Pandemic To Impact Advertising Budgets, Shift Priorities

The coronavirus is expected to have a significant impact on the advertising sector. Surveys by research and advisory firm Gartner found that 76 percent of marketing leaders expect a decrease in marketing budgets due to the COVID-19 pandemic and budget cuts will hit advertising particularly hard with nearly half (45 percent) reporting a campaign launch had already been delayed, 34 percent had altered ad creative and 26 percent had already cancelled a media buy.

“Cuts to media spend are beginning to hit marketers hard—a reality that will likely worsen throughout second quarter 2020,” says Andrew Frank, distinguished vice president analyst in the Gartner Marketing practice. “Marketers need to take decisive action now to manage media budgets and ad strategies during and well beyond the COVID-19 public health crisis.”

Gartner notes that the uniqueness of the COVID-19 pandemic has rendered predictive models based on historical data useless and that the fluidity of conditions undermines test-and-learn approaches that require time and scale to produce reliable results. As a result, it advises marketers to work together to develop strategies that can gain alignment and support with less data than they’re accustomed to and learn from their industry peers to develop a collective consensus on the path forward.

“While the effects of the coronavirus outbreak are felt globally, its business impact varies by industry sector,” says Eric Schmitt, senior director analyst in the Gartner Marketing practice. “Some sectors, such as travel and hospitality, have largely suspended all commercial operations. Others, like essential consumer goods, are experiencing spikes in demand due to hoarding. For many others, the effects are less clear.”

Gartner has broken up these sectors into three categories: dark sectors, shaded sectors and spotlit sectors.

Dark sectors are those where shelter-in place policies have caused many to suspend commercial operations completely—such as nonessential brick-and-mortar retail, sports and live entertainment, and travel and hospitality. Gartner advises marketers in these dark sector businesses to conserve media budgets while pandemic conditions persist and focus on providing useful updates directly to loyal customers.

“Centralize control of media spend to avoid regional noncompliance with communication policies and take advantage of programmatic channels that can be rapidly ramped up or down depending on changing local conditions,” says Schmitt. “Marketers should beware of returning to promotional tactics that may have worked well previously, even in the recent past, as consumers are likely to reject a rapid return-to-business-as-usual approach.”

Shaded sectors are those that remain operational but have been impacted by plummeting demand or supply chain restrictions. This includes automotive, B2B products and services, energy and utilities, high-tech and telecom, and luxury, among others. In Gartner’s analysis, these sectors must continue to monitor media and creative strategies, and avoid being absent from markets where competitors are running media campaigns.

“Marketers in these sectors should seek value propositions and narratives that explicitly acknowledge the pervasive condition of social distancing and limited mobility,” adds Frank. “Work closely with agencies and other advisors to vet strategies and make real-time adjustments to campaigns as conditions change and consumers respond more directly on social media.”

Spotlit sectors are those on the front line of the COVID-19 pandemic such as news media, essential consumer goods, over-the-counter pharmaceuticals, health care, insurance, grocers, restaurant chains and delivery services. These businesses are repurposing advertising channels to convey vital information to customers who are directly impacted by the health crisis.

“Marketers in these sectors should use local media buys to promote safe, contactless home delivery and service options where available, and help combat misinformation,” says Frank. “Those businesses with vital messages should prioritize reputable media sources, such as national news media, and use extreme care with social media to avoid proximity to misinformation.”

Additional information on what marketing leaders should be doing amid COVID-19 is available to Gartner for Marketers clients in the report “How to Advertise in Uncertain Times: Lessons from COVID-19.”

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