Advertising industry set to take $49bn hit from coronavirus

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Advertising industry set to take $49bn hit from coronavirus

The old adage is that during times of crises, marketing budgets are the first to be cut.

And coronavirus seems to have confirmed it as the outlook for the advertising industry seems bleak.

“The prediction is that global advertising spend in 2020 will fall by just over 8.1 percent,” said Philip Thomas, CEO of Cannes Lions International Festival of Creativity and Dubai Lynx.

“In terms of figures, that equates to $49 billion worth of spend,” he added.

The current situation is not as drastic as it was during the global economic crisis in 2008-9 when advertising spend dropped by 12 percent or $60 billion, Thomas noted.

This difference is because recent cuts in spending are not across the board as they were back then.

Philip Thomas, CEO of Cannes Lions International Festival of Creativity and Dubai Lynx

Ad spend will fall by 8 percent in central and eastern Europe, 13 percent in Latin America and 20 percent in the Middle East and North Africa by the end of 2020, according to Zenith’s latest Advertising Expenditure Forecasts.

Advertising channels such as billboards (outdoor advertising), newspapers and cinemas saw the most cuts in spending as consumers spent most of their time at home during coronavirus-related lockdowns.

On the other hand, digital and television advertising budgets were almost untouched.

“You can understand the reasons why: advertisers need to be where the customers and the audience is,” said Thomas, speaking ahead of the LynxLive event which runs until October 7 and gathers the creative community in MENA.

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He said there are no easy answers to when the advertising world will go back to pre-pandemic growth figures.

Thomas believes recovery depends on the twin factors of the economic situation and consumer behaviour.

“There is the economic problem where advertising spend is cut when there is an economic crisis but also there is a behavioural problem which is that during a health crisis people are doing different things,” he said.

“There is very little point in advertising in the cinema, for example, when people are not going there. Both these factors have to change for us to get back to normal,” he added.

In this new normal, advertisers are being careful not to appear out of touch with reality or tone-deaf in their promotions and brand messages.

Thomas encourages them to be socially responsible and engaged in the global conversation while staying true to their identity.

“If you are a manufacturer of soft drinks, you can work on reducing single-use plastic consumption. If you are a soap manufacturer, you focus on hygiene and health,” he said.

“It has to be in line with your mission as a brand and chime with its purpose. If you do that, you come across as authentic. If you just try to invent something that sounds good, it will definitely fail,” he added.

The silver lining in the current situation is that creativity grows in times of uncertainty and crisis and so we can look forward to the most creative advertising campaigns yet. “What we find is that during the crisis like this, creativity does have the opportunity to explode; human beings are very inspirationally creative when we are presented with these problems,” says Thomas.

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