Globally, ad spend has decreased in the digital realm by 33% and 39% in traditional media. 400 media buyers and planners surveyed by IAB explained how they decreased spending during the pandemic:
70% adjusted or paused planned ad spend
16% are still thinking about what actions to take
24% paused all advertising spend for Q1 and Q2
46% adjusted their ad spend for Q1 and Q2
73% indicated that the coronavirus will impact the Upfront 2020/2021 spend commitments with a 20% decrease in Upfront spend originally planned
For more data on this visit IAB’s research
Consequently, advertising budgets have been adjusted with a number of methods; (a) rapid decrease in ad spend (b) the hiring of fewer ad agencies (c) the maintenance or increase in ad spend and hiring of agencies. These strategies are implemented to save money for the unforeseen and secure future revenues.
Airbnb has frozen their spend in an effort to save US$800 million in 2020 to offset expected losses during the pandemic. Additionally, its top executives will receive a 50% pay cut and founders will not receive their salary for 6 months. Due to the coronavirus, Loop Capital Markets analyst Rob Sanderson projects that Google will experience a 15% year-over-year decline in travel ad revenue in its first quarter with a subsequent 20% drop in the second quarter.
HIRE FEWER AGENCIES
Marketing Dive reports that Kraft Heinz plans to increase their media spend by 30% to support its flagship brands. CEO Miguel Patricio also explained that the company will be limiting the number of creative agencies it employs. Essentially, the company’s marketing strategy seeks to decrease its budget slightly with “the additional media budget coming from a shift in focus away from smaller brands and fewer product innovations in the pipeline, which will reduce research dollars. The company also expects greater efficiencies by reducing the number of creative agencies it works with from 36 to 19.”
Check out Kraft Heinz’s for more information on approach.
Cheuk Chiang, chief executive for greater North Asia at DAN, suggests that by responsibly maintaining or increasing ad spend during times of crisis, brands will win over the hearts of consumers in the long term.
“Winning a share of voice at this time supports a long-term recovery plan. Some 34% of our respondents said they were planning to either maintain or increase spending in 2020. There is a bank of studies from previous downturns to show that increasing investment sustains a brand’s long-term growth. Our econometric modelling consultancy D2D has shown that there is compelling econometric evidence to support the argument that advertising has a long-term impact on sales. Diverting marketing expenditure into short-term price promotions usually damages the brand values and is also likely to be unprofitable,” he explains.
Using the Sars outbreak as an example, Chris Stephenson, regional head of strategy and planning, PHD APAC, reflects that paying attention to historical behavioural shifts can potentially provide a guide on how to innovate during the pandemic.
“Depending on the brand and the category, there is everything to be gained by committing media investment to your crisis response. Kantar Worldwide data from China during SARS crisis of 2003 demonstrated longer-term gains for in-home essentials, and anecdotal evidence from the same time suggests that it was the pivots into online delivery that formed the basis of the Chinese e-commerce platforms that we see today.”
See more details from Stephenson and Chiang
How are Jamaican brands traversing changes in media buy and ad spend? To find out, view our next post “Jamaica’s Ad Spend during COVID-19 pandemic”.