Coronavirus Expected to Hit Global Ad Spending
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As the coronavirus continues to take a toll on essentially every major sector of the economy, media and advertising is no exception.
On a global scale, a reduction in expected growth for advertising is seen due to the impact of COVID-19, according to a report from research firm eMarketer. The firm said as of now, global ad spend is expected to increase this year to $691.7 billion, down from an earlier estimate of $712 billion. But this could again change for the worse if the 2020 Summer Olympics in Japan set to air on NBC are ultimately canceled or postponed. EMarketer’s research assumes the event will go on as planned, although that is increasingly unclear as major global events are being canceled daily.
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The cut in the projection “is due primarily to one country: China,” the firm said. In that country alone, still a growth market for media and advertising led by digital platforms, eMarketer said total media spend will drop to an estimated $113.7 billion, from an earlier forecast of $121.1 billion. China’s advertising growth rate is also projected to decrease to 8.4 percent from an initial 10.5 percent. China is the second-largest ad market, after the U.S.
“Despite the increase in digital media consumption in China, as consumers try to keep themselves entertained and informed at home, advertisers are reluctant to spend what could be lost dollars if supply chain shocks prevent them from getting their products to market,” eMarketer said.
After workers in China were largely placed in self-quarantine, daily time spent actively using mobile Internet increased to nearly seven-and-a-half hours, according to research from QuestMobile. TV viewing is up, too, to almost eight hours a day from about six hours during the same timeframe last year, according to Nielsen data.
When the situation around COVID-19 will start to improve is unknown, although there are some signs of stabilization in China. Still, advertisers are being cautious and taking more of a wait-and-see approach. And at least in major Chinese cities, like Beijing, Shanghai and Guangzhou, consumers are expecting “the situation to last at least another four months,” according to a late February report from ReHub.
Even with more people staying inside engaging in one way or another with devices, eMarketer said digital advertising in China — which has been on the rise for several years but even before coronavirus was expected to eventually slow — will grow by a reduced 13 percent, down from an initial expectation of more than 15 percent.
Part of the reason advertisers, at least those that are directly involved in making products, are expected to reduce ad spending is to offset the financial impact of global supply chain issues caused by regional shutdowns over coronavirus. Amazon is one platform that may see more immediate effects from such an advertising pullback, eMarketer said, especially among its many smaller third-party sellers that already operate with smaller budgets.
“It’s possible that this trend could extend to other digital platforms if problems continue,” the researcher said.
Another area of advertising that could ostensibly be impacted is “out of home,” or things like billboards and public transit ads, due to all of the isolation and “social distancing” practices that are being demanded or promoted by various government and health bodies worldwide. If people are putting off gathering in groups or traveling for months more, it would drive that market downward.
But it’s also possible that the virus will level off soon and the entire advertising market will bounce back in the second half of the year, eMarketer said. A majority of ad spend takes place in the latter half of the year anyway, due to holiday campaigns and product rollouts.
Still, there is much unknown about how the virus will ultimately impact global markets and businesses.
“While some major industries, such as travel and tourism, have already been hit hard,” eMarketer added, “it’s too soon to tell how debilitating the impact will be on the global economy in the long term.”
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