Global advertising faces double-digit decline this year

A shopper walks past an advertisement board in the Westfield shopping centre in London on June 22, 2020. PHOTO: AFP

NEW YORK (REUTERS) - The global advertising industry is expected to decline nearly 12 per cent this year as the coronavirus pandemic batters businesses around the world, a report on the sector said on Monday (June 22).

The advertising market, which typically tracks the broader health of economies, was thrown into chaos in March, as people stayed home and businesses shut their doors to stop the spread of the virus.

However, while the overall hit to economies from the pandemic is expected to be worse that the 2008 financial crisis, the report from ad agency GroupM said this year's advertising decline, excluding US political advertising, would still only be modest.

That's because the small businesses that bore the brunt of the coronavirus lockdowns already accounted for a smaller portion of the advertising industry, said the agency, which is a unit of holding company WPP.

The ad market decline is also softened because many businesses "are fighting to stay alive via ecommerce, and you would expect to see some advertising through that," said Brian Wieser, global president of business intelligence at GroupM, in an interview.

The hardest-hit parts of the industry are expected to be television advertising, which has long been losing ground, and "out-of-home" (OOH) advertising such as billboards, as people stay indoors. TV advertising is expected to decline 17.6 per cent this year, while OOH will drop 25 per cent, when excluding political ads, GroupM said.

The ad agency also estimated digital advertising will decline 2.3 per cent this year and will account for 52 per cent of the advertising market, up from 48 per cent last year. Advertisers have invested more on digital ads because it is generally cheaper than TV and easier to start or cancel an ad campaign.

A global ad market recovery is expected to begin next year with 8.2 per cent growth, GroupM projected.

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