An advertising recession in the first half of 2020 is now highly probable as brands slash spending due to the coronavirus outbreak, according to a new report.
Industry body Warc today warned that the advertising industry was all but certain to follow the wider global economy and fall into a recession sparked by the pandemic.
The services sector suffered its worst performance worldwide in February and March, according to the latest PMI figures, and the Covid-19 crunch has filtered down to the ad industry.
ITV last week cut its dividend and scrapped its forecasts after warning of a decline in revenue from advertisers in all sectors.
RTL Group — Europe’s largest broadcaster — and NBC Universal have also said the pandemic will have a material impact on ad revenue.
However, fast-moving consumer goods (FMCG) brands, which spend $97.2bn (£78.4bn) each year on advertising, are likely to weather the storm better than other sectors amid booming demand for food, drink and hygiene products on ecommerce sites.
UK sales of antiseptics and disinfectants have risen almost 300 per cent on Amazon in recent weeks, while sales of soaps and hand wash have trebled, according to the report.
Moreover, investment from FMCG brands has previously proved to be more resilient. During the last advertising recession in 2009, UK FMCG ad spend fell 5.6 per cent, compared to an 11.7 per cent decline in the wider market.
“The current downturn may not hit FMCG as hard as other product sectors, but it is likely to be consequential in terms of changing consumer purchasing behaviour,” said James McDonald, managing editor of Warc Data.
“A sharp increase in ecommerce activity may result in online players becoming more significant as the gatekeepers to FMCG shoppers.”