Last week saw the publication of key advertising performance report, the Advertising Association/WARC (AA/WARC) Expenditure Report. ExchangeWire speaks to figures within the industry to get their thoughts on the report's findings.

Context and sentiment can help brands capture untapped audiences

It's no surprise ad spend has been reined in due to the uncertainty over COVID-19. Cutting back is a natural reaction as brands take time to understand new consumer behaviour and reassess what to have in market. In the mid-to-long-term, and with relevant messaging determined, brands can step back into the picture so they are front of mind with consumers once something closer to normality resumes.

More people at home with eyes on screens and the surge in online readership, particularly in premium publishing, means there are opportunities. While advertisers and brands have been initially reluctant to be placed next to COVID-19 content, those who avoid blanket keyword blocking - and instead use context and sentiment to determine ad placements - stand to capture a share of audience in trusted media environments other buyers may be avoiding.

Andrew Morsy, managing director international, Peer39

Quality original content in thriving verticals is essential for brands

The latest report from AA/WARC  is certainly sobering and will come as no surprise to the industry.  Increasingly, we are seeing brands turn to innovative formats in areas such as video that maximise the impact of their content and creativity.  Brands now more than ever need quality, safe, original creative content in verticals which are thriving during lock down such as health, beauty, FMCG and homeware.

The digital advertising business has much to do before we come out the other side, and to some extent, a global pandemic has put some things in perspective. But if we can learn lessons in these trying times, we will be stronger for it in the end and need to look forward to the expected significant growth towards the end of the year.

Jenny Stanley, MD, Appetite Creative

Adapting to consumer needs is more critical now than ever

The latest ad expenditure report from the Advertising Association and WARC evidences quite plainly the impact COVID-19 is having on the advertising industry, estimating a 16.7% fall in industry wide spend this year. But during these challenging times it’s crucial that brands don’t disappear altogether - according to Kantar’s COVID-19 Barometer, only 8% of consumers globally believe that companies should stop advertising at this time. Consumers are craving a sense of normality and consistency amongst the turmoil and will still find advertising useful and entertaining, when shown in the right context.

Advertising budgets everywhere are contracting in the face of an economic downturn, and what budget remains is likely to be under intense scrutiny. This means it’s all the more important for brands to maximise the effectiveness of their adverts by tailoring content appropriately to the consumer experience and measuring each step of their campaigns, to ensure valuable and engaging content is targeted at the right consumers on the right platforms. This report forecasts that billboard and cinema advertising will suffer most, falling by 19% and 33% respectively, which is regrettable but logical in light of government measures to curb the pandemic. Savvy advertisers will need to concentrate their existing budgets on digital platforms to remain present and relevant to their audiences through these difficult times, if they are to weather the storm and emerge stronger.

Mark Inskip, CEO UK & Ireland, Kantar (Media Division)

To prepare for recovery, brands must remain bullish

The downturn in the AA/WARC ad spend forecast for the rest of 2020 and 2021 is to be expected. COVID-19 has impacted the whole of the advertising industry, as well as the wider UK economy.

Trusted journalism is vital to Coronavirus recovery

Continuing to advertise will give brands a competitive edge

Advertisers that push ahead with adspend in the next few months will be at a competitive advantage post-pandemic. Lower programmatic CPMs, less competition from brands who are not advertising and more consumers online presents an opportunity to gain market share growth now and be in a strong position for the upturn.

This is a good time to learn about and build a panoramic view of the customer, test creative messages and optimise data enrichment strategies. With more people at home and increased eyeballs on screens there is also the scope to advertise in new environments you wouldn't typically consider. News sites, for example, have seen a huge surge in readership but also a reluctance from some brands to advertise due to the Covid context - providing the messaging is right and socially conscious, opportunities are present.

Chris Hogg, managing director EMEA, Lotame

Advertising opportunities can be found in rising demand for news, entertainment, and sports

The ad spend forecasts for 2020 reflect how companies are rethinking marketing strategies in response to changing consumer behaviour. Despite blanket keyword blocking weighing on forecasts as brands seek safe haven from COVID-19 related content, the report highlights a leap in online traffic of between 30% and 60% for premium publisher sites, with consumers locked down and hungry for news, entertainment and sports - which does present advertisers with an opportunity.

We have already seen some industries like food, financial services and DIY suppliers adapt their strategies to focus on mission-based and cause-based marketing, to tap into consumer needs according to their situation. With a touch of creativity and a focus on contextual relevance, bolder brands have an opportunity to corner the market and make the best of a challenging 2020.

Rachel Powney, VP of marketing, Dugout

Marketing and advertising have a critical role in the post-Coronavirus recovery

The fall in ad spend is not unexpected, of course. We now all hope that the way marketing as a leadership function - and advertising as a tangible, public expression of that leadership - will drive a positive bounce back to growth for businesses and the wider economy. There have been clear signs - at both sector level (such as grocery, drinks, e-commerce) and with particular brands (such as Tesco, P&G, Unilever, Guinness, and Colgate, to name just a few) - of businesses that have shown a conviction in the role that marketing and advertising can play during this challenging time for the general public. These will be the marketing businesses that will be stronger as a result of this commitment.

Paul Evans, strategy and marketing consultant to ad tech and media businesses

Playing the long game is the key to success

While the AA’s predicted drop in advertising spend this year is unsurprising, this doesn’t mean it should be accepted as inevitable.

It’s understandable that the instinctive reaction from many companies is to cut back, but while consumers may be stuck indoors, their appetite to hear from brands hasn’t reduced. If anything, they’re looking to advertisers to offer some light relief or normality amidst the uncertainty of the outside world. And they’re spending more time online than ever before, with most bouncing between laptop, phone, tablet and TV, providing brands with a multitude of opportunities to engage with primed audiences.

Playing the long game is key to success. Marketers who cut too deeply risk losing valuable market share at a critical time. We just need to look to China for an idea of what’s to come – since its lockdown eased, the country has seen a surge in spending on luxury goods. Shoppers who have saved over the course of lockdown are adopting what could be likened to a post-war spirit as they splurge on indulgences.

Brands need to prepare for a similar trend in the UK, and those who have maintained their advertising efforts through lockdown will ultimately reap the rewards.

Philippa Snare, SVP EMEA, The Trade Desk

Investing in data science will help brands prepare for life post-COVID

Inevitably the short-term picture is extremely challenging. The forecasts point to a significant negative adjustment in ad spend in Q2 with hospitality and travel spend halted completely. However, some of that difference will be made up by increased government spending and continued strength in online retail, media and telecommunications.

Nevertheless there is a growing consensus that we will start to see a return to some form of normality later this year. Even when restrictions start to ease, the outlook is complex and constantly evolving as we adjust to the ‘new normal’. Businesses would be well advised to divert their budget to data science and planning, in preparation for optimising the expected ramp-up in spend in Q3. In fact, many are already using this period of enforced pause to their advantage, using deep analytics to re-evaluate large swathes of their strategy and to develop more robust ad- and mar-tech foundations.

Agility will be crucial as businesses look to bounce back. The use of data to properly inform new strategies and business plans and to drive a host of decisions across businesses at pace will be critical, not just to short-term survival, but to long-term growth.

Sam Taverner, EVP, Merkle EMEA

Supporting publishers will be vital, as they feel pandemic pinch more keenly than others

Success of SMBs and online-only businesses should not go unnoticed

Opportunity to be inventive can be found amidst decline

While the ad spend forecast sees an expected decline in 2020, it is optimistic to see an expected return to growth the following year. Yes, we must accept that channels such as online display are predicted to fall by 12.7% this year, however there is opportunity. For companies in ad tech and martech, there’s a chance to adapt and be more creative than ever, as they develop clear strategies to target audiences outside of display advertising. Partnerships and working collaboratively with brands is one way for companies to continue to reach audiences and deliver on investment. At Impact, we are seeing brands being more inventive than ever with their partnerships, offering cooking and exercise classes as well as free educational tools to collaborate with their communities and engage audiences during this uncertain time. It’s this kind of response and adoption to the current climate that will contribute to a better outcome and evoke ad spend to return.

Florian Gramshammer, MD EMEA, Impact

In-app and gaming offer paths to advertisers

Channels such as OOH and cinema are expected to see large decreases in ad spend in 2020, with growth projections at -18.7% and -33.6% respectively. Although budgets for OOH might have decreased overall,  we are seeing brands and agencies divert budgets into channels such as in-app and gaming which are performing well and are complementary to their messaging and formats. Before we return to strong growth in 2021, we can continue to show value in order to drive marketing ad spend back up during lockdown.

 Niklas Bakos, CEO, Adverty

Now is the time to invest in tools for effective collaboration

The £4.23b reduction in the revised 2020 forecast for ad spend will be setting off alarm bells at media agencies across the country. Widespread budget shaving measures to brace business for the storm are already being widely reported and while expectations for 2021 growth are positive, many are concerned about what the near future has in store.

To weather this difficult time, efficiency will be key for agencies. Remote-working throws up new challenges for teams, but it also presents a good opportunity to re-evaluate what best practice should be. Time is money and now is the time to invest in, and innovate with, tools and techniques for effective collaboration to give agencies that much-needed boost in 2020, and a springboard into a more productive 2021.

Richard Wright, head of marketing, Scoro

Now is the time for advertisers to take stock and re-evaluate

The report highlights the decline in ad spend, but it also reveals an expected return to growth in 2021. The whole industry therefore has the chance to reset before we get back to seeing the spend levels of 2019. In the short-term it makes sense for brands to take stock and think about how they advertise during these challenging times. Moving forward, it's a chance for brands to evaluate the effectiveness of their advertising and to consider what their most effective channels will look like post lock-down.

Steven Filler, MD, Union