Media Buyers Don’t Expect Ad Spend To Rebound This Year

At the beginning of the pandemic, nearly half of advertisers pumped the brakes on or pulled a campaign mid-flight. During that same time, about half also reported plans to not reduce ad spending but instead shift budget among media types. These findings emerged from Advertiser Perceptions’ wave one coronavirus survey, fielded from March 17 to March 20.

In early May, media buyers expressed optimism about Q3, with just one in three respondents expecting ad spend to be affected in Q3. 

However, Advertiser Perceptions’ wave-five survey, fielded from May 18 to 21, suggests that ad spend won’t rebound this year. In fact, 43 percent of media buyers expect there to still be a “major impact” on ad spending in Q3, eMarketer reports. The sentiment is in line with responses to Advertisers Perceptions’ wave two and three surveys, fielded in March and April.

By the time Advertiser Perceptions conducted its fifth survey, just 13 percent of US media buyers confirmed ad spending had already begun to ramp up. An additional three percent expected the same to occur by the end of the month.

On the other hand, 79 percent of respondents said they anticipated ad spending to start picking up by the end of Q3, 51 percent of which expected it to happen during Q3.

Advertiser Perceptions also found that most media buyers expected moderate or major impacts to continue through the end of 2020, while one-third expected at least moderate ramifications to continue into 2021.

Now, 43 percent of respondents expect a major impact on ad spend to push into Q3, up from 31 percent in wave four, which was fielded from May 1 to 5.

eMarketer advises the digital ad industry should prepare for a slow return to a new normal. Digital ad investments will plunge in Q2 and year-over-year spending increases won’t return to pre-pandemic figures until at least 2021, the researcher notes.

How The Rapid Growth Of Ecommerce Will Change Brands’ Approach To Media

As the pandemic accelerates the shift to digital, ecommerce becomes both an opportunity and a threat to brands. During his virtual LIONS Live presentation, WARC vice president of content David Tiltman and a panel of marketing executives discuss how the rapid growth of ecommerce will change how brands approach media and why brand and creativity will remain key along the way.

Ecommerce’s first implication for brands, Tiltman notes, is that it forces consumers out of usual purchase habits and into new ones. According to a Kantar study, during lockdowns, 56 percent of households with kids have tried new products, which they’ll continue to buy.

To capitalize on changing consumer behavior, brands must look at the total brand experience they can offer, from rethinking packaging and pricing to enhancing the unboxing experience. “What you lose in the ability to talk to customers and let them touch and feel your products, you have to make up for in your customer experience,” says Cheryl Calverley, chief executive officer of Eve Sleep.

Effective marketing in the age of ecommerce also requires marketers to get closer to the supply chain.

“Supply chain is a top-line growth driver for ecommerce, it’s not a cost-cutting exercise. It drives second moment of truth. We see vulnerabilities for brands impacted by damages like leaking, broken trigger sprays and bruised fruit. That’s all damaging that second moment of truth. Supply chain is the opportunity to make second moment of truth outstanding,” says Patrick Miller, co-founder of Flywheel Digital, whose client roster includes Procter & Gamble.

Ecommerce is also changing the way marketers view performance media to drive sales. One trend that encapsulates this shift is the rise of shoppable formats. For example, Instagram’s recent expansion of virtual storefronts for businesses and Snapchat’s forthcoming shoppable show represent opportunities for marketers to take a consumer directly to sale.

Another trend that has arrived with the rise of ecommerce is livestreaming ecommerce, which has already gained significant traction in China. There, livestream shows combine influencer marketing, video content and ecommerce to create “retailtainment” (retail and entertainment) experiences that drive community and sales.

Elijah Whaley, chief marketing officer of the Chinese influencer consultancy Parklu, points to the success of cosmetics brand Perfect Diary, which launched in 2016 and became a top-selling brand on China’s Tmall in 2018 and again in 2019. Instead of focusing on the top-of-funnel like brand awareness and programmatic advertising, Whaley says Perfect Diary has poured efforts into fostering community. To do so, the brand created a virtual influencer around which it launched a program store and product line. The result: Perfect Diary has over a million customers in what’s called “private traffic,” or online audience, on WeChat.

Lastly, Tiltman advises brands to resist the shift to short-termism, which has produced the creativity crisis. For example, brands have spent more on ecommerce and less on brand advertising, leading to diminished campaign effectiveness.

“Digital channels prove themselves quite well in a silo, but you need to understand how it fits into your whole mix,” says Jerry Daykin, EMEA media director of GlaxoSmithKline.

In addition to looking beyond attribution models, Tiltman suggests reserving budget for brand building.

Brands Stop Facebook Ads In Show Of Support For #StopHateforProfit Campaign

The North Face is halting its Facebook ads as part of a social media boycott led by civil rights groups calling on brands to take a one-month Facebook advertising hiatus in an effort to crack down on hate speech and misinformation on the platform. “Stop Hate for Profit,” organized by the Anti-Defamation League, Color of Change, the National Association for the Advancement of Colored People (NAACP), Common Sense Media, Free Press and Sleeping Giants, follows Facebook’s refusal to remove President Trump’s offensive posts in the aftermath of the murder of George Floyd by police.

Stop Hate for Profit condemned Facebook for actively choosing not to protect and support black users and call out Holocaust denial as hate.

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“We are asking businesses to stand in solidarity with our most deeply held American values of freedom, equality, and justice and not advertise on Facebook’s services in July.”

On Friday, The North Face tweeted, “We’re in. We’re Out,” with a follow-up tweet noting that its commitment to the movement extends to all Facebook-owned properties, namely Instagram.

A few hours later, REI followed suit, saying it, too, would pull all Facebook and Instagram ads for the month of July on the premise that it has put people over profits for 82 years.

Patagonia’s head of marketing, Cory Bayers, also announced via Twitter that the brand will stand with #StopHateforProfit:

“From secure elections to a global pandemic to racial justice, the stakes are too high to sit back and let the company continue to be complicit in spreading disinformation and fomenting fear and hatred.”

Since then, Talkspace and Fons have also said they’re pulling spend from Facebook advertising.  

Facebook’s content moderation policies have drawn backlash for propagating fake news, racism and hate speech before; the Black Lives Matter protests have only magnified the issue. After Floyd’s death, Trump took to Facebook, referring to protesters as “THUGS” and warning, “when the looting starts, the shooting starts.”

In response, CEO Mark Zuckerberg said the platform wouldn’t remove the President’s post on the basis that Facebook “should enable as much expression as possible unless it will cause imminent risk of specific harm or dangers spelled out in clear policies.”

As the #StopHateforProfit organizers point out, Facebook generates nearly all of its revenue through advertising. Despite marketers pausing spending in response to COVID, Facebook made $17.4 billion in Q1 from advertising alone.

US Local Businesses Pivot Digital, Remain Optimistic About Post-Pandemic

This week, Magna announced the global ad market would shrink by seven percent, or $42 billion. Despite this, a new study from Viamedia shows marketers are quickly adapting: in response to the pandemic, 83 percent of local US businesses have overhauled their marketing strategies.

The survey, “How Can We Help Through the Pandemic,” found that, despite the economic downturn, there remains a strong need for advertising—45 percent of business owners from various industries say they’re seeking creative incentives for advertising. Forty percent of respondents also reported an annual marketing budget of at least $75,000, 39 percent of which they allotted to advertising.

In an attempt to pivot, 46 percent of respondents say they’re offering incentives and promotions to drive sales and continue operating during the downturn while 10 percent have shifted to digital during store closures and nine percent plan to expand.

Still, 28 percent are looking for guidance on how to change their marketing strategy to weather the pandemic.

Many respondents expressed optimism over their post-pandemic futures, with 36 percent saying they felt their business would be the same as it was pre-pandemic.

Viamedia’s findings are based on a survey among business owners (59 percent) and advertising agencies on behalf of businesses (29 percent), conducted between May 15 and May 27.

The CMO Survey’s COVID edition survey echoed similar sentiments, namely marketers are doing more with fewer employees. For example, despite nine percent of marketing jobs being lost due to the pandemic, 30.3 percent of marketers have experienced no change in their overall marketing budgets and 62.3 percent report that the marketing function has grown more important amid the pandemic. In fact, 41.3 percent have reported gains, whereas 28.4 percent have reported losses.

