The usage of digital channels for numerous purposes, ranging from remote work to online shopping, entertainment, and banking, increased across the globe as people were advised or forced to stay at home because of the COVID-19 pandemic.

More importantly, perhaps, the adoption of digital channels for these and other purposes accelerated among a significant group of people that discovered specific digital services for the first time and have no plans to stop using them, driving digitalization plans and priorities of organizations.

Marketers quickly reacted and started leveraging various forms of digital marketing as the behavior of those who were lucky enough to stay at home when needed and to have an Internet connection changed for all the obvious reasons.

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Internet advertising in times of budget cuts

The increasing choice for digital channels and Internet advertising by brands of course is also inspired by other motivations; for instance, on the level of costs and the need that many organizations now have to reap even faster results from their efforts.

Internet advertising will flatline in 2020, with a slight decline of 0.1 percent. Despite the buoyant online traffic growth generated by people spending more time online, Omdia expects advertisers to reduce overall discretionary advertising spend due to the global economic woes.

As has been the case in previous crises, brands have been advised not to stop advertising and, instead, continue to communicate and certainly also look at the longer-term where growth happens. Yet, not everyone, can afford to invest in branding, and for many quick results through proven methods are the only option.

While strong brands, who can do it because of their reputation and their activities, revisit their advertising messages/narrative as they intend to continue advertising and, here and there, even up their efforts with a good mix between sales and marketing activation on the one hand and branding on the other, we definitely see a shift in tactics and channels. It probably won’t come as a surprise that in the context of advertising, Internet advertising will be the preferred way for brands to spend their advertising budgets.

Despite calls to keep investing in branding and the long-term growth when feasible, the global advertising industry inevitably will see a significant drop in worldwide advertising revenue, and Internet advertising won’t make up for budget cuts in other media and channels at all.

Global advertising expected to drop by at least 7.4 percent

Keeping in mind that marketing and advertising are not the same, it seems that brands are more than careful regarding advertising spend, also for the coming years.

Technology research company Omdia (the result of the merger of the research division of Informa Tech and the acquired IHS Markit technology research portfolio) expects global advertising revenue to drop by at least 7.4 percent in 2020 in a best-case scenario.

Using the 2008 financial crisis as a precedent, the company believes that the impact of global advertising revenue decline will be highest on TV advertising. Two major reasons that won’t come as a surprise either: 1) there are no big sporting events (in ‘normal times’ already having an impact on global advertising revenues for decades), and 2) advertisers as said prefer Internet advertising. The latter is, even more, the case now that people buy more online due to lockdowns and the mentioned increased adoption of digital platforms and time spent on digital channels.

Yet, even if Internet advertising could be expected to increase a tad bit because people are more online, Omdia doesn’t expect advertisers to spend more but to reduce overall discretionary advertising spend due to the global economic woes.

Small decline in Internet advertising revenue for 2020

Internet advertising is expected to flatline per Omdia, with a small decline of 0.1 percent in 2020. With global TV advertising revenue expected to fall by 12 percent and outdoor advertising even by 21.2 percent, all in all, the Internet advertising industry doesn’t have to complain all too much.

As could be expected for the mentioned reasons, the market share of Internet advertising revenues will increase in 2020, but here as well, it’s all relatively modest. Omdia expects the market share of Internet advertising revenues to grow from 48 percent in 2019 to 51 percent in 2020. TV advertising’s market share is ‘only’ expected to drop from 31 to 30 percent.

Global print media ad revenues are forecasted to decline with 16.8 percent. And there’s more bad news for print media. While Omdia expects other media categories to return to growth in 2021 or 2021, print media would only return to a lower negative growth rate in 2021.

Updated Omdia forecasts indicate that the market share of internet advertising revenues will grow from 48 percent in 2019 to 51 percent in 2020, eating into shares of other media including outdoor, cinema, radio and print

What the impact of the pandemic and its ripple effects on digital marketing is a different story. It’s, for instance, not immediately apparent what the effect on digital outdoor advertising could be.

In the worst-case scenario and a prolonged lockdown, Omdia expects global advertising revenue to decline by 17 percent in 2020 and only return to modest growth in 2023 or later. However, that scenario is not highly likely at the time of reporting (May 2020).

Media companies and the global advertising ecosystem, including the Internet advertising market, need to prepare for a more prolonged slowdown as during the period from 2021 through 2024, advertising revenue growth rates will remain rather conservative per Omdia.

Needless to say that the overall picture of the global advertising market and of Internet advertising will differ per industry the advertiser is active in.

We already see Internet advertising in the technology industry returning, again with differences per region. Within an industry such as the technology sector, it’s clear that those technologies organizations will use to digitally transform and those types of digital services that are increasingly adopted by people will see more advertising budgets than others.

One can also expect that the share of Internet advertising will be more significant for online platforms, tools, and services in that context.