Type to search

Top Companies

“A seismic shock”: Nervous companies withdraw their ads during the pandemic

Share

The billboard was blank.

In all the times Takeshi Sato had walked Shibuya Crossing, Tokyo’s answer to Times Square, he had been more or less surrounded by advertisements. But on March 23rd, he noticed something strange popping up above the pedestrians: a blank sign.

“I thought, ‘Oh, this is not normal,’ and I remember feeling depressed,” said Mr. Sato. “But it’s understandable that advertisers would want to stop showing ads on billboards because fewer people are going out.”

Even in 2011, after a devastating earthquake and tsunami, billboards were full in this part of town, he said. The white spot in Shibuya overlooking one of the world’s busiest intersections indicated the far-reaching effects of the coronavirus.

Companies that spent a lot of money promoting their products prior to the pandemic have stepped on the brakes. Facebook has described its advertising business as “debilitating”. Amazon has reduced its Google Shopping ads. Coca-Cola, Kohl’s and Zillow Group have stopped or restricted their marketing. Marriott’s advertising has “gone dark” in the words of the company’s CEO.

“A lot of advertisers are pulling out now – the tide is coming,” said Garrett Johnson, assistant marketing professor at Boston University’s Questrom School of Business. “If the economy is not doing well, if companies are bleeding cash from Covid, we will not see too much advertising.”

Ads have become an inevitable part of modern life for one simple reason: they work. Research firm IHS Markit estimates that every dollar companies spent on advertising in the United States in the past year resulted in $ 9 in revenue. And while the flood of marketing messages can seem like background noise, their absence would be noticeable.

The advertising industry employs approximately 500,000 people in the United States. Their work covers movie screens, smartphones, buildings, stadiums, and promotional emails clogging the inbox. Companies that buy advertising regularly are the lifeblood of television stations, podcast companies, news outlets, lifestyle publications, and pretty much the entire Internet – and when they spend less on marketing there is a ripple effect.

According to the RWB research group, more than $ 60.5 billion in worldwide advertising spending was wasted during the Great Recession. It took eight years for the industry to fully recover.

Close observers of how the advertising business has developed over the past few weeks say the new crisis may get worse.

“It was a seismic shock, possibly the biggest we have ever experienced,” said Harris Diamond, CEO of advertising company McCann Worldgroup. “Everything happened in a very short time and has an impact everywhere we communicate.”

Total digital ad spend in March and April is 38 percent lower than company expectations, and ad spend on television is 41 percent, radio 45 percent, print publications 43 percent, and billboards and others 51 Outdoor platforms have fallen percent, according to the IAB trading group.

Advertising giants like Interpublic Group and Publicis have suspended their financial forecasts, saying they are uncertain about the future. The Cannes Lions Conference, one of the biggest events on the advertising industry’s calendar, was postponed last month and canceled early on Friday.

Updated

Nov. February 26, 2021 at 4:37 p.m. ET

The big TV networks won’t be hosting their annual New York get-together, called the Upfronts, to hyped their fall shows in front of an audience of corporate sponsors and advertising executives. Similar events for digital platforms like YouTube and Hulu have also been postponed.

“We’re working on it as it develops, just like everyone else,” said Patty Morris, vice president of marketing at State Farm insurance company. “Things happen that we have never seen before.”

State Farm planned to advertise for men during the National Basketball Association games and the NCAA’s annual basketball tournament. It also expected to run ads while reporting on the Summer Olympics on Peacock, the streaming service NBCUniversal is slated to launch nationwide on July 15. And now?

“We’re trying to deal with all of the cancellations and trying to understand what’s going on here,” said Ms. Morris.

With the closure of production studios and the standstill of filming for commercials, a sober advertising style has emerged. One recent night, NBC late night host Jimmy Fallon read a State Farm ad like a podcaster at the start of his home-recorded episode of “The Tonight Show”. After Mr. Fallon caught the insurance giant, he held up a piece of paper on which one of his daughters had scribbled the company’s website address.

On YouTube, the “Tonight Show” episode was in some cases preceded by a State Farm commercial called “New Normal,” a mash-up of old-fashioned footage and non-professional videos.

Many companies are trying to protect their brand names by keeping their ads away from media reports of overcrowded hospitals, unemployment and deaths.

As news organizations increase their coverage of coronavirus, they are losing the revenue that would have been made in more pleasant times as many companies have stipulated that their ads cannot appear near articles that contain outbreak-related keywords.

British news organizations, including The Guardian and Daily Mail, wrote in an open letter this week that blacklisting will cost news outlets more than $ 60 million if the pandemic continues for another three months. “Readers rely on us right now, and we rely on advertising,” noted the editors.

The companies that have continued to advertise are taking it lightly as they try to find a way to get customers to see their products while acknowledging the pandemic. Kentucky Fried Chicken responded to the shift in atmosphere last month by putting off a UK commercial set for a Chopin nocturne that featured dozens of people eating chicken and licking their fingers.

In online ads, Audi and Volkswagen have distributed the letters and symbols of their logos to encourage social distancing. A billboard in Times Square made by a McCann agency for Coca-Cola also presented the company logo with the letters spaced apart.

A recent Lincoln commercial, part of Ford Motor, highlighted the issue of isolation. The ad, created by the Hudson Rouge agency, reused footage of a woman and child in a sparsely decorated house in the middle of nowhere. A voice-over appears to address life in quarantine: “Your home is your refuge more than ever.” The commercial then shows Lincoln picking up a car that needs servicing and leaving a rental vehicle in its place.

“Many customers shift their messages to what they think will be most useful to customers and how they can help,” said Michael Epstein, director of media planning for marketing firm Dentsu Aegis Network.

Many ads now feel like public announcements. The flu drug company Mucinex has launched an awareness campaign entitled “Spread the facts, don’t be afraid”. According to an analysis by the artificial intelligence platform Pattern89, images for washing in social media ads rose 600 percent and crowd displays fell 54 percent in the past month.

“Today it is an unforgivable sin if you get the tone wrong,” said McCann’s Mr. Diamond. “The ability to reach audiences is currently unprecedented, but their willingness to embrace marketing messages is limited to the right messages.”

Tags:

You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *