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  • Writer's pictureRoundabout team

Advertisement spending collapse will be worse than in the financial crisis

Advertising budgets will likely fall even more in the current coronavirus-driven economic slowdown than they did in the crisis of 2008-09, according to a new survey.

The survey, released Friday by the Interactive Advertising Bureau, asked 390 media buyers, media planners, and brand executives about their U.S. advertising plans for the rest of 2020. The group represents 650 companies that work in digital advertising and marketing.

The research found that nearly a quarter have paused all advertising spending through the second quarter. Another 46% are reducing their budgets. The impact on the second half of the year is expected to be more modest, although most say that it is too early to know.

Of the survey group, 44% say the impact of the current slowdown will be “substantially” worse than in the 2008-09 crisis, and another 30% say it will be “somewhat” worse. The survey found that for the March-June period, digital ad spending is down 33% compared with original plans, with outlays on traditional media down 39%. The first two months of the period are expected to show even deeper declines, with spending off 38% on digital media and 43% for traditional media. For May and June, the survey group expects a 28% cut to digital media spending, and a 35% reduction in traditional media. The survey group expects steep spending reductions in every category, including digital display, video and audio, linear TV, terrestrial radio, print, out-of-home, and direct mail. Least affected will be paid search, but even there spending is expected to fall 30% in the March-April period from previous plans. Outlays for May and June are seen falling 21%.

Taking the biggest hit is traditional out-of-home advertising—billboards and the like—projected to fall 51% in the first two months, and 41% in May and June.

Declines of that depth would be terrible news for newspapers, magazines, TV and radio station operators, billboard owners, and ad-supported web services. As for the second half of the year, two-thirds of the survey group said it was still to early to know if they will change their ad-spending plans.

Over the past week, both Twitter (TWTR) and Facebook (FB) have warned about weakness in digital advertising. Wall Street has begun reducing its financial forecasts for Alphabet (GOOGL).

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