- Almost three quarters (74%) of advertising executives said the coronavirus pandemic is having a greater effect on advertising than the 2008 financial crisis that ushered in the last recession, the Interactive Advertising Bureau (IAB) found in a survey. Seventy percent of media buyers have adjusted or paused their ad spend, while 16% are deciding what to do next, the survey found.
- About three quarters (73%) of media buyers said the coronavirus will affect their 2020-21 upfront spend commitments, expecting a 20% drop from their original plans. About a quarter (24%) of respondents paused all advertising spend for the remainder of Q1 and for Q2, while 46% said they had adjusted ad spend for the periods. Most immediately, 39% of media buyers have reduced spending on traditional media and 33% have pulled back on digital advertising, the survey found.
- Almost two thirds (63%) of advertisers have changed their messaging because of the pandemic, leading to a 42% jump in mission-based marketing and 41% increase in cause-related marketing. More than a third (35%) of advertisers are adjusting their tactics, driving a 38% gain in audience targeting and a 35% increase in over-the-top (OTT) and connected TV (CTV) targeting, per the IAB. The group surveyed 390 buy-side decision makers.
The IAB’s findings are another sign of how the coronavirus pandemic has profoundly disrupted the U.S. economy, leading to a massive shift in advertising and marketing strategies. While travel-related industries were among the first ones to bear the brunt of the pandemic as health officials urged people to avoid non-essential travel, subsequent actions to limit physical contact among people has shut down broad segments of the economy. The consequences of those policies have led advertising and marketing executives to have a more pessimistic view about the pandemic than the 2008 financial crisis, which triggered the worst economic decline since the Great Depression.
Despite the current dire mood, there are signs that advertising and marketing activity can rebound during the second half of the year. About two-thirds (67%) of media buyers reported that their second half plans were still to be determined, while 8% hadn’t changed their plans. The remaining 25% who have changed their plans for the second half have changed their Q3 budgets to 75% of their original plan and their Q4 budgets to 88% of the prior amount. The findings suggest that it’s too early to tell whether the pandemic’s effect will be as significant as in Q1 and Q2.
The finding that more marketers are pulling on traditional media compared to digital media underscores how some brands are focusing on still reaching consumers by engaging with them online as many practice social distancing and stay home during the health crisis.
Advertising executives said they’re looking at key indicators of the direction of the pandemic. Almost two-thirds (65%) of respondents said they’re looking for information about quarantine status, while 62% said shelter-in-place in initiatives are most important to watch. Almost half (49%) of survey respondents are watching the number of coronavirus cases, while 47% are keeping an eye on business openings and closings. Sports and travel are each being watched by 38% of executives, an indicator of how much the suspension of those activities has disrupted media planning during the pandemic.
The IAB survey comes as the advertising industry looks for a way to weather the pandemic. According to Gartner, CMOs and marketing leaders must be “aggressively proactive” in preparing their organizations for the disruption of the coronavirus pandemic. Gartner suggests developing a plan that lessens risks; monitoring, reporting and reacting to shifts in customer behavior; preparing marketing teams for interruptions and challenges; and reviewing their plans and measuring their effects as new products or campaign launches are disrupted.