Coronavirus: disrupting life and digital advertising.

Mar 19, 2020 | Articles

Andrea Burgueño

Andrea Burgueño

Contributor

Coronavirus has arrived to disrupt our lives and its consequences are still unknown. Between enormous restrictions and uncertainty, the global advertising industry seems to be doing both,  slowing down in some verticals and pivoting in others.

With key industry events being canceled, giants like Apple dealing with supply chain issues and the current consumer demand decreasing, companies are forecasting losses and many of them have put advertising budgets on hold. However the outcome of this crisis in the long-term is hard to predict.

Transforming challenges into chances

While the travel industry (and therefore the travel advertising industry) is under enormous economic pressure, other companies like Microsoft or Slack have an opportunity to increase their revenue. How? By offering products useful for people to adapt to the new circumstances. This will certainly reflect on their advertising.

Although online publishers have already made it clear that coronavirus  is starting to take a hit on ad revenues and uncertainty and fear are affecting the digital ecosystem, some analysts believe the impact could be short-lived. In fact, the flexibility of the digital ad industry and its agility are both great advantages when it comes not just to adapt and survive the situation, but also to normalize it. For instance, programming and budgets can be easily modified ad hoc and now that people are forced to spend more time at home, brands are shifting ad spending from offline media to online.

Just a bump in the road?

However, Facebook predicted that the advertising spending will be lower in travel, retail, consumer packaged goods and entertainment. They make up approximately 30% to 45% of their total revenue. Also, Google estimates a 15% decline in travel ad revenue in the first quarter and a 20% drop in the second. Some businesses have cut digital budgets by more than 50% or even put a full stop on them.

Looking back at previous crisis experiences, we can predict an uptick in some verticals once the panic is over. For example: food or grocery delivery and CPG. Also utility, live-streaming and e-commerce are going to grow. The way consumers interact with the world is different in a global crisis. Their habits are changing and so does the way they consume digital media, including which channels they use. That also affects the way they buy products and services and, therefore, the customer journey too. 

In conclusion

Despite all these considerations, the only valid conclusion so far, is that we are facing an extraordinary situation. Industries, brands, companies, advertisers and publishers need to change the way they operate. Also, the way they sell and advertise their products and service to avoid a deeper crisis. Yet this might not be entirely possible. Depending on how the different scenarios evolve, we might end up facing another economic crisis. 

If that’s the case, then luxury products and services will grow. Also industries related to health, pharma and vices like alcohol. The digital advertising industry will have to adapt to the changes like it’s already doing. Evolution is the key to survival, whether we are talking about a virus or its consequences. 

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