Short-Term Shifts in Marketing Strategy Due to the Coronavirus Pandemic
With the coronavirus pandemic taking a toll on the global economy and amidst changing consumer habits and supply chain disruptions, a decline in global ad spending is expected. The advertising industry is especially sensitive to economic growth and the primary concern now is to strike a balance between the need to engage with customers and tightened advertising budgets.
A Major Shock to Traditional Marketing
Many businesses are cutting down on their TV ad spend in anticipation of a decline in viewership due to the cancellation of various major sports events and repeat content on TV due to halt in shooting for all entertainment purposes. ITV, considered as a benchmark for the British TV ad market, has estimated a 10% decrease in their revenue due to the pandemic. In India, TV advertising is estimated to decline by approximately 10% to 20%, despite the growth in news consumption.
As major sports events are cancelled or postponed, marketers are drawing up new plans for those budgets, with many holding back their investments for a later date. According to an article by WARC, the Olympics increases TV spend by close to a billion dollars in the U.S. alone. The postponement of the 2020 Tokyo Olympics will not only negatively impact TV spend but will also affect online publishers. With restrictions on social gathering and lockdown scenarios in most countries, Out-Of-Home (OOH) ad spend is also expected to be negatively impacted.
An Increase in Digital Marketing and Social Media Ad Spend
A huge increase in digital ad spend is expected in the coming months as consumers spend more time online due to travel restrictions and social isolation. Dentsu Aegis surveyed 155 clients of whom about 14% said they plan to move their budgets towards online media. As people spend more time online during lockdowns, there is an increase in the use of social media. Spend across social platforms is expected to increase with consumer brands leveraging social media to engage with their audience. Social media spend is expected to increase by approximately 22%.
In addition to sponsorship investments in social media, e-sports is another rising trend among marketers. AB InBev is considering reinvesting the marketing budget with non-profit partners during the Coronavirus crisis. Ad spend on mobile gaming and streaming services is also likely to increase with people spending more time at home.
What's Next for Marketers?
Shifting focus from brand awareness and sales campaigns to investing towards community-building activities can help marketers connect well with their consumers. Marketers are moving their budget spend from key opinion leaders towards key opinion consumers (KOCs) and retention marketing, as KOCs appear to resonate more with the audience and require less brand spend. Procurement may push aggressively for property now as they have been priced lower amidst the coronavirus scare, though there is still a risk of losses if the virus threat continues beyond a few months.
Though most of the strategy shifts are for the short-term, it is important for marketers to reallocate their budgets in tune with price fluctuations in various media channels caused by demand–supply changes in media and set new ROIs based on their cost levels. It is too early to understand the debilitating impact of the pandemic on the global economy in the long-term, however it is important for marketers to draw alternate plans for their strategies and monitor shifts in media consumption.