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The advertising business is becoming less cyclical—and more concentrated

25 Jun 2020

SOMBRE PIANO music? Check. Footage of deserted streets? Check. Maudlin voice-over lamenting “uncertain times”? Check. Seeking a television commercial fit to air amid a pandemic, brands from AT&T to Budweiser sent for their finest admen. All seemed to come up with the same cliché, proclaiming: “We’re in this together.”

This is a hard year for advertising, and not just on the creative front. Global ad spending is expected to be 10% lower than in 2019, according to GroupM, the world’s largest advertising firm by billings. The pandemic led advertisers to trim marketing budgets, deprived sellers of ad space, such as cinemas, of audiences, and left the admen with no work. Rishad Tobaccowala, an adviser to Publicis Groupe, the world’s third-biggest agency, likens it to an asteroid strike: “The Earth will go on. But some dinosaurs will die.”

As the dust settles, a reshaped advertising world is emerging. The buyers are lying low but look ready to splurge. Most of their money will for the first time go online. Offline-ad sellers, long in decline, and the creative agencies, whose middleman business is being pinched from both sides, face gradual extinction.

Despite a slump like no other, ad spending may fall by less this year than the 11.2% drop that followed the financial crisis in 2009. And whereas most of the...

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This content was originally published by The Economist: Business. Original publishers retain all rights. It appears here for a limited time before automated archiving. By The Economist: Business

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