2020 Set To Be the Worst Year for Traditional Advertising: WARC Study Finds

Ad spends dropped by $63.4 billion in 2020, according to a new study by WARC

According to the latest WARC study, advertising spend dropped by 10.2% or $63.4 billion in 2020. The study that polled marketers from 100 countries shows that 2020 was the worst year for traditional advertising media.

The rise in global ad spend next year is projected to increase by 6.7% next year, meaning the industry will only be able to recoup 59% of this year’s losses. To top the peak recorded in 2019, WARC predicts that ad investment will need to grow by 4.5% in 2022.

The global ad market is set to contract by 11.4% this year – which is almost double the 6.1% dip recorded at the height of the Great Recession.

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With the global economic output set to drop by 4.4% this year (-0.1% in 2009), the worst drop in recent history. Additionally, unemployment rates are set to double across OECD markets this year according to the organization’s ‘doublehit’ scenario, whereby a second outbreak of the virus is seen worldwide. This is expected to slow economic recovery as we head into 2021.

Key Ad Spend Trends and Takeaways for 2020

1. The advertising industry will take two years to recover: A $63bn cut in global advertising spend represents a 10% drop to $552.3bn this year.
2. The ad market decline is double that of 2009: 2020 represents the worst year on record for the advertising industry. Online ad spends also witnessed negative growth for the first time since the dot-com crash.
3. Ad investment is set to grow by 6.7% next year: The investment in advertising in 2021 will increase by 6.7%, helping the industry recover 59% of lost advertising spend in 2020. Advertising investment will need to grow by 4.4% in 2022 to beat 2019’s ad spend peak.
4. Online video witnessed a spike in 2020: Video advertising consumption grew this year as countries imposed stay-at-home orders to control the spread of the virus, and this led to an increase in CPMs. Online video is expected to lead growth for the industry in 2021 (+12.8%), following a 7.9% rise this year.

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1. The majority of ad spend in 2021 will be transacted by machines: Despite the growth in automated ad spend, only 15% of marketers said brand safety was one of their biggest concerns, falling to 10% for ad fraud.
2. Only governments and not-for-profit sectors increased investments in ad spend: The automotive sector witnessed a massive 17.4% drop in ad spend, which represents an $11bn loss. Retail followed with a $10.5bn decrease, with travel and tourism brands cutting ad spend by a third (33.8%). The study expects all categories to increase spending next year, although only three are expected to top their 2019 total.

“2020 was the most hostile year for the advertising economy ever seen in our 40 years of market monitoring,” says James McDonald, head of data content, WARC, and author of the research. “Some platforms – such as e-commerce and social properties – have emerged relatively unscathed, but the vast majority of the media landscape has witnessed a severe material impact.

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“An immediate bounce back is not on the horizon,” he adds. “Rising unemployment is set to depress consumption demand well into next year, and though the prospect of a vaccination programme offers cause for optimism among consumers and businesses, it may only be a waypoint in a recovery that stretches years.”