Covid-19 outbreak may hit ad spending


  • Advertising & Media
  • Monday, 16 Mar 2020

Shifting trend: A man wearing a protective face mask walks past an empty commercial billboard at a bus stop in Beijing. A survey by DAN of clients in China, among others, indicate that people are spending more time at home and that some brands have responded by shifting spend from offline media to online. — AFP

PETALING JAYA: The coronavirus (Covid-19) outbreak, which has now been declared a pandemic by the World Health Organisation (WHