What should we expect from the post-pandemic media market?

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Covid-19 is still rampant across the world. Infection rates are soaring in countries including the UK, France, the US and Indonesia, to name just a few. Despite this, we are moving into a post-Covid world, thanks largely to vaccine roll-outs weakening the links between infections, hospitalisations and deaths. Many countries are throwing off the shackles of Covid restrictions, with governments hoping that citizens will leave their homes and spend their countries back to economic health. Brands from all sectors will of course be hoping to benefit from this uptick in consumer spend. They will be investing in marketing strategies in anticipation. This will have an impact on media pricing; indeed, the cost of media, as well as the amount spent on it, is often a good indicator of economic recovery, or lack thereof. So what does the post-pandemic media market look like?

Global recovery will remain uneven

According to the OECD, global prospects are improving, but are strongly dependent on countries’ individual situations. Unlike the global recovery following the 2008-2009 global recession, the post-pandemic recovery will be ‘uneven and dependent on the effectiveness of vaccination programmes and public health policies’. Some countries are recovering much more quickly than others. South Korea and the US are reaching pre-pandemic per-capita income levels after about 18 months. Many European countries are expected to take three years to recover, while in others such as Mexico and South Africa it could take up to five years. Countries with effective public health strategies are seeing their economies recover more quickly – a ‘more jabs, more jobs’ scenario. The dependency on different sectors such as tourism is also a key factor.

Consumer confidence is crucial

As the pandemic is wrestled under control, consumer confidence and spending will increase, bringing relief to hard-hit industries. The pandemic deeply impacted consumer spending. There were a lack of opportunities to spend but also concerns around job security and future uncertainty. Real personal consumption expenditure (PCE) in the US contracted by 3.9% in 2020, compared to 2.45% expansion in 2019.

Meanwhile, savings increased as even people in secure employment avoided spending. The US personal savings rate ended 2020 at 14.25%, nearly double what it was in December 2019. In the UK, consumers are estimated to have amassed an extra £180 billion ($245 billion) in their bank accounts over the course of lockdowns, equivalent to almost 10% of the country’s annual GDP. Experts agree that the easing of restrictions will spark a surge in consumer spending, especially by wealthier households. Deloitte estimates that US consumers have saved around $1.6 trillion more than if there been no pandemic.

Alongside the increased spending power are higher confidence and a change in mood as health-related anxieties ease. In the US and elsewhere, there is likely to be a huge rebound in spending on services in the coming months. Consumers will be eager to go on vacation, eat at restaurants and go to sporting events, for example. In March, PCE on services grew year-on-year for the first time in 13 months, rising to 19.3% in April. That’s still 4.7% lower than what it was in February 2020, but a reassuring rise.

A boost to the advertising industry

Anticipating the rise in confidence and resultant unleashing of latent savings, advertisers are investing heavily in media strategies to encourage consumers to spend those savings and celebrate the easing of lockdown with their brands. This has led to an uptick in media pricing, as ECI Media Management predicted in January in our annual Inflation Report – an update will be released in September. Both Magna and GroupM revised their previous projections for the post-pandemic media market upwards.

GroupM predicted in June that global advertising will grow by 19% in 2021, a significant increase on their December forecast. This represents a level of ad revenue 15% higher than 2019, and high growth should persist into the foreseeable future. Remarkably, GroupM anticipates that global advertising will exceed $1 trillion in 2026, a huge increase on 2020’s $641 billion. Regions including the UK, India, China and Brazil could see growth of over 20% in 2021 versus 2020. The US, Australia and Canada could see an uptick in the high teens.

The Magna report forecasts that digital ad formats will be the big winners of the post-pandemic media market, capturing two-thirds of total ad sales for the first time. This is down to a 13% growth expected from digital ad sales, including search, social, video, display and audio. While linear ad spend has suffered as much as it did in the recession of 2008 and 2009, the market is recovering much more quickly. Spend on linear channels are expected to have grown in Q2 after four negative quarters. The last recession led to 11 consecutive negative quarters.

Learning from previous downturns

The global recession of 2008 and 2009 was very different in nature to the one caused by the pandemic. The economic depression caused by Covid-19 has been very sharp, but is also expected to be ‘v-shaped’. Experts predict that the global economy should be back above pre-Covid levels soon, while the recovery after the 2008-2009 recession was much slower. However, the last recession offered brands some valuable lessons in how to handle the current situation and recover more quickly. Millward Brown found in 2008 that 60% of brands that spent nothing on TV for six months saw brand use decrease 24%. Brands that cut their ad budgets more than their competitors were at a greater risk of share loss. Businesses that continued to maintain share of voice and share of market during the downturn showed longer-term improvement in profitability that outweighed short-term savings.

Specific strategies for a pandemic

While those lessons continue to be relevant in the challenging times advertisers face today, the specific nature of this downturn, driven by a global health pandemic that has affected almost every single person in the world, should be addressed in a very specific way. Kantar found that 77% of consumers want brands to talk about how they can be helpful in their everyday lives. 75% want brands to showcase their efforts to face the situation. 70% want brands to offer a reassuring tone.

Many advertisers have moved their focus away from performance-based, sales-focused channels and metrics and investing in long-term brand-building strategies. Meanwhile, caused-based marketing is on the rise, as brands seek to position themselves as socially and environmentally responsible.

The answer, as always, is to focus on the consumer

By learning from previous downturns and focusing on brand loyalty and the consumer, many brands will emerge stronger, better and with a more loyal following than ever. These will be the perfect conditions to capitalize on the economic recovery and consumers’ appetite to spend. The post-pandemic media market will be stronger and more resilient than ever.

Header image: Dean Drobot / Shutterstock

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