As the novel coronavirus, COVID-19, continues to spread across the United States, and the globe, it is important to note the impact the spread will have on the paid media spend landscape. This landscape continues to shift daily based on changing consumer behaviors, affected supply chains and fluctuating economies.
Many international and national travel, tourism, event and hospitality companies are cutting back or putting a complete pause on all paid advertising efforts. This will likely stay in effect until travel bans are lifted and events and conferences are rescheduled. As a result, it is predicted that advertising will see a slump during this time since travel constitutes the sixth largest online advertising category and is responsible for generating 54% of all digital ad spend on paid search.
The supply chain shortages are also affecting paid advertising spend. Many companies are cutting ad spend by up to 40% within Google Search due to key products going out of stock. “Advertisers are reluctant to spend what could be lost dollars if supply chain shocks prevent them from getting their products to market,” eMarketer said.
Also, the cancellation of major events such as March Madness and both the NBA and NHL seasons, and possibly the Olympics, could be another major factor affecting ad spend. At this time, the Olympics are expected to go on as planned, but this could all change, especially since global events are being cancelled daily.
Paid advertising is decreasing among some industries, however, it is not coming to a complete standstill. COVID-19 is causing consumer behavior and habits to shift and change as more and more people are staying indoors and advertisers need to adapt to this. Because of this, mediums such as streaming services, online digital ads and social media are seeing a spike in advertising spend due to an increase in consumer usage. Many advertisers are shifting funds to these formats from more traditional formats, such as out of home and cinema, since these formats are targeted to public gatherings, which are now being advised against. Even radio is seeing a downshift since many consumers are working from home and are no longer listening in during their daily commutes.
No matter what medium advertisers are using to reach their audiences, it is important and essential that companies engage with their customers, stakeholders and employees by being clear and transparent about the challenges they are facing during this time. Brands have the opportunity to pivot their paid media strategy and messaging to address consumers’ ever-changing needs and concerns all the while being sensitive to the situation at hand.
Below is one successful example, from Warc, of how brands are making this shift,
“People isolating themselves at home are hungry for entertainment and information. Activewear brands have been quick to promote in-home exercise content at a time when usage of the short video app TikTok has seen usage as much as double. Nike began posting workouts to the platform, and its account has amassed 346,000 followers and more than 2 million likes.”
Pivoting strategies so that a brand’s messaging resonates with audiences during this time will help to establish a sense of credibility and trust among consumers, thus establishing a connection and loyalty brands can leverage in the future. Other examples of brands doing this successfully include Mercedes Benz who recently ran a campaign on the WeChat app that allowed consumers to view a 360-degree interior view of its GLB SUV. Also, according to Dynamic Business, Absolut Night, an events brand associated with Absolut Vodka, “launched a one off live-stream event through Chinese video sharing app, known as TikTok, featuring local DJs.” Doing this provided consumers entertainment by providing them with the opportunity to join a rave online.
Grocery, Software/Technology, Entertainment and Retail (fashion, home decor, self-care) are additional industries successfully pivoting their campaigns to adjust to the shifts occurring in consumer behaviors.
Although advertising spends are currently decreasing overall, analysts are still expecting this year to generate an increase in annual global media spend. Companies are expected to shift dollars into the second half of the year (holiday timing, etc.) and political advertising will boost and continue to ramp up across multiple mediums. This will result in paid media inventory being in high demand, thus making it more limited and expensive.
Information is changing hour by hour, and while the future is unknown it is important for brands to put their customers first during this time. We recommend staying up to date on breaking news and industry trends via platforms such as AdWeek, AdAge and eMarketer. We promise to keep you in the know as well as we learn more regarding shifts among the paid media landscape.