Report: Global Ad Market To Decline 7 Percent This Year With Expected Recovery In 2021

This year, the global ad market will shrink by nearly seven percent, from $582 billion to $540 billion, according to Magna’s “Life After COVID” forecast. A rebound that is expected in the second half will expand into 2021 when ad spend is predicted to grow by 6.1 percent to $573 billion—still $9 billion less than its pre-COVID level.

Global digital ad sales, including search, video and social banners, will remain stagnant at a one percent increase to $302 billion. Search will see a one percent decline and banner ads an 11 percent decline. Whereas social media and digital ad formats will increase by eight percent.

Linear will fare worse as consumers increasingly shift to digital channels during lockdowns; revenues from global ad sales are expected to drop 16 percent in 2020. Linear television ad revenues will decline 12 percent; print ad sales 32 percent; and out-of-home (OOH) 22 percent.

Magna’s findings show the US market will contract by just four percent, due in part to $5 billion in political ad sales and a three percent growth in digital media offsetting a sharp decline in linear ad sales (a loss of 17 percent).

Also in the US, ad spend on digital formats will stabilize in the summer and recover in the second half, with a two percent increase to $130 billion.

Despite the economic downturn, US ad sales saw a 3.5 percent increase in Q1, fueled by a 19 percent increase in digital video, 17 percent increase in social media and 12 percent increase in search. However, ad sales are expected to see a 17 percent decline in Q2. US ad sales will rebound in 2021 with a four percent gain.

In Q1, the US economy shrank by five percent, and is expected to see a 32 percent decline in Q2 as retail sales, car sales and clothing sales plummeted in April: 16 percent, 50 percent and 90 percent, respectively. Given many parts of the country have reopened, Magna expects ad spend will begin to stabilize in Q3 and recover in Q4.

Report: Advertisers Will Press Restart In Q3 To Make Up For Lost Time

As the pandemic pushed people to stay inside, advertisers were forced to pause product launches and reorient messaging. Now, as theaters, gyms, restaurants and beaches start to reopen in many parts of the country, advertisers are ready to start anew; 90 percent of advertisers that planned to launch products or services in 2020 say they will introduce them in the second half. That’s according to the fifth wave of Advertiser Perceptions’ report on the pandemic’s effect on ad spending.

As they try to make up for lost time, advertisers are poised to treat Q3 as the start to a lengthy recovery. The data show that 51 percent of advertisers plan to resume or ramp up ad spending in Q3 while 13 percent have already resumed activity. On the other hand, 28 percent plan to accelerate spending before the end of June. 

Advertisers also signal a readiness to move ahead with previously planned product launches in Q3 and Q4. While 48 percent of respondents postponed new product and service launches until the second half of 2020, 41 percent will proceed with new product launches as planned. Just 11 percent of advertisers canceled new product/service launches for 2020.

Though the findings reveal advertisers are ready to embrace Q3, many are unsure how to shift away from COVID-19 messaging. For example, while 58 percent say it’s time to replace COVID-19 messaging with product-specific ads, 43 percent are having difficulty producing new creative; whereas half of them aren’t sure what their new message should be.

Rewriting the post-COVID-19 playbook also presents a challenge. Just 29 percent have a strategy in place for the new normal, compared with 52 percent which say they’re still working on one.

Regional differences in reopening the economy are also affecting how advertisers move forward as 68 percent of respondents say that such differences are making it hard to plan national campaigns. 

To ensure regional relevance, brands should look to media with brand reach and targeted, digital platforms such as television and social media. On that note, 64 percent of respondents expect media and ad tech partners to be flexible when it comes to pausing or shifting spending as needed.  

As live events remain canceled for the most part, 75 percent of advertisers are willing to accept alternative content and media in the place of canceled live programming.

Over the past three months, 40 percent of advertisers have relaxed their own media return on investment (ROI) goals and over a third have lowered their media return on ad spend (ROAS) goals. Still, many say they’re raising the bar to make up for the downtime.

Advertiser Perceptions surveyed 151 advertisers comprising 34 percent marketers and 66 percent agencies, from May 18-21.

Brands Will Cut $50 Billion In Global Ad Spend This Year

As a result of the pandemic, brands will cut $50 billion in ad spend this year, an 8.1 percent decrease, according to WARC’s latest global ad trends report exploring the impact of COVID-19. The estimate represents a $96.4 billion downgrade compared to WARC’s previous global forecast of 7.1 percent growth, made before the pandemic.

