The Collapse of the Ad Industry, by the Numbers
And how to get good publicity while slashing your ad budget
52,000: That’s how many jobs U.S. ad agencies are expected to lose in 2020 and 2021, with half of those jobs projected to never return, according to an analyst at the research firm Forrester, as reported in the New York Times. With advertisers making severe, pandemic-induced budget cuts, Forrester also predicted that ad spends will decline 25% in 2020, not recovering until 2023.
The recalibration has been a long time coming for a bloated industry still saddled with lavish Mad Men-esque habits and outdated incentives. Even Wieden+Kennedy, the agency that produced Nike’s breathtaking, hot-off-the-press “You Can’t Stop Us” ad, laid off 11 percent of its workforce last month.
Meanwhile, at least some of the 1,000 brands that boycotted Facebook in July might have figured out how to make the most of a moment — slashing their ad budgets, while framing it as a protest. Though the move put pressure on the social media giant to change its policies around misinformation and hate speech, it barely made a financial dent—the platform’s ad revenue grew 10% year-over-year in the first three weeks of the month. It turns out several of the bigger brands that left Facebook are now returning in August, just as Zuck predicted they would.
The tech giants actually hurting from the advertising contraction? Twitter, which saw its ad revenues drop 23%, and Alphabet, which reported its first-ever decline in quarterly revenue. What scares Zuckerberg less: Advertisers threatening to pull their dollars or Congress threatening to break up Facebook?