The Burgeoning Impact of Coronavirus, COVID-19, on the Advertising Industry

Of course we must take every precaution to minimize the spread of COVID19 we also must do everything we can to minimize the economic impact That does not mean life is going to be normal it does mean that we will have to adapt to a new normalA March 4 update from the Consumer Tech Association cited various electronics industry trades indicating that most factories that are online are operating at under 70 percent utilization with facilities in Hubei and Hunan reporting utilization between 25amp821160 percent Many are saying that they will not be at full capacity until late March or early April Foxconn the main assembler of Apple products such as iPads and iPhones was projecting 80 percent utilization by March Point is even as we take all necessary precautions the economy must go onOver the past two weeks I39ve had numerous conversations with advertising and media leaders about their thoughts on the disease39s impact on our industry Here is a sampling of what they had to say about the impactWhen the news of the virus first came out many of the buyers were taking a waitandsee approach and I had the sense that many thought I was being an alarmist by even calling None of them feel that way anymoreTravel accounts understandably are the first to be hit Most of the schedules are on pause including performancebased programmatic dealsWith the markets in freefall banks will also be holding back budgets and adjusting plansGlobal accounts are shifting budgets to less impacted countriesWith each passing day there39s a growing fear that the Olympics could be canceled or postponed either of which has enormous implicationsIf canceled no one has any clue where they can make up that large amount of GRPs While advertisers are not concerned about losing their money amp8212 all the major TV sponsors have clauses in their contracts that protect them amp8212 they are concerned about the domino effect that this could have on their entire marketing efforts The games are scheduled to begin July 24 but organizers have started the discussion to potentially move them to October if necessaryIf the games are postponed it would require many sponsors39 product launches to either delay or switch the messagingSeveral key industry conferences including Mobile World Congress SXSW and E3 have been canceled SXSW is a showcase for some of the most groundbreaking experiential marketing programs in the US The cancellation is proving costly to some top experiential agencies in both real dollars and potential bragging rights which in our industry turns into real dollarsClosing offices and moving to a quotvirtualquot office space whether mandatory or optional is quickly becoming the norm for ad agencies I have known many a chief financial officer that will look at this experiment to see how it impacts productivity and if successful they will salivate over the costpersquarefoot savings If this lasts for more than a few months it will become the normThe NewFronts and Upfronts that do take place will be virtual My colleague Ed Martin has written extensively on the ramifications and I agree that this could be a catalyst that ends the traditional lavish parties for good MediaVillage has established a hub for the VirtualUpfronts and we look forward to telling you more about it in the upcoming daysIt is likely to be a very soft Upfront season There still is time for everything to stabilize but very few companies are in a position or have a desire to commit to anything longterm right now 202021 was already going to be a tougher Upfront without elections Olympics or World Cup to create mustown eventsThe advertiser quotpitchquot process will grind to a halt for at least the next month or twoAdvertising for movies will take a hit Fearing lower box office numbers MGM and Universal moved the release date of the new James Bond film No Time to Die from April to November The Hollywood ReporterMorning Consult survey found that 38 percent of US adults support shuttering theaters while 44 percent oppose There are more than 41000 movie screens in the US Should quotsocial distancingquot continue for many months I believe that the long fought against taboo of releasing home distribution at the same time as intheater showings may be at last broken Additionally incinema networks such as NCM and Screenvision will be hit in the short termCreative agencies are worried about shoot schedules talent availability and protecting talent They also seem to have greater concern over creatives39 productivity while working remote as the creative process often benefits from inperson group dynamicsOutofhome companies especially those with a significant presence in the crossroads of the world such as Times Square Piccadilly Circus and Shibuya Crossing will need to recalculate estimated traffic and provide creditsmakegoods with customersWith the NCAA Tournament cancelled as well as every other sports league suspended for now including NBA and MLB and PGA Tour and NASCAR playing without fans contracts will need to be madegood or renegotiatedWhile Cannes Lions is still on as of now backup plans have been made to hold it October 2630 if need be Many advertising consultants and trade organizations are very concerned over the revenue loss from events and multiday conferences The margins on these events are high and if this drags out it would pose a huge fiscal challengeFor the foreseeable future many aspects of our lives will be different amp8212 how different depends on whether we allow fear to overtake us and how quickly we can adapt to this new reality While we all hope that this ends soon the likelihood is that we are in this for a protracted period of time and that it39s likely going to be a catalyst for change that will long outlast the era of coronavirusBut Wait That39s Not Allamp8230Please stay healthy wash your hands and don39t take this lightly We will get through this I read a blog saying that the quotKeep Calm and Carry Onquot mantra while wellmeaning is not helpful Definitely don39t panic but don39t stay so calm that you don39t take the proper precautions that the CDC and WHO are recommendingLearn more about the MediaVillage VirtualUpfrontsDon39t stop now Stay in the know on media industry trends and technologies with more from Jeff MinskyClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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The Burgeoning Impact of Coronavirus, COVID-19, on the Advertising Industry

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Jeff Minsky

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