Ad spend is set to plummet across all of the 19 product sectors WARC examined, with the steepest decline recorded in the travel and tourism sector, down 31.2 percent, or a $7.2 billion reduction in spend compared to 2019.

Leisure and entertainment brands will also make severe cuts, with ad spend down 28.7 percent, or $6.6 billion; followed by financial services, down 18.2 percent, or $8.7 billion; retail, down 15.2 percent, or $10.2 billion; and automotive, down 11.4 percent, or $7.4 billion.

“We note three distinct phases to the current downturn: firstly, an immediate demand-side induced paralysis for sectors such as travel, leisure and retail, combined with supply-side constraints for CPG brands. Second, the recessionary tailwind will exert extreme pressure on the financial services sector as well as the consumer, whose disposable income is now heavily diminished, says James McDonald, head of data content, WARC, and author of the research.

The pandemic will hit traditional media the hardest, with ad investment set to fall $51.4 billion and additional declines across cinema (-31.6 percent), out of home (-21.7 percent), magazines (-21.5 percent), newspapers (-19.5 percent), radio (-16.2 percent) and television (-13.8 percent).

Online media will fare better than traditional media but is not immune from the downturn. At a global level, internet advertising will see modest growth this year, a 0.6 percent increase.

The strongest performer in 2020, social media will increase by 9.8 percent to $96 billion. Followed by online video, which will increase by five percent and online search, which will increase by 0.9 percent. Still, all represent far lower rates than WARC previously projected.

Alphabet, which accounts for nearly one in four dollars spent on advertising worldwide, will see its ad revenue rise by just 1.6 percent to $137.1 billion in 2020. This represents a downgrade of $12.9 billion from WARC’s pre-COVID forecast.

At $77.6 billion, ad spend across Facebook, Messenger, WhatsApp and Instagram is expected to rise by 11.5 percent from 2019, marking a downgrade of $5.3 billion from WARC’s pre-COVID estimate. This means Facebook holds a 13.8 percent share of global ad investment. Together, Alphabet and Facebook account for one in three dollars spent on advertising globally.

The pullback in Latin America will be acute, with ad spend set to decrease by 20.7 percent. Whereas in Africa, ad spend will fall 19.5 percent; in the Middle East, 15.1 percent; in Europe, 12.2 percent; in Asia-Pacific, 7.7 percent; and in North America, 3.7 percent.

Brands will have to ride COVID-19 out until 2021, when WARC predicts there will be a recovery, at a 4.9 percent increase. McDonald notes that during the recovery phase, “there will be an added emphasis on healthcare and wellbeing credentials among brands not normally associated with the field.”

On the flip side, this year’s downturn will be softer than in 2009, when ad investment dropped by 12.7 percent, or $60.5 billion.

WARC’s new projections are based on data from 96 markets worldwide.

Most Ad Buyers Have Now Paused Or Adjusted Ad Spend Due To COVID-19

Eighty-two percent of ad buyers have now paused or adjusted ad spend, according to the next phase of the Interactive Advertising Bureau’s (IAB) COVID-19 survey, which compares changes to ad spend and buyer perspective for the period of March to June. 

Those respondents who were undecided about pausing ad spend in IAB’s March survey have chosen to pause spend by mid-April. A breakdown shows that in March, 16 percent were undecided about pausing activity whereas in April, just three percent were undecided. The amount of respondents who said they paused advertising increased from 24 percent in March to 37 percent in April.

Other insights reveal 73 percent of buyers are shifting messaging and modifying or creating new creative assets: 54 percent are modifying existing creative assets and 19 percent are planning to modify or create new assets. Twenty-seven percent of buyers say they’re leveraging the same assets used pre-coronavirus. Among buyers that are shifting messaging, about 60 percent say new creative in some ways reflects the crisis.

Additionally, brands are increasingly adopting a “we’re all in this together” tone of solidarity for ads, with mission- and cause-related messaging growing from 41 percent in March to 53 percent in April. Performance messaging has also seen growth, going from 28 percent in March to 34 percent in April. 

Creative and messaging challenges have impacted news buyers most as nearly half have canceled or paused ads due to irrelevant or inappropriate creative. Some news buyers (24 percent) are reforecasting an increase in display spend, with a similar amount (29 percent) looking at new key performance indicators (KPIs) such as consumer engagement and sentiment. 

