The impact of COVID-19 on customer behavior is discussed, and the implications of this disruption for marketing strategies and policies are. Changes in customer behavior and how marketing is carried out during economic downturns are comparable to those seen throughout the crisis. It does, however, exhibit traits that distinguish it from downcycles, such as shifts in consumption between categories and a faster movement from offline to online behavior. The re-evaluation of life priorities by ultimate consumers has compelled this.
The world as we know it is today facing one of the most significant challenges since WWII. The COVID-19 situation is impacting every part of our lives. We’re all concerned about people with who the coronavirus has directly afflicted. Society and the economy have come to a halt, and practically every country is experiencing a downturn. COVID-19 has a global impact on real GDP
- In April 2020, 75% of brands lowered their advertising budgets.
- In April 2020, agencies lost between 54 and 91 percent of their billing.
- COVID’s impact on the advertising industry in 2020 will result in a 30% reduction in advertising investments.
- The decline in advertising revenues has an impact on all media. However, some (billboards) are more prominent than others (social networks).
- During the imprisonment, five different forms of new advertising messages were discovered.
- Border closures may allow the market to catch up over the summer.
Advertisers will modify their advertising messaging as soon as the confinement ends due to the long-term behavioral changes created by the Covid issue.
The impact of COVID
The advertising industry was one of the first to be hit by the coronavirus outbreak, reducing advertising budgets. We’ll go through the financial implications first, then the visible effects of advertising messaging in this section.
- Stopping advertising investments for the wrong reasons: this involves procurement or senior management dictating expense cutbacks.
- Advertisements in media that no longer exist (inflight magazine) or advertising campaigns that are too out of date have been discontinued for good reasons.
- Investments have not come to a halt: 1/3 of the brands have not halted advertising. Instead, they either remained because they were still in business (food stores) or no longer in business but decided to tailor their message to the circumstances.
Revenue that got affected badly
If it ends in May, the coronavirus outbreak is expected to result in a 10% loss in advertising revenue for the entire year of 2020. M6 (France), for example, anticipates a 9.2 percent yearly drop. According to Jean-Luc Chetrit, the chairman of the Trademark Union in France, advertising firms lose €60 million in revenue every week. Furthermore, advertising revenue fell by 40 to 90 percent throughout March and April, depending on the type of media (the impact on April is, of course, total, as the confinement began only in mid-March, allowing just around ten days of reprieve).
According to the agencies we spoke with, the great majority of advertisers have moved their ads around while waiting for a more precise picture. In this environment, it’s also clear that brands are extremely cautious when it comes to communication. As a result of the repositioning of these efforts, media commitments made at the start of the year cannot be honored. The appropriate contracts are currently being reviewed through intensive negotiations. Clients are in high demand for advertising firms but not for “billable” initiatives. This is a matter of keeping an eye on things and seeking guidance on how to handle the problem.
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Back to back decreases with no increase.
In April 2020, 75 percent of the 44 marketers we have data had cut their advertising budgets. On the contrary, 25% took advantage of the opportunity to boost their earnings, sometimes by significant amounts. Aside from official “advertisements” (those issued by the government), rises can frequently reach 250 percent.
Traditional retail (save for low-cost retail), FMCG, home furnishings, internet, and mobile access are among the brands that have overinvested during the lockdown. Coca-Cola is a notable example, as it has completely stopped investing in advertising.
Larger organizations are already using temporary unemployment, and savings measures have been established. For example, Publicis has unveiled a €500 million global savings plan. During the crisis, this approach will result in a hiring freeze, a reduction in the usage of freelancers, and the taking of vacations.
Although redundancies need to be avoided, they would be highly destructive in the event of a market rebound. Indeed, there is a real risk that people who have left the market will not be able to re-enter it quickly in the case of a dramatic market upturn. This is especially dangerous for creative people. Since last week, all of the agencies we spoke with have experienced a significant (though minor) boost in budget investment.
Advertising budgets have altered in reaction to changes in consumer behavior. Advertisers should avoid spending money on material that has no audience. Out-of-home and movie advertising shrank rapidly when confinement measures were implemented worldwide, as did print advertising. Advertising budgets have altered in reaction to changes in consumer behavior. Advertisers should avoid spending money on material that has no audience. Out-of-home and movie advertising shrank rapidly when confinement measures were implemented worldwide, as did print advertising.
Meanwhile, in-home media consumption has increased. TV viewing has increased, but digital consumption has surged even more: the use of social platforms and streaming services has increased practically everywhere, and gaming has exploded. So whichever special event you commemorate, we can help you celebrate in style!