how Covid-19 affects the advertising industry (based on the article).

Introduction :

The coronavirus crisis has put a brutal halt to advertising investments, whatever the medium. The drop in advertising revenue ranges from 50% (television, radio) to 99% (billboard) during the weeks of confinement. As we showed in our other analysis, the impact of the COVID on the media, the annual decline in advertising revenues is estimated at:

10% for television and radio
20% for Out of Home display

The entire advertising ecosystem has been put under pressure and is feverishly awaiting deconfinement. With the latter comes the hope of a revival of the advertising market.

The current impact of COVID on the advertising industry

The advertising sector was one of the first to be affected by the coronavirus crisis, as advertising investments were cut back. In this section, we will successively discuss the financial impacts and then look at the visible consequences in terms of advertising messages.

There are 3 scenarios mentioned below :

Stopping advertising investments for the wrong reasons: this involves cost reductions dictated by procurement or by senior management.
The cessation of advertising investments for good reasons: these are advertisements that were in media that no longer exist (inflight magazine) or advertising campaigns that are too out of date.
No halt in investments: 1/3 of the brands have not stopped advertising. Either they continued because they were still operational (food retailers), or they were no longer functional but decided to adapt their message to the context.

Campaigns postponed; targets not reached but clients seeking advice

According to the agencies we interviewed, the vast majority of advertisers have moved their campaigns around while waiting for a more detailed picture. It is also apparent that in such a context, brands are incredibly cautious when it comes to communication (see below). The relocation of these campaigns has the consequence that commitments made to the media at the beginning of the year cannot be respected. Intensive negotiations are currently underway to review the necessary contracts. The advertising agencies are very much in demand by clients, but not for “billable” projects. This is a matter of monitoring and advice on how to manage the situation.

what would be the future of advertising after the Covid-19 pandemic :

Wherever consumer behavior has shifted, advertising spend has adjusted in response. It makes little sense for advertisers to spend on media that have no audience. As confinement measures were introduced around the world, out-of-home and cinema advertising shrank almost instantly; print advertising also fell.

Meanwhile, in-home media usage went up. TV viewership has climbed, but digital consumption has increased even more: use of social platforms and streaming services have risen almost everywhere; gaming has also grown dramatically.

Advertisers have adapted by following consumers, which means prioritizing digital advertising. The online environment is favorable for “direct response” campaigns – those encouraging quick purchases by consumers – an attractive proposition for brands spending cautiously and looking to drive sales. In the first quarter, facebook and google saw better than anticipated first quarter revenues.

Brands advertise to raise awareness, increase sales and build loyalty, using media appropriate to each objective. In general, small- and medium-sized enterprises are more dependent on channels that drive customer engagement. Global brands, on the other hand, run multiple campaigns, including values-based marketing that builds association with consumers’ identities.

The pandemic has caused advertisers of all sizes to rethink the type of campaigns they should run. For many, this means focusing spending: in a survey, lifestye advertiser reported acquiring customers is now their priority , and other consumer categories are also adapting their marketing strategies. Media – such as TV – that work well for identity-based marketing may not be the priority in the near-term.

For others, however, focus means changing the message. IAB data shows that 73% of advertisers have modified or developed new assets since the start of the pandemic. Of these, over half (53%) are increasing messaging that emphasizes the mission of the company.

Unilever, one of the world’s largest advertising buyers, is adapting on both fronts. According to Conny Braams, Chief Digital and Marketing Officer, “Unilever is guided by three beliefs: brands with purpose grow, companies with purpose last and people with purpose thrive. The pandemic will not waiver our commitment to purpose-led business, nor will it change how we position our brands. More broadly, we are witnessing a change in consumer behavior. We know that life in the time of coronavirus is increasingly a life lived online which has led to an acceleration of digital adoption and e-commerce. Time spent with certain media channels has increased during lockdown, so we are adapting to these changes, shifting to a greater focus on in-home channels versus out-of-home.”

The power of brands to choose where to advertise means that media reliant on advertising – or overexposed to certain categories – may suffer. Analysis shows that all media are affected, though for obvious reasons, travel and retail media are experiencing the worst.

This is how COVID-19 is affecting the advertising industry

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