Covid-19 induced marketing budget cuts to hit advertising hard, survey
Seventy-six percent of marketing leaders have predicted a dip in marketing budgets as Covid-19 pandemic continue to take a toll on businesses in a survey of 360 respondents carried out by Gartner Inc.
The research comes weeks after an earlier one indicated that budget cuts will hit advertising particularly hard with nearly half, 45 per cent, of those interviewed reporting that a campaign launch had already been delayed, 34 per cent had altered ad creative and 26 per cent had cancelled a media buy.
Andrew Frank, Distinguished Vice President Analyst, Gartner Marketing practice: “Cuts to media spend are beginning to hit marketers hard – a reality that will likely worsen throughout 2Q20. Marketers need to take decisive action now to manage media budgets and ad strategies during, and well beyond, the COVID-19 public health crisis.”
The uniqueness of the COVID-19 pandemic has rendered predictive models based on historical data useless. The fluidity of conditions undermines test-and-learn approaches that require time and scale to produce reliable results. As a result, marketers must work together to develop strategies that can gain alignment and support with less data than they’re accustomed to and learn from their industry peers to develop a collective consensus on the path forward.
Eric Schmitt, Senior Director Analyst, Gartner Marketing practice: “While the effects of the coronavirus outbreak are felt globally, its business impact varies by industry sector. Some sectors, such as travel and hospitality, have largely suspended all commercial operations. Others, like essential consumer goods, are experiencing spikes in demand due to hoarding. For many others, the effects are less clear.”
Gartner has broken up these sectors into three categories: dark sectors, shaded sectors and spotlit sectors:
Dark Sectors: Conserve and Centralize
Dark sectors are those where shelter-in place policies have caused many to suspend commercial operations completely – such as nonessential brick-and-mortar retail, sports and live entertainment, and travel and hospitality. Marketers in these dark sector businesses need to conserve media budgets while pandemic conditions persist and focus on providing useful updates directly to loyal customers.
Eric Schmitt: “Centralize control of media spend to avoid regional noncompliance with communication policies and take advantage of programmatic channels that can be rapidly ramped up or down depending on changing local conditions. Marketers should beware of returning to promotional tactics that may have worked well previously, even in the recent past, as consumers are likely to reject a rapid return-to-business-as-usual approach.”
Shaded Sectors: Monitor and Remain Agile
Shaded sectors are those that remain operational but have been impacted by plummeting demand or supply chain restrictions. This includes automotive, B2B products and services, energy and utilities, high-tech and telecom, and luxury, among others. These sectors must continue to monitor media and creative strategies, and avoid being absent from markets where competitors are running media campaigns.
Andrew Frank: “Marketers in these sectors should seek value propositions and narratives that explicitly acknowledge the pervasive condition of social distancing and limited mobility. Work closely with agencies and other advisors to vet strategies and make real-time adjustments to campaigns as conditions change and consumers respond more directly on social media.”
Spotlit Sectors: Focus on Safety and Combat Misinformation
Spotlit sectors are those on the front line of the COVID-19 pandemic such as news media, essential consumer goods, over-the-counter pharmaceuticals, healthcare, insurance, grocers, restaurant chains and delivery services. These businesses are repurposing advertising channels to convey vital information to customers who are directly impacted by the health crisis.
Andrew Frank: “Marketers in these sectors should use local media buys to promote safe, contactless home delivery and service options where available, and help combat misinformation. Those businesses with vital messages should prioritize reputable media sources, such as national news media, and use extreme care with social media to avoid proximity to misinformation.”