Large multinationals will be cutting and holding back ad spend, according to the latest World Federation of Advertisers (WFA) COVID-19 response tracker. The report revealed that about 52% of large multinationals surveyed will now hold back ad spend for six months or more, compared to just 19% taking similar medium-term action in March.
While 62% of respondents agree that it is critical for brands not “to go dark” during the crisis, they are still making dramatic cuts to spend overall. The squeeze is being felt hard by TV which is traditionally the biggest media channel spend. Overall, TV is expected to be down 33% globally across the first half of the year, while print spend will be down 37%, OOH down by 49% and events down 56% are suffering more.
This comes following the first research which found 89% have deferred campaigns, up from 81% in March, with delays likely to last much longer than previously planned. The current WFA report also noted that despite while 68% of brands are now running their crisis campaigns, this will hardly compensate for the cuts made to previously planned marketing campaigns. As such, global ad budgets are now expected to be down 36% in the first half of the year (up from 23% in the first report) and 31% for the full year.
Conducted in the last full week of April, the report is based off responses from senior marketers in 38 companies across 17 sectors with a total annual global spend of US$46 billion. About 61% of respondents held global positions, with 39% in regional roles.
More focus on digital?
Amid these significant cuts to ad spend, digital however is not heavily impacted. According to the report, digital is boosting its share of ad spend by virtue of the fact that spend falls in this area are less dramatic, with online video down 7% and online display down 14%. Other channels such as radio (-25%), point of sale (-23%) and influencer (-22%) are expected to experience significant cuts, the report added.
In addition, global marketing teams are taking drastic action on the number of ads seen by their target consumer audiences, and also viewing the situation as an opportunity to make radical changes to the way they operate as marketing organisations both internally and in partnership with their agencies.
About 92% agree this crisis will have a long-term impact on the way they operate and 84% agree that this is an opportunity to rethink “everything” in terms of its marketing organisation, with the same number saying it has already accelerated digital transformation.
Hence, nearly two-thirds (63%) are now focusing on developing strategies for the immediate post-crisis as well as for the longer term but in the interim 73% agree they will have to find ways to support agencies during the crisis.
Stephan Loerke, WFA CEO said marketing leaders are fully aware that the crisis is having a major impact on their teams and their external partners. Many are making significant efforts to support their agencies by finding projects for their key people to work on while spend is low or by changing their payment terms when they can.
“Our research shows that such efforts are widespread and reflect how much brands value the contributions that agencies can make to their businesses,” he added.
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