How COVID-19 Will Affect Worldwide Advertising Spending

The eMarketer published its forecast about how will the COVID-19 pandemic affect worldwide advertising spending. According to senior analyst Jasmine Enberg «there is almost an amount of 692 billion dollars down from our previous estimate of about 712 billion dollars. But really all of the reduction in spending due to COVID- 19 is coming from one country. This is China.

China is the world’s second biggest advertising market so reduction in advertising there will also have an impact globally. We haven’t made any other major advertising adjustments to our global forecast due to COVID-19 but we are continuing to moderate the situation. Keep in mind that our forecasts represent a full year outlook and the global ad spending takes place in the second half of the year ahead of the holiday season».

What impact will supply chain shortages have on ad spending? Elberg explains that «simply supply chain shortages can lead to economic loses and one way for companies to annihilate those loses is by reducing their ad spending. Now, that can impact all types of media but especially digital ads because those are easier to change. We’ ve seen it happening in China because of COVID-19 and there is evidence to suggest advertisers in other parts of the world are pulling some of their spend on platforms like Amazon in fears of their policy won’t be able to make it on market. At the same time though we see an increase at the digital media consumption as consumers spend more time at home and that combined with the fact that advertisers tend to turn to platforms like Facebook or Google in times of uncertainty means it’s too soon to tell how bigger an impact and short term loses in digital spending could have on the market in total in 2020».

How will out of home ad spending respond to social distancing and isolation measures mandated by local and national governments? «Out of home advertising is one of the media categories that is most susceptible to COVID- 19’ s impacts. Just think about transit service ads. If people aren’t taking public transit advertisers aren’t going to invest there. We are not quite at that stage in the United States but if this social distancing and isolation measures have a more wide spread that could mean a reduction in our out home ad spend forecast here in the US. In China were more than 50 million people put under mandatory quarantine having reduced the out home growth rate from 2.5% to 0.7% in 2020» says Elberg.

What is the likelihood of a global recession or conversely an economic rebound after the pandemic has peaked?

Elberg makes it clear that «recent stock market shocks could bring us closer to an economic slowdown. Some main industries have already been hit hard including travel and tourism and we just have started seeing the economic overall impact».