Global advertising faces double-digit decline this year

The global advertising industry is expected to decline nearly 12% this year as the coronavirus pandemic batters businesses around the world, a report on the sector said on Monday.

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, a unit of holding company WPP, showed, said this year's advertising decline, excluding U.S. 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, the agency said.

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% this year, while OOH will drop 25%, when excluding political ads, GroupM said.

The ad agency also estimated digital advertising will decline 2.3% this year and will account for 52% of the advertising market, up from 48% 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% growth, GroupM projected.