2020 Budget Reductions Could Cost Media Up to $3 billion
Response to Coronavirus fears could potentially reduce total U.S. 2020 marketing communications investments by as much as $11 billion, according to a new analysis of 62 marketing and media categories from The Myers Report. Minimal marketing cuts, the report says, will be $1 billion. If the viral threat accelerates beyond the first half of the year, The Myers Report projects 2020 marketing investments will decline from projected year-to-year growth of 1.8 percent to -0.1 percent, representing $11 billion in lost revenues. If the Coronavirus spread continues into the 4th quarter, The Myers Report predicts a further potential downside of an additional marketing reduction of $11 billion in 2021, with advertising media’s share of the budget cuts equaling $3.1 billion.
While media’s share of total marketing budgets is 38 percent, The Myers Report projects that media will absorb only 28 percent of total marketing cost reductions. The most significant budget cutbacks are likely to hit directly to trade promotion, direct mail/email, experiential/event marketing, mobile and apps advertising, and cinema. Beneficiaries, The Myers Report says, will be broadcast network television (excluding potential Olympics and major event losses), local newspaper advertising, content marketing, and public relations. The worst-case 2020 scenario for media and advertising companies, according to The Myers Report analysis, is $3 billion in reduced ad spend (from the projected $227.8 billion to $224.9 billion). Even at this reduced level, advertising will grow 4.8 percent over 2019. The Myers Report originally forecast 2020 advertising growth of 6.2 percent.
In 2021, a non-Olympics/non-election year compounded by an expected economic downturn, The Myers Report has projected spending reductions of $6.2 billion (-2.6 percent). If the Coronavirus continues to impact marketers’ confidence into 2021, advertising budgets can be expected to decline up to an additional $3.1 billion.
The potential long-term impact of Coronavirus on the economic health of marketing is significant. According to The Myers Report 2020–2025 analysis, if the perceived threat of the disease is not dramatically reduced by summer’s end, total marketing spend over the next half-decade could shrink by more than $75 billion with advertising and media representing nearly $30 billion of the total.