Dive Brief:
- In response to mass shutdowns by the novel coronavirus pandemic, eMarketer revised its forecast for media ad spending worldwide in 2020 to around $691.7 billion. That's up 7% from 2019 but down from the research company's previous forecast calling for a 7.4% increase and a $712.02 billion total, according to details shared with Marketing Dive.
- The decrease is mainly being driven by China, the world's second largest ad market, where 2020 ad spending growth is now expected to reach 8.4%, down from a previous forecast of 10.5%.
- Out-of-home (OOH) ad spending will likely decrease if social distancing continues and people are encouraged to avoid large gatherings, according to the report.
Dive Insight:
The COVID-19 outbreak is upsetting the economy in numerous ways, and eMarketer's revised forecast estimates the outcome for the advertising industry this year if the virus is able to be contained in the coming months.
The estimated drop in expected spending from 7.4% down to 7% is not significant, in part because the majority of ad spending takes place in the later part of the year as brands gear up for the holidays, per eMarketer. If the virus is contained by Q3 and stores reopen, letting people begin to leave their homes again and events to return, then the industry could avoid major losses.
Also tempering the potential impact of the pandemic on the ad industry is the fact that marketing leaders had already been girding for a possible recession in 2020 for the past year, according to eMarketer.
If the virus lasts longer, eMarketer will again update its findings. One major factor that could lead to another revision is if the 2020 Summer Olympics in Tokyo are postponed or canceled. While many major events including national sports leagues' playing season and SXSW have been canceled over the pandemic, the Olympics are still scheduled to take place in June. If the event occurs, then eMarketer estimates it will give ad spending a boost in the U.S. and globally.
Beyond ad sales, the pandemic is impacting the marketing and advertising industries in other ways. A recent Fishbowl study of professionals found that more than 65% of advertising professionals fear company layoffs as a result of the coronavirus pandemic. This is above the average 54% for professionals across industries.
Additionally, a recent statement from Augie Ray, VP analyst at Gartner, said CMOs and marketing leaders must be "aggressively proactive" in preparing their organizations for the disruption of the pandemic. While the uncertain situation brings greater risks, there are also opportunities to build customer loyalty, he said.
