The other side // So long…well, not quite
The Ad Association and Warc released their latest adspend report on Thursday with its forecasts updated to account for the impact of the Covid-19 crisis – and the numbers, as you might imagine, are grim.
You can find a detailed breakdown in our story here, but essentially every media format can expect to see ad investment plummet over 2020, reaching a total loss of more than £4bn for the UK market as a whole.
At a drop of -16.7% compared to this year, that’s worse than the 2008/2009 recession.
Maddeningly, despite the significant boost lockdown has driven in TV viewing, the medium is to see its ad revenues down as much as -19.8% – and it’s a similar story for newsbrands, magazines and, of course, out-of-home.
According to the report, the “deterioration of advertising trade” is to be focused mainly in the second and third quarters of this year, with aftershocks to last into Q4 and early 2021. The out-of-home sector is forecast to contract by more than 50% in Q2 alone as lockdown keeps people indoors, while cinema – which has had to temporarily close its theatres – is to fall by 100%.
And for once, pure-play digital – from search to online display – isn’t safe either. The online ad market is also set to see some major reductions in spend, the results of which are already being seen. Both Facebook and Twitter’s financial updates this week have reported shrinking ad revenues despite user growth, with Facebook reporting its slowest quarterly growth since going public.
Fortunately, some recovery is expected in 2021, though adspend still won’t come close to 2019’s total.
All the available evidence suggests that cutting adspend during a recession is harmful to brands – unless it’s a matter of absolute business survival – and will make post-virus recovery much more difficult and costly. According to Analytic Partners, brands which cut adspend in 2020 by £10m stand to lose £25m in revenue the same year.
However, it’s also fair to say that the current situation is more complex for businesses than any previous downturn – so brands need to be carefully considering when and how is appropriate to invest in advertising and what messages they should be putting out. Agency advice cannot be any more crucial than now, surely.
Meanwhile, we could see some changes made when the downturn ends which will help adland recalibrate for the better.
Brands will likely – finally? – have the incentive to hone in on the long-term effectiveness of their media investment – particularly those, like travel and entertainment brands, for whom short-term marketing is no longer appropriate.
This can only be a good thing for those brand building media channels which have lost share over the years because of what many believe is a disproportionate investment in online activation channels.
And as Nick Manning wrote earlier this month about the programmatic market, this unique period offers the industry the time and space to reevaluate and correct its imperfections.
To that end, we’re already seeing meaningful conversations taking place in adland as a result of Covid-19, such as the (now age-old) dilemma of overzealous keyword blocking – for which newsbrand publisher Reach has now partnered with tech companies to engineer a solution. (More on that subject to come during the coming fortnight’s Future of Media Trading digital event.)
So despite the alarming nature of these figures, there are positives to be found – and if this period allows it for those businesses able to make it through to the other side, there is also an opportunity to return to normality with improvements over the old.
So long…well, not quite
Today was supposed to be our editor’s final day running Mediatel News – well, things have been put on hold.
Earlier this year, David Pidgeon had announced his plans to step down after 8 years in the role to pursue his love of rock climbing on an extended European trip.
Well, given the current situation, he’ll be staying on a bit longer to help keep things running here.
In the meantime, it’s fair to say, he’s climbing the walls… but happy to serve.
Michaela Jefferson is Mediatel News’ reporter covering all things media and advertising.