Over halfway through one of the strangest and most volatile years in recent history, and there are still plenty of challenges ahead for the ad industry. The IPA Bellwether report for Q2 2020 makes this clear, particularly with the notable finding that budgets have shrunk at their fastest rate in over two decades. With recovery expected to begin no sooner than 2021, some within the industry argue that now is the time for all players to explore and develop the solutions for a post-COVID advertising landscape. We spoke to a number of industry figures to get their thoughts on the latest report.
Decision-makers need versatile tools to combat COVID challenges
It is no surprise the global pandemic has hit the advertising industry hard, but while this latest report makes for some difficult reading, marketers should not give up on driving positive results and future success.
At these times of uncertainty, making the right decisions about internal processes and tools is arguably as important as the messaging being displayed to the public. Efficiency and accuracy are absolutely critical to ensure the budget advertisers have available goes towards driving as much value as possible.
As we see advertisers try to adopt the best strategies to maintain business over the next few months – and drive growth when recovery eventually begins – decision makers need to select versatile tools they can trust to address multiple challenges. For example, IP Intelligence data can be used to not only localise content and target effectively – especially important for increasing responsiveness and revenues in these times where we see huge shifts in consumer behaviour – but also address the challenges of fraud and rights management.
Andy Ashley, international marketing director, Digital Element
Championing publishers will be key to the industry's recovery
Publishers are set to lose more than most, as the latest IPA Bellwether figures seem to confirm. All areas of marketing have seen sharp declines in budgets during the second quarter of 2020, which will have come as no surprise for many, but ‘main media’ has been particularly hard hit. This comes at a time when our trusted news brands and quality journalism are producing more than ever, but often without the right amount of ad spend to support it. The IPA anticipates a strong bounce-back in spend next year, but urges advertisers to invest now in order to profit from recovery. As publishers hold the keys to the open web, now more than ever, is the time to support those premium and quality environments that deliver better business outcomes.
Amit Kotecha, marketing director, Permutive
Brands that haven't explored online must grasp the opportunities it offers
Provided that government aid proves successful, I predict that we will see some recovery in 2021. It is unlikely that marketing budgets and consumption habits will change enough for this to happen during 2020.
Marketing is often abandoned when budgets become tight. However, as it has been brick and mortar stores which have been hit the hardest, it’s clear brands aren’t utilising online enough to support their stores – and purse strings are being loosened to make up for this. As a result, we will see more investment in online development as brands are forced to adapt.
As the IPA Bellwether report suggests, brand exposure advertising such as OOH were severely hit, and if you compare this to the 2008 financial crisis, then there are reasons to be pessimistic. In 2008, those who kept on marketing returned to original levels of normality far quicker than those who turned it off completely. Coupled with this, brands which cut marketing faced problems with competitors encroaching on their space, as well as a lack of brand awareness from consumers. Over the next few months, it will be interesting to see the incremental effect offline has on online, and how quickly investment goes back into marketing.
Growth in video, OTT, and gaming will lead recovery
Although media budgets are down across the board, we are seeing clear cases where spend is accelerating in a positive way – most noticeably in the video and OTT space, as well as in gaming. With TV time among adult viewers up 10 minutes per day in 2020, advertisers are taking better consideration of their target audiences, and shifting their ad dollars to digital video as a result. The boost in ad spend for this category should support the industry’s overall recovery and, as third-party cookies disappear, we can expect continued interest from advertisers in what digital video and connected TV can do for them.
Pierce Cook-Anderson, UK country manager, Smart
The fallout from the pandemic only reiterates the value of data-driven marketing
It was natural for advertising to be cut back at the beginning of the pandemic, as marketers needed time to reassess their priorities and to better understand new consumer behaviour. There is light at the end of the tunnel with ad spend recovery expected from 2021. In the meantime, however, as marketers and advertisers continue to exercise caution, it is clear that the adoption of data-driven insights and ensuring every penny works as hard as possible will be critical to short-term and future success.
Marketers may not always have direct control over the size of their marketing budgets, but they can gain a better understanding of their data and scrutinise the value of every pound spent. The adoption of a data-driven approach facilitates the opportunity for increased digital efficiencies and is also key to demonstrating the value of maintaining marketing efforts at a time where all spend is under review. This will prove to be a pivotal year for marketers to gain a competitive advantage ahead of 2021.
Alexander Igelsböck, CEO, Adverity
There's room for cautious optimism, but media must continue to work hard
The Bellwether Q2 report clearly underlines the serious impact that COVID-19 has had on many companies across our industry, highlighting that few are immune from its effects.