IAB found that a majority of buyers (45 percent) had allocated budget to sports in their original 2020 plans. Among those, sports represented 25 percent of their overall 2020 budget. Despite this, 43 percent of originally planned sports budgets will remain unused. Those who are allocating sports ad spend also indicate a shift to Q3 and Q4 of 2020.

Month over month trends reveal traditional media channels continue to decline, with linear television remaining relatively flat. Digital ad spend is showing growth as digital product agility has benefitted search, social and audio.

This marks IAB’s second buy-side survey, fielded April 15-21 among 294 participants spanning media planners, media buyers and brands, both incumbent and direct-to-consumer. The first phase of IAB’s buy-side survey was fielded March 18-24.

Food Delivery Ad Spend Reaches $269 Million During Coronavirus

A Kantar study of food delivery advertising during February 2-April 11 shows ad spend in the category at $269 million, down just over 5 percent compared to the same time frame in 2019. Despite the modest decline, a handful of food delivery brands actually upped their ad spend during coronavirus.

Kantar’s data show that seven of the ten highest spending food delivery brands increased their year-over-year ad spend. The biggest spender in the category, Domino’s increased its ad spend by 9.7 percent, to $80.1 million, from February 2 to April 11. 

What’s more, five of the top ten biggest spenders in the category saw double digit increases in their year-over-year ad spend during the pandemic: Papa John’s saw a 48.3 percent increase, GrubHub saw a 31.8 percent increase, DoorDash saw a 60.2 percent increase, Shipt saw a 68.9 percent increase and Papa Murphy’s saw a 57.1 percent increase.

Though it’s the lowest spender in the category on the list, Freshly saw a whopping triple digit increase in ad spend—774 percent. 

Brands that saw a decrease in year-over-year ad spend in the period spanning February 2-April 11 include Little Caesars (-7.5 percent), Pizza Hut (-36.2 percent) and Marco’s Pizza (-11.5 percent).

The pizza chains have created television spots with the pandemic in mind and to highlight their new no-contact pizza preparation and delivery policies. For example, a Papa John’s spot stressed that humans don’t touch its pizzas while a Little Caesars ad displayed how customers can pay for and pick up their pizza via an automated machine.

In addition to safety, another major theme for pizza chains has been solidarity. In employee recruitment ads, Domino’s said it’s looking for extra hands during “these tough times,” while Papa Murphy’s re-purposed an existing spot with the messaging, “We’re in this together.”

To maintain activity, food delivery services like GrubHub and DoorDash are running television ads that urge Americans to support the restaurants they love and have always been there for them.

TV Ad Spend In First Half Of 2020 Expected To Be $10 to $12 Billion Less Than Expected

Emarketer’s updated television ad spend report reveals that television ad spend in the US will decrease by between 22.3 percent and 29.3 percent in the first half of 2020, $10 to $12 billion less than expected in its previous forecast, which predicted a two percent increase in television ad spend for all of 2020—an estimate that was reached before the coronavirus outbreak.

While television ad spend was down last year and eMarketer expected the trend to continue in 2021, the 2020 Summer Olympics and presidential election were expected to offset the downward trend. NBCUniversal estimated ad commitments for the Olympics amounted to nearly $1.25 billion. 

Political ad budgets will also be hampered in Q2, in part to avoid insensitivity in light of the pandemic. However, Kantar believes fewer political ads now doesn’t mean less ads later, as it noted in a blog post: “But with travel, rallies, and in-person campaigning severely curtailed, and campaigns striving to maximize communication channels that they can control, paid advertising in general, and television advertising in particular, will likely be the best vehicle for campaigns to deliver the messages they want delivered.”

The cancellation of the Olympics coupled with postponed sports programming such as the National Hockey League (NHL), National Basketball Association (NBA) and NCAA March Madness games will contribute to billions lost in ad revenues for television networks.

A March 2020 study from Kantar found that the aforementioned sports content collectively accounted for nearly $2 billion in television ad revenues in 2019. Similarly, MoffettNathanson Research estimated in March that due to the NBA season cancellation, 2020’s losses to ESPN, TNT and ABC would equate to about $700 million.

Emarketer believes television advertisers will adopt a wait-and-see approach as the economy continues to stall.