News about coronavirus and its impact on lives and the global economy are now ubiquitous. Forecasts for industrial output and commercial productivity, including in advertising, are getting gloomier by the day.
The travel industry has cut spend almost entirely for the coming months. Automotive, an industry which has largely put production lines on pause, is cutting ad budgets drastically for the year ahead, in part to protect profitability. Many other sectors are delaying campaigns which had been due to break between now and the end of April. And events which were forecasted to bring in both high ratings and ad spend this year – from the Euro 2020 football championships to NBA and MLB seasons Stateside – have been postponed.
In these unparalleled times, it is important that advertisers don’t get carried off by panic mode. They need to keep a calm head in order to make the right decisions, and it takes courage, wisdom, and leadership to spot and seize genuine opportunities. One of the first such opportunities to arise is a clear growth in TV reach. With most office workers now working from home, and many children off school until further notice, TV consumption has surged in many markets.
The trend towards increased TV reach started in China, the first country to impose isolation measures that grounded people in their homes. In the six week period after these measures went into effect, TV reach in China increased by 60% as compared to the first few weeks of the year. This compares to a 5-10% increase in most other years. South Korea experienced the second major outbreak of coronavirus after China, and according to Nielsen the country saw a 17% growth in TV viewing. In Italy – the country hardest hit by viral morbidity and mortality at time of writing – TV audiences spiked by 29% in the second week of March alone; Auditel reports a particularly strong increase in daytime viewing. Interestingly, the effect was even bigger among younger viewer, with a 44% surge for adults 15-34.
Elsewhere in Europe, France´s Mediatel reported that Monday March 16 experienced a 28% increase in TV viewing compared with the previous three Mondays. Meanwhile, in Spain TV ad break reach increased by 17% year-on-year during the period of March 9 to 18, according to Kantar Media. Germany saw reach increases of 15-20%. What’s more, in the U.S. – the world’s biggest advertising market, and one where subscriber video-on-demand is booming – Nielsen reported a 6% rise in linear broadcast TV viewing over the past weekend. When people can’t go out, they watch TV.
This boom in TV not only creates opportunities to reach mass audiences which have become increasingly difficult to reach in recent years; it’s like turning the clock back to the early 2010s. The rush back to TV also provides cost advantages to advertisers, as media cost experiences deflationary pressures because of increasing reach. And while for some brands even very low media costs will not be reason enough to spend in this current sales environment, for others it creates great opportunities to build market share. This is particularly true for FMCG products that are always on everyone’s shopping list, and some advertisers are already experiencing increased consumption from people urged or compelled to stay at home in the weeks and months ahead.
Research suggests that during crises – including recessions, which many sectors will inevitably experience as a result of this unprecedented chain of events – it is those brands that invest that gain market share. These are gains which they can go on to sustain when the upturn comes, when the world’s citizens revert to more normal patterns of life and consumption. A study from GfK and Serviceplan in Germany during the financial crisis in 2010 observed 959 brands across nine years. The compelling conclusion to their study was: “The biggest market share gains, but also the biggest losses, are not achieved in growth phases but in downturns, which usually only last ten to twelve months.”
GfK’s study also showed that it is impossible for brands that under-invest during downturns to catch up when the recovery comes. The work of Ebiquity’s own Analytics team with leading brands in the U.K. and in other markets worldwide has seen very similar patterns. So, it is important for brands to seize the opportunities quickly within this short period.
The findings from the German research have been confirmed by a Harvard Business School study from the last recession. This found:
• Brands that increase advertising during a downturn can improve market share and return on investment
• Early-buy allowances, extended financing, and generous return policies motivate distributors to stock manufacturers’ full product lines
• In tough times, price cuts attract more consumer support than promotions
Our specific recommendations for advertisers on media during the current pandemic are:
• There are currently opportunities to optimise TV schedules for greater reach at a time of price deflation. Reach during daytime is growing disproportionally, for example. Work with your agency partners to take these opportunities before your competitors do. Also, media vendors are currently open to negotiation.
• If your brands are not directly affected by the crisis – as, for instance, both airlines and auto manufacturers are – then use the opportunity to build presence now. Many advertisers tend to delay their spending until later in the year. Brands delaying in 2020 may experience a squeeze in budgets and increased media costs.
• Watch the impact of price deflation on buying guarantees with your agencies. The coming months will see price deflation in most markets as a result of the coronavirus aftershock on the global economy. This will show as savings guarantees. Most advertiser / agency contracts have provisions to correct for unforeseeable market changes. Adjustments needs to be created for the affected months.
Ebiquity’s media experts are available to advise advertisers on the best way to navigate the current crisis. Do feel free to reach out if there’s any way we can help during this time of rapid change and evolution.