Report: Ad Market Bottomed Out In April

The full impact of the COVID-19 pandemic was felt in April, Brad Adgate at Forbes reports.

The monthly unemployment rate as measured by Bureau of Labor Statistics reached 14.7% as the U.S. economy lost a record 20.5 million jobs. As businesses shut down, a large majority of Americans were under statewide quarantine laws. With the economy coming to a grinding halt, the advertising and media industries bottomed out. According to Standard Media Index (SMI), in April, the year-over-year total ad marketplace dropped by a staggering 35%.

Besides the unprecedented loss of jobs in such a short span, another reason for the ad dollars shriveling up were the loss of live sports and 24 scripted programs that ended their seasons ahead of schedule after production was shut down because of the pandemic. In April, SMI found the advertising revenue for every major traditional and digital media had dropped notably. In addition, the ad spending for 11 of the 12 product categories measured reported year-over-year double-digit percentage declines.

➤Product Categories: The product categories hurt most by the pandemic also cut back the most in ad spending. For example, with stay-at-home orders in place, marketers in the travel industry reduced their ad dollars by 89% compared to April 2019. Business shutdowns and quarantined consumers also had an impact on restaurants, which reported a year-over-year cutback in ad spending of 52%. Similarly, retail advertisers, another category hard hit by the pandemic, decreased their ad spend by 51%. Apparel & accessories had a similar drop of 49%.

In April, with millions unemployed or workers being furloughed, several “big ticket” product categories reported significant declines in their ad budgets. Automotive saw a reported a year-over-year reduction in ad spend of 64%. Tech companies reported a decline of 26% in ad dollars and financial services dropped by 24%. Automotive, tech and financial companies are among the heaviest advertisers of televised sports. Only pharmaceuticals, among the product categories, increased their ad commitment, by a slight 4%.

➤Media Companies: With marketers severely curtailing their advertising budgets, every prominent media company reported a double-digit decline in ad revenue for the month. Media companies more reliant on sports in April reported the sharpest ad revenue declines, followed by other traditional media companies that focused more on scripted entertainment content. All major media companies reported a double-digit percentage drop-off in ad revenue from April 2019.