Advertising and marketing spend significantly impacted by COVID-19
- 31 March, 2020 11:54
Approximately 400 buy-side decision-makers shared their changes to ad spend and messaging strategies in a new report by IAB US. According to 74 per cent of media buyers, planners and brands, the current crisis will have a bigger impact on advertising than the 2008 financial crisis. In fact, 70 per cent of buyers have already adjusted or paused their planned ad spend, while 16 per cent are still determining what actions to take.
Nearly a quarter (24 per cent) of respondents have paused all advertising spend for the remainder of Q1 and Q2 while 46 per cent indicated they have adjusted their ad spend for the same time period. Seventy three per cent of buyers are indicating the coronavirus will have an impact on the Upfront 2020/2021 spend commitments and expect a 20 per cent decrease in Upfront spend vs their original plan.
Currently, digital ad spend is down 33 per cent and traditional media is down 39 per cent.
Messaging has also changed, with the majority (63 per cent) of advertisers increasing mission-based marketing (up 42 per cent), and cause-related marketing (up 41 per cent).
IAB Australia CEO, Gai Le Roy, said the study from IAB US is extremely useful for the Australian market to help us understand the likely changes to marketing budgets, approaches and messaging.
“The headline is that 70 per cent of marketers have already paused or decreased their ad investment for this quarter and although some marketers are indicating that they will start investing again in the second half of the year, 66 per cent admit they don’t yet know when they will start investing," she commented.
“Many marketers are moving their current activity and messaging from performance related activity to either brand or mission/cause related marketing, while approximately one third of marketers are looking at shifting more of their remaining spend into CTV due to the increased consumption on digital big screen ad supported content.”
IAB is currently seeking respondents for its own study, visit the IAB website to participate.
Conversely, eMarketer has predicted total media ad spending worldwide in 2020 will reach US$691.7 billion, up by 7 per cent from 2019, a decrease from the previous forecast by only 0.4 per cent. This is mainly due to China, with the downgrading of China’s 2020 ad spending growth rate to 8.4 per cent from 10.5 per cent due to a reduction in spend across all media formats, including digital.
It also expects digital ad spending in China to grow by 13 per cent in 2020 vs the previous estimate of 15.2 per cent.
eMarketer said there is evidence to suggest a slowdown in Amazon ad spending, particularly among smaller third-party sellers that already have tighter cash flow. Out-of-home (OOH) ad spending could also feel a negative impact worldwide if the social distancing and isolation measures that have emerged in some cities expand to larger territories.
A survey of more than 2200 marketers conducted by Econsultancy and Marketing Week revealed the majority believe the outbreak has already heavily impacted marketing activities for the first half of 2020.
The survey showed 55 per cent of those in the UK and 57 per cent of those in North America say product or service launches are delayed or under review, while 55 per cent of UK and 56 per cent of North American marketers say that marketing campaigns are delayed or under review.
The majority of marketers (62 per cent in the UK and 63 per cent in the US) say that marketing budget commitments are also delayed or under review. Seventy-eight per cent of UK and 69 per cent of North American marketers project that their business customers will have delays in spending decisions, while 55 per cent of UK and 64 per cent of North American marketers expect delays in product or service launches from business clients.
Despite the fact that the majority of marketers (77 per cent in the UK and 64 per cent in North America) predict consumer delays in major spending decisions, most also predict a rise in other areas. Ninety-one per cent of UK and 87 per cent of North American marketers predict an increase in the use of online services.
Social networks could also benefit, as 77 per cent of UK and 70 per cent of North American marketers predict an increase in social media activity.
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