The coronavirus pandemic has wreaked havoc on economies across the world, forcing consumers inside and closing down huge swathes of society and business, including retail, hospitality and travel. The advertising industry has been hit hard, with many brands having to pull or adapt their marketing campaigns and slash their budgets. However, many countries are starting to show signs of recovery, while media prices are still down. Could this be the perfect time for advertisers to reassert themselves?
Media pricing is low
As we reported in the special coronavirus update to our inflation report, the forced changes in consumer behaviour during the lockdown led to significant changes in media pricing. OOH, Print and Radio were more obvious victims, suffering significant deflation globally; however, TV also became deflationary thanks to increased eyeballs teamed with many brands pausing their activity. Even Digital inflation was lower than forecast at the beginning of the year: high demand led to overall inflation, but several major markets saw deflation in digital channels due to huge inventory increases combined with decreased demand. The result? Huge savings to be made for advertisers who continue their marketing campaigns.
As countries emerge from lockdown, signs of economic recovery are encouraging
Over the last few weeks, countries around the world have started to emerge from lockdown, with the retail, hospitality and travel sectors being opened up, albeit with restrictions in place. Governments are providing stimuli to kick-start spending, and there are indications that these measures are working. Italy saw a 24% surge in retail sales after lockdown lifted, while retail sales in both Germany and the Netherlands in May rose above pre-pandemic levels.
Promising signs from China
There are also promising signs from markets who are further along the coronavirus ‘curve’, particularly China. The Chinese economy continues to recover after the government lifted strict lockdown measures and ramped up investment. Four data points in particular show encouraging signs that this key market is recovering: the services PMI jumped to 58.4 in June, from 55.0 in May, which points towards rapid month-on-month recovery; nonmanufacturing activity jumped to a seven-month high in June; the official manufacturing PMI reached a three-month high, and manufacturing activity reached a six-month high. These indicators have raised hopes that China will make a full recovery later this year. Of course, the ramifications are felt across the world: Wall Street stocks rose sharply on 6th July as positive sentiment from China allowed investors to hope that the Chinese recovery would drive demand for foreign goods.
Hope for a single-hit scenario
The OECD has made predictions for global economic recovery based on two scenarios. The first is a double-hit scenario which would see a second wave of infections before the end of the year. The second would see the second wave of infections avoided. Given economic and industrial indicators, and with continued controls in place, we should be cautiously hopeful that the latter scenario will be the case.
The time to restart your advertising is now
Brands should take hope from the Chinese recovery. In markets where the pandemic has been largely well managed, there is light at the end of the tunnel. Although the pandemic has caused huge suffering both personally and economically, many people who have not lost their jobs have saved a significant amount of money as they have not been able to travel, eat out or go shopping. Furthermore, it’s likely that many of them will be eager to spend the money they’ve saved following months of boredom at home. Teamed with the fact that media pricing is so low, now is a great time for advertisers to invest in an intensive marketing campaign so that their brands are top of mind as consumers start spending again. There will undoubtedly be a first-mover advantage for brands seeking to increase their share of voice, and to obtain the best value media pricing.
Look out for ECI Media Management’s upcoming whitepaper on how to harness reduced media pricing and ensure that you capitalize on the deals to be had. At ECI Media Management, we can help you to navigate the rapidly changing media landscape so you can drive higher media value. Contact us to discover how:
Image: Olivier Le Moal / Shutterstock
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