2020 Budget Reductions Driven By Coronavirus Concerns Could Cost Media Around $3B In Ad Spend

Confidence is playing a major role in the global economy, including responses from top media buyers and marketers at major corporations.

Warranted or not, the response by media buyers and marketers based on 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.

The basis for the Myers’ projection is the company’s historic econometric model that integrates public and private proprietary feedback, data and market assessment, said Jack Myers, a media ecologist and founder of MediaVillage.

At the minimum, marketing cuts will tally about $1 billion. Investments are projected to decline from previous year-to-year growth of 1.8% to -0.1%, representing $11 billion in lost revenue.



If the coronavirus spread continues through the year and into the fourth quarter, The Myers Report predicts an additional marketing spend decline of $11 billion in 2021, with advertising media's share of the budget cuts equaling $3.1 billion.

Addiction specialist Dr. Drew Pinsky believes the media coverage on the coronavirus outbreak in the United States is the root of a larger problem. He told "The Ingraham Angle" earlier in March that “essentially the entire problem we are having is due to panic, not the virus."

"I was saying this six weeks ago,” he told "The Ingraham Angle." We have six deaths from the coronavirus, 18,000 from the flu. Why isn't the message, 'Get your flu vaccine?'"

The major concern, writes The McKinsey Report, that the virus is highly transmissible. Emerging scientific evidence shows the virus causing COVID-19 is easily transmitted from person to person. The U.S. Centers for Disease Control and Prevention estimates that the virus’s reproduction number, the number of additional cases that likely result from an initial case, is between 1.6 and 2.4, making COVID-19 significantly more transmissible than seasonal flu.

A global slowdown would affect small and mid-size companies more than larger, according to The McKinsey Report. Not all sectors are equally affected. The U.S. already sees service sectors, including aviation, travel, and tourism, taking the brunt of the blow.

The Myers Report suggests that media will absorb only 28% of total marketing cost reductions, with the most significant budget cuts to hit trade promotion, direct mail/email, experiential/event marketing, mobile and apps advertising and cinema.

Broadcast network television -- excluding potential Olympics and major event losses -- as well as local newspaper advertising, content marketing, and public relations will benefit most.

The worst-case 2020 scenario for media and advertising companies is $3 billion in reduced ad spend, down from the projected $227.8 billion to $224.9 billion.

Even at this reduced level, advertising will grow 4.8% in 2020, compared with 2019, down from the original forecast of 6.2% growth.

If the coronavirus continues to impact marketers' confidence into 2021, advertising budgets could decline up to an additional $3.1 billion.

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