IndustryCOVID-19 and its impact on ad spend

COVID-19 and its impact on ad spend

Ad spend declines up to 50% are expected across all channels. A quick look at ad spend and options available to advertisers in the coming months. 

30-second summary:

  • The COVID-19 crisis is affecting everyone, and every business is dealing or at least trying their best to deal with it.
  • According to Statista, the advertising industry is looking at a $26 billion loss in revenue as of early March 2020 due to the coronavirus outbreak.
  • Ad spend declines up to 50% are expected across all channels, according to advertising professionals. 
  • The impact is big and there’s a lot to unpack, so let’s take a look at ad spend and explore some of the options available to advertisers in the coming months.

Needless to say that the current COVID-19 crisis is in its full swing. Many countries are in a complete lockdown and the impact is felt everywhere, including the global ad spend. The global economy is estimated to suffer $2.7 trillion loss, with the most significant impact happening in the third sector, with public services like hotels and restaurants in complete shutdown. 

Marketing and sales are in significant decline as the customers start saving money due to fear and unemployment. More than six million have claimed for unemployment, and the Federal Reserve estimates that the unemployment rate may hit 32% in the worst-case scenario. 

The crisis is affecting everyone, and every business is dealing or at least trying their best to deal with it. 

The impact is big and there’s a lot to unpack here, so let’s take a look at ad spend and explore some of the options available to advertisers in the coming months. 

Coronavirus ad spend impact 

Advertising thrives on ROI and the customers simply aren’t spending at the moment.

According to Statista, the advertising industry is looking at a $26 billion loss in revenue as of early March 2020 due to the coronavirus outbreak. That’s a 10% decline in revenue and a huge impact on U.S. ad spend. Ad spend declines up to 50% are expected across all channels, according to advertising professionals. 

Traditional out-of-home advertising is impacted the most with a 51% ad spend decline in March/April. Digital media is hanging around 40%, while the best estimates go to social media and paid search, with 33% and 30% decline, respectively.

stat on consumer behavior and ad spend during COVID-19 times

Source: Statista

A forecast from emarketer shows similar results, the global ad spend is down $20 billion from the beginning of the year, and marketers should focus their ad spend on PPC and email

Retail demand is down 86% as shown by Amperity’s crisis tracker, mostly due to stores closing down, but online sales also continue to suffer, as online revenue drops by 70%. 

There are also some positives, with the Health & Beauty sector showing growth during the crisis. 

Most tech buyers also expect to spend more as a result of trying to adapt to the new measures and move to work remotely. B2B software sales are expected to increase. 

Ad spend is down across all channels, however, instead of stopping ad spend, marketers should refocus their efforts to more resilient channels such as social media, paid search, and email. 

While most businesses are suffering heavy losses, some sectors are thriving. 

Media consumption during COVID-19

Most customers are spending their time home, which raises the question, “What are they spending their time on?”

Media consumption has spiked all across the globe, with 36% users reporting that they watch more news, 27% watch more shows, 21% spend longer time social media, 18% engage in gaming, and so on. 

Streaming is thriving, Conviva reports a 26% increase in streaming during the pandemic.

Streaming, gaming, and online food delivery are on the rise. Visual Capitalist shows how quarantine impacts consumer internet activities.

Businesses looking to thrive with advertising in the current crisis should look to focus their efforts on popular media as that is where the customers spend their time. 

Takeaways

Social distancing is in full effect and we are all trying to take care of ourselves. 

As the global ad spend declines, some channels show more promise than others, and that is exactly where the focus should be. Businesses hit by the crisis should look to spend money on resilient channels such as search, social media, and email. 

It might be the perfect time to optimize your website with tools to improve performance and get more insight into what is working and what is not. Marketers should also look into automation solutions to improve the reach even when resources are lacking. 

Businesses are going to struggle for a while, but there are still opportunities to grow, especially on the channels mentioned above. Nobody can predict the full impact just yet, but it’s better to be prepared than to sit and hope for the best. 

What are some of the major impacts on your business and how do you plan to respond? 

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