Although there has been a short-term economic recovery after the quarantine, the crisis caused by the COVID-19 will have long-term effects on society, business, consumer habits, mobility, media usage and certainly on the advertising industry, as reported by Polaris.
Estimates made before the crisis which predicted growth in advertising spend are now being revised down, while new calculations show that global investment in advertising will be significantly less than in 2019 in all regions and a major portion of advertising channels will be affected by it.
Net investment in advertising in 2020 is projected to be -7.2% lower globally than in the year prior. The biggest losses will be suffered by advertising in cinemas (-42%), followed by print with a drop of -32%. It is estimated that OOH will fall by -22% this year because advertisers have largely given up on this medium (especially during quarantine) due to reduced movement and the decreased number of people it can reach. Although TV viewership increased during the state of emergency, advertising on this medium has declined and it is predicted to fall by -12% by the end of 2020. The reason behind this is the abstinence of many major brands from TV advertising during the crisis; however, the cancellation of big sporting events is also contributing to the steep decline. Investment in radio advertising will also be lower by an estimate of -15% because this medium mainly relied on listening while driving, and therefore its reach is smaller during times of limited movement. Digital formats are the only ones that are projected to be at last year’s level (+ 1%) thanks to greater internet usage by consumers, growing e-commerce, and shifting marketing budgets to cheaper channels, which is typical of any recession.
When it comes to the countries in this region, Serbia is most affected – investments in advertising are lower by -24% compared to the previous year
All regions will be affected by the crisis, but Western Europe and Latin America will suffer the most (expected decline of -10%), while North America (-4.4%) will be least affected, due to the positive spillover of political campaigns ad spend during the 2020 elections. The decline in the Central and Eastern European region is estimated at -7.7%.
When it comes to the countries in this region, Serbia is most affected – investments in advertising are lower by -24% compared to the previous year. The Croatian advertising market will decline by -13% in 2020, while Bulgaria expects a decrease in the investment of -8% by the end of the year. Following global patterns, cinema advertising will suffer the greatest consequences in the region (-61% in Serbia, -50% in Croatia and -20% in Bulgaria). This is followed by OOH and print (between -30% and -35% in Serbia and Croatia, and -15% in Bulgaria). Serbia shows worrisome numbers when it comes to advertising on TV (-22%), while in Croatia and Bulgaria this figure is lower (-13%). Investment in digital media in Croatia is stagnating and thus following the global trend; however, Serbia recorded a decline of -17% in this medium, while Bulgaria, on the other hand, and has a growth of + 6%.
Forecasts for 2021 are optimistic – according to IMF estimates, the global economy will recover (GDP + 5.8%), and major sporting events will have a significant impact on the recovery of the advertising industry and ad spend. The data shows that the global advertising market will grow by + 6.1%, but despite the recovery expected in 2021, investments will be lower by $ 9 billion compared to the period before the COVID-19 crisis. In the region, Serbia is projected to recover by almost + 18% compared to 2020, but given the large decline, investments will still be lower than 2019 (187 million in 2021 vs. 209 million in 2019). Croatia and Bulgaria also expect growth of + 13% and + 6%, which brings both countries to the level of investments from 2019.
By Polaris agency