22 Jul How Covid-19 is affecting the advertising industry
As most industries feel the constraints of the coronavirus, the advertising industry has seen a considerable drop in advertising spending too. Before the pandemic hit the world, the ad market was forecasted to grow to $865 billion by 2024. However, according to Publicis, ad spends dropped by 15% in China and an average reduction of 9% in Europe with a 71% drop in Germany and a 12% drop in France. A drop in the advertising industry has caused a huge constraint on marketeers and the marketing world. It is expected that the pandemic will have a bigger impact than the 2008 financial crisis.
When consumer behaviour shifts, so do advertising. Advertisers cannot spend on media with no audience. Hence, as the pandemic shifted consumer behaviour, advertising had to too. Thus, out-of-home cinema advertising and print advertising dropped. Whilst in-home media usage increased. These included a rise in TV viewership, use of social media platforms, streaming services and gaming.
As a result, advertisers had to switch their plans and prioritise digital advertising instead. In the first quarter of 2020, Google and Facebook had better statistics than they anticipated. The online environment favours direct response campaigns that encourage quick purchases by consumers. This approach is interesting for companies who wish to drive sales and be cautious about spending.
Small and medium-sized companies tend to opt for channels that drive customer engagement. Whilst, on the other hand, global brands run multiple campaigns who opt for values-based marketing that builds an association with consumers’ identities.
As the pandemic took everyone by surprise, advertisers of all sizes had to change the type of campaigns they run. This means advertisers focus on their spending or changing their message. IAB data shows that 73% of advertisers have modified or developed new assets since the start of the pandemic. 53% of these are increasing messaging that emphasizes the mission of the company.
The pandemic is likely to shape the advertising industry in the long-term in three possible transformations. The change in people’s media consumption habits will force a rethink for advertising and will make businesses find new ways of brand-building. The second transformation is the decrease in the value of Pay-Tv to the benefit of ad-supported streaming video services. Thirdly, offline channels will accelerate their shift to digital as confinement measures are being lifted and out-of-home advertising grows back. This will increase how it measures the return on investment across different media, devices and platforms.
After facing unforeseen circumstances created by the pandemic, direct response marketing has been prioritised by many advertisers as they rely on it for revenue generation. The marketing world as a whole has been impacted by the pandemic and will be impacted in the long-term both positive and negative. The pandemic has shaped the advertising industry in a new light by changing the mindset and focusing on tools to reach their desired audience at home.
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