According to the research data analyzed and published by StockApps.com, global ad spending could drop by 4.9% to $614.73 billion in 2020. Comparatively, 2019 saw an increase of 6.3% and eMarketer.com’s pre-pandemic forecast was a 7.0% growth rate for 2020.
Moreover, a World Advertising Research Center (WARC) report echoed similar sentiments, predicting a higher decline of 8.1% and a drop to $563 billion.
Alphabet to Lose $12.9B, Facebook $5.3B in Ad Revenue in 2020
However, based on a Zenith study, ad markets will recover in 2021, enjoying a 5.8% growth rate. It cites the fact that the postponed UEFA championship and Tokyo Summer Olympics will both be taking place in 2021. Moreover, as eMarketer points out, as overall ad spend drops, digital ad spend will increase by 2.4%.
Tech giants Alphabet and Facebook are among those stung by the effects of ad revenue drops. Google suffered its first-ever quarterly decline in year-on-year (YoY) revenue, while Facebook had its slowest revenue growth since its 2012 IPO. Alphabet reported a 2% revenue drop overall and a net income decline of 43%. YouTube advertising only grew 6% and total Google ad revenue by dropped 8.4%. “Search & Other” revenue also declined by 9.8% during the quarter. Facebook, on the other hand, reported a mere 10% increase in ad revenue during the quarter. Though other operations reported a 40% increase in revenue, the total revenue increase was only 11%.
According to WARC, Alphabet could lose up to $12.9 billion in ad revenue in 2020, while Facebook can lose $5.3 billion. The discrepancy between the two could have to do with differences in their advertising models. According to another eMarketer research, 11% of Google’s 2019 ad revenue came from the travel industry. Facebook’s revenue is, however, tied to gaming and eCommerce.