Dive Brief:

• Global ad spend is set to fall by $63.4 billion this year, per a press release emailed to Marketing Dive by WARC. It could take at least two years for ad spend to recover from the effect of COVID-19.
• This year's 10.2% global ad market decline is double the drop seen during the Great Recession in 2009, when adjusted for inflation, according to the firm's Global Ad Trends: State of the Industry 2020/21 report. The new projection represents an additional 2.1% downgrade from the 8.1% drop the firm forecast in May. Total spending will reach $557.3 billion this year, compared with 2019's $620.6 billion.
• Online video is the only format to see an increase from the firm's original 2020 spending estimate, and the format will continue to lead growth in 2021, with ad spend expected to increase by 7.9% to $52.7 billion this year and increase by 12.8% in 2021.Traditional media, in particular linear TV, out of home and cinema, accounted for the majority of the decline in overall spending.

Dive Insight:

The pandemic is clearly taking its toll on the advertising industry, as sectors such as automotive, retail and travel continue to sharply curtail their advertising spending. Indeed, without the $4.9 billion spent on advertising during the U.S. elections, the global ad market would have been projected to contract by about 11% ($68 billion).

Most of the year's decline can be attributed to cuts in traditional media spending. Global spending drops on linear TV (down $29.9 billion), cinema (down $1.5 billion), out of home (down $11.3 billion), newspapers (down $9.8 billion), magazines (down $4 billion) and radio (down $5.9 billion) accounted for 98% of the overall drop. Every one of those channels recorded their worst performance in WARC's 40-year history of market monitoring. While most are expected to rebound in 2021, the gains will be more a reflection of 2020's staggering losses than an indicator of recovery.

"2020 was the most hostile year for the advertising economy ever seen in our 40 years of market monitoring," said James McDonald, WARC's head of data content, in a statement. "An immediate bounce back is not on the horizon; while growth is expected in most corners of the industry next year, this will be more reflective of a tumultuous 2020 than a sterling 2021."

Spending is projected to rise by only 6.7% next year, which would only recoup about three-fifths of 2020's total losses. The ad market would need to grow another 4.4% in 2022 to reach 2019's total.

The overall online advertising market, which accounts for 54.4% of the year's total spending, is flat at $303.3 billion. This is the first year the channel has not recorded growth since the dot-com crash in 2000. Online video, the only format to have prospects upgraded, is expected to grow 7.9% to $52.7 billion, boosted by increased viewing as nations across the world imposed stay at home orders in the wake of the virus. Online video is expected to rise 12.8% next year, according to WARC.

Automotive advertising spending is expected to drop by 21.2%, or $11 billion, making the sector responsible for 17.4% of the total losses. Retail spending is expected to decline by 16.2% ($10.5 billion), while travel and tourism spending is expected to drop by 33.8% ($8.4 billion). Some of these declines could become permanent if pandemic-spurred behaviors — especially around travel and tourism — do not return to normal.