The rapid decline of ad budgets in Q2 meant that businesses were forced to realign and enforce drastic cost-saving measures at an unprecedented rate to preserve both cash and employees. With the uncertainty of a second wave of the virus, compounded with the potential economic pressures of Brexit, it is understandable that many marketers remain cautious as we head into H2. But we are already starting to see green shoots of recovery and while significant budgets will not switch on overnight, brands understand that to drive business forward they need to invest in marketing.
Media will need to work harder in the coming months, but it is setting the right directional path on the road to recovery as we prepare to head into a more positive 2021.
Lisa Menaldo, co-founder, The Advisory Collective
The industry has an opportunity to create a better tomorrow
With economic conditions predicted to make a robust recovery in 2021, this is a pivotal time for marketers to gain a competitive advantage and be in a strong position for the upturn. As both consumers and brands continue to adapt to the ‘new normal’, previous advertising strategies will need to be adjusted to reflect the new environment; this is an opportunity for the industry to create a better tomorrow.
Consolidating online and offline consumer activity has always had its challenges, but the obstacles are growing fast with more stringent privacy regulations, third-party cookie blocking, and first-party cookie limitations. To capture the increasingly complex digital life of a consumer, advertisers should learn about and build a panoramic view of their audience to understand their ever-shifting interests and behaviours. Only then can they reinforce consumer connections and come out on top, post-pandemic.
Chris Hogg, managing director EMEA, Lotame
Current events have pushed publishers to become more efficient and creative
It’s concerning but expected to see that most aspects of marketing have contracted over the last quarter. Yet fortunately for the industry there are many silver linings.
Research suggests that while many advertisers pressed pause in the early weeks and months of the pandemic, they are committed to investing in the future and budgets are anticipated to bounce back in 2021. An increase in spend can’t come soon enough – slashed budgets have effectively forced certain brands into liquidation, while publishers have to become more creative and nimble in devising new ways to monetise their content amidst declining CPMs; quite the juxtaposition given content consumption is higher than ever.
But as is often the case, necessity is the mother of invention, and this period of growth has given marketers the chance to re-examine their strategies and budgets. With increased scrutiny on ad spend, budgets are being optimised and allocated to more addressable, accountable and measurable tactics such as people-based search, programmatic, and advanced TV.
What’s more, given the pandemic has hit at a time when third-party tracking cookies are in the process of being eroded, brands and publishers have accelerated the pace with which they are evaluating alternative solutions that are more persistent and offer improved ways to target and engage with consumers via privacy-centric, first-party data strategies.
Q3 2020, is likely to be a tricky period for the industry as a whole, but by viewing this as an opportunity to reimagine and revise strategies, brands and publishers can help ensure their future success.
Vihan Sharma, managing director Europe, LiveRamp
The crisis has given digital time to shine
There’s no doubt it was a tough quarter for advertisers overall, with uncertainty about consumer behaviour brought about by lockdown. But those same circumstances drove us online in huge numbers, seeking new forms of communication and entertainment to replace face-to-face interaction and live events. This digital silver lining is clearly accounted for in the report, with video and online advertising making up the better performing channels.
As ad spend recovers, the trend towards digital looks set to continue because certain changes in consumer behaviour will remain in place for the foreseeable future. For example, live sport has returned, but so far fans have not. So clubs and sporting organisations will have to be more creative to keep their larger digital fanbase engaged, and we are likely to see further growth in live streaming and esports as a result. This will in turn create new opportunities for brands to reach these audiences and maximise their marketing spend.
Rachel Powney, VP of marketing, Dugout
Catering to native commerce or affiliate marketing will give publishers an edge
As the report highlights, advertising budgets are still off the pre-COVID pace, down 9.9% from Q1. The near-term impact to digital publishers remains unclear as advertiser budget constraints cause their spend to shift to only paying for "outcomes" such as clicks, sign-ups, or consumer purchases with less focus on simply serving an ad that may or may not be seen. Publishers that can adapt their product offering to cater to native commerce or affiliate marketing are likely to attract performance budgets.
In addition to grappling with the disruption caused by a global pandemic, publishers need to be working with their exchange partners on solutions that will help them stay relevant and desirable after the deprecation of the third-party cookie – a scenario that may play out sooner than Google's two-year timescale. The time is now to be thinking about near and long-term diversification.
Jeff Meglio, VP global demand, Sovrn
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