Between March and June, brands said they’re spending 33% less on digital media, and 39% less on traditional media, as the vast majority adjust spending for the first half of the year.
The IAB surveyed nearly 400 senior decision-makers at brands and agencies in the past week. Seventy-four percent of them anticipated a coronavirus-related downturn in advertising more severe than the 2008-2009 financial crisis.
Their plans for Q1 and Q2 support this negative outlook. Twenty-four percent of brands paused all of their advertising spend for Q1 and Q2. Close to half – 46% – are adjusting ad spend for the rest of Q1 and Q2.
The declines will level off in the second half of Q2. In digital media, brands said they were spending 38% less in digital media in March and April, and 28% less in May and June. Across traditional media, a 43% decrease in spend in March and April would be followed by a 35% decline in May and June.
The “ray of sunshine” in the report is in the back half of the year, said IAB President David Cohen. Two-thirds of buyers hadn’t decided yet if they would make ad spend changes in the second half of the year.
“I think that is very telling about how flexible and agile the agency and brand world is being this year, to plan to shift and pivot in a very short period of time,” said SVP of measurement Sue Hogan.
COVID-19 is changing how and where brands are spending money
Where brands are continuing to spend money, they’re using different messaging and different tactics. They’re also largely shifting away from performance advertising for the moment and toward brand advertising and mission-based and cause-based marketing.
Forty-five percent of marketers were decreasing performance marketing budgets. However, the remaining respondents were split, either increasing their performance marketing or making no change.
“If the performance isn’t there, brands and agencies are not going to put their money there,” Cohen said. One agency respondent in charge of retail clients said demand for their products was down, making it harder to scale performance tactics.
Marketers running mission-based or cause-based advertising rose 42% and 41%, respectively. They’re also spending more on brand equity messages, with those rising 37% – though another 31% of brands pulled back on their brand equity messaging, perhaps to regroup during the pandemic. Overall, two-thirds of brands made short-term changes to their messaging strategy during the COVID-19 pandemic.
The top three tactics marketers are embracing during the coronavirus pandemic are audience targeting, OTT/CTV device targeting and programmatic advertising. More than one-third of marketers planned to increase their use of these tactics to adapt to the new climate.
“My hypothesis is that in times of belt-tightening, marketers are making sure every dollar is going against the exact audience they’re after, and they’re using first-party and third-party data to ensure there’s no waste,” Cohen said.
The types of media brands are buying is also changing. The places where digital ad spend was growing the most – social media, video and search – will see the smallest declines in coming months, Cohen said.
Digital video will decline 26% in May and June compared to 37% in March and April. Paid search will decline 23% instead of 33% during the same time period. Social media will also see a lesser, 23% decline in May and June compared to a 30% decline in March and April.
In contrast, many other media types will see 40% to 50% declines in March and April (Linear TV, terrestrial and digital radio, traditional and digital OOH, digital display). Then some formats will recover quickly – such as digital display, down 28% in May and June.
Other media types, for example, traditional OOH, will recover more slowly, with that format remaining down 41%, with digital OOH only slightly better with a 38% decline.
The pandemic will also put the TV upfronts in jeopardy, with a predicted 20% decline in the TV upfronts this year. Seventy-three percent of brands predicted their upfront commitments would change.
The IAB still has more questions it wants answered. OTT and CTV viewership is up around 20%, Cohen said – but ad dollars aren’t yet meeting the increased supply. Will that change?
Where will sports advertising dollars end up? Is it possible that brands will become less skittish around advertising next to COVID-19-related keyword terms? The IAB plans to take the pulse of brands constantly in the weeks and months ahead, Cohen said.