July 12, 2020
AliExpress WW
Visualizing The COVID-19 Impact On Advertising Spend

Visualizing The COVID-19 Impact On Advertising Spend

AliExpress WW

Before the outbreak of COVID-19, global advertising investment in 2020 was estimated at 7.1%.

AliExpress WW

Now, as Katie Jones of Visual Capitalist notes, it is estimated that as a result of changes in consumer behavior, global advertising spending will decline by 8.1% to nearly $ 50 billion. Taking into account forecasts before the pandemic growth, the total loss is becoming dismal 96.4 billion dollars.

Today’s graphics use data from the World Advertising Research Center (VACR) to visualize the estimated reduction in advertising costs in the format of the media and industry.

As advertisers adapt to the growing consumption of media in the home, tug of war for advertising dollars between online and traditional media there seems to be a decisive winner.

The death of traditional media

After decades of expert predictions about the death of traditional media formats, the COVID-19 pandemic could be the last highlight in the coffin.

In fact, the costs of all types of traditional media formats will decrease in 2020, and most online media formats are expected to increase costs.

In the medium term, this era will be associated with an acceleration of latent and growing trends in increasing digital consumption, trade and, therefore, advertising. ”

– Dr. Daniel Knapp, European Interactive Advertising Bureau

As consumers spend significantly more time at home, brands give out more dollars to certain media formats to reflect this. However, when it comes to traditional home formats, such as television, consumers prefer streaming services instead. In fact, they broadcast twice as many online videos on services like Netflix, compared to last year.

Cost estimate by category

Nearly every industry we’ll see a reduction in costs. The only category that will oppose this trend is Telecommunications and Utilities, in which advertising costs will increase by 4.3% during the year.

It is interesting to note that restrictions on staying at home have increased consumers’ dependence on these services to keep in touch with loved ones and work at home.

In addition, the pandemic was a turning point for the telecommunications industry, as the importance of higher internet speeds and 5G potential implemented.

The road to recovery?

When inflation and exchange rates It is expected that the reduction in advertising costs will be worse than during the global financial crisis.

Although there are signs of recovery in 2021, WARC suggests that this reflects how sharp the recession in 2020 will be.

Data show that global ad spending growth has not fully recovered over eight years after a previous recession, a quick recovery may be extremely unlikely, and a return to pandemic growth rates may not be possible for several years.

Changing advertising landscape

As advertisers agree with their new reality, they are faced with the uncertainty of changing consumer behavior and the possibility of a second wave of tightening quarantine restrictions again.

Can a pandemic hasten the inevitable transition to digital technology, or is the pain in traditional media temporary?

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