COVID-19: Advertising Spend Trends, Part 1
The COVID-19 pandemic is one of the greatest health and socioeconomic crises of modern times. National governments across the globe have encouraged or mandated their citizens to stay at home and avoid nonessential journeys, which is having a demonstrable impact on how advertisers reach consumers, necessitating a response. Some examples of how advertisers have adapted are provided below.
- In a recent survey of almost 400 media buyers and brands, 74% believe the coronavirus pandemic will have a more detrimental impact on their advertising spend than the 2008 global financial crisis.
- The same survey found that almost 25% of respondents have paused all advertising for the first and second quarter of 2020, while another 46% have adjusted or plan to adjust spending during the first two quarters of this year.
- 20% of advertising buyers expect to decrease their spending when compared to their original yearly plan and 73% believe their budgeting for 2020 and 2021 will be affected by the COVID-19 crisis.
- However, 67% of those surveyed state that they have not yet made advertising spend changes for the second half of 2020 as a result of COVID-19 while 25% said they do plan to make changes at all.
- In terms of key indicators for managing marketing spend, 65% reported they're monitoring the COVID-19 quarantine status, 62% examining shelter-in-place orders, and 49% are focused on the COVID-19 patient statistics.
- One of the most stunning examples of change in advertising spend has been from global marketplace giant Amazon. The company has reduced its spending via Google Ads to 'almost nothing' in mid-March after a gradual decrease from January. This, however, is not due to budgetary pressures but rather a lack of need. As more people self-isolate they are turning to Amazon to deliver much-needed goods, as a consequence Amazon may feel that its sales figures are demonstrating that advertising is a superfluous cost in the current climate.
TACTICAL CHANNEL SHIFTS
- Whilst many are projecting reduced advertising spend, digital advertising is expected to fare better than other mediums, with protections for Q2 2020 down just 33% compared to the 39% decline for traditional media.
- Traditional out-of-home advertising is expected to take the biggest casualty of advertising spend, with an estimated spend decline of 51% for March and April and a decline of 41% for May and June. The rationale behind steps contributing to this trend is that far fewer people will be outside to see billboards and digital displays while they’re at home in government-advised isolation.
- 38% of media buyers plan to increase audience-targeting while 35% plan to increase device targeting for over-the-top media and connected TVs. This is explained by Interactive Advertising Bureau (IAB) President David Cohen as being due to the expectation that with reduced commuting, increased working from home practices, and self-isolation, media consumption, in general, will grow.
- In the United States, there has been a 29% increase in social media marketing activity since mid-February and 25% in gaming advertising. This likely reflects the distractions people social distancing at home are resorting to in their free time.
- The surge in television advertising is best exemplified by the car industry in the United States. Toyota, General Motors and Hyundai all unveiled new TV adverts in March 2020 which pivoted their marketing message to be coronavirus-centered.