Laura Martin, CFA & CMT and Entertainment & Internet Analyst at Needham & Co., Christian Polman, Chief Strategy Officer at Ebiquity, and Brian Wieser, CFA and Global President of Business Intelligence at GroupM joined Scott McDonald, Ph.D., President & CEO of the ARF to discuss:
On the economy, Laura maintained
- • Digital and television each represent close to 50% of advertising. Television is in better shape because 50-70% of television is sold upfront while digital is largely sold on auction. Also, digital advertising comes largely from small and medium-sized businesses – the economic sector that has weakest cash reserves and is most likely to curtail advertising in a crunch. 70% of digital advertising is Google and Facebook and so these two companies will be most affected.
• Travel, film and entertainment and retail are some of the largest digital advertisers and these three industries have all shut down almost completely, driving the impact to digital.
On the international response to the crisis, Brian suggested
- •There had been three patterns of responses
- Those taking immediate action resulting in the least impact – Japan and South Korea
- Where there was some lag but very aggressive programs once mobilized – China and Germany
- Those slow to respond – Italy and the UK
• Recovery is dependent on liquidity and despite the $2 trillion stimulus package, the US’s relatively slow and regionally varied embrace of social distancing programs will attenuate the pandemic and diminish the economic benefit of the stimulus.
• China is coming back online but there is a danger that the global crisis will kill demand for its manufacturing. There also is economic danger in the rise of “national hoarding” of food and medical supplies as countries curtail trade to try to protect their own populations.
• In the short term, US marketers must focus reassuring consumers and taking steps to soften the blow to consumer demand from job loss and business retrenchment, with messaging focusing on navigating the crisis.
On the world in which the crisis grows, Christian offered
• Prior to the pandemic, the world already had poor planetary health, a highly interconnected food supply, growing nationalism and low trust in institutions affording a planet for this virus to thrive
• We should prepare now for the recovery with messages of relevance, trust, agility and risk. The media can support this recovery with examples such as LVMH rapidly converting to hand sanitizer. Christian provided numerous examples of companies acting in the public benefit first, but then reaping some PR benefit afterwards. He warned against starting with the PR first.
• Christian pointed to an extensive body of research from prior crises and economic downturns and noted that the results consistently show that marketers who can maintain share of voice during a crisis maintain or improve their share of market in the 2 years following the crisis. In the long term, maintaining advertising during a crisis builds brand equity and pricing power for marketers after the crisis has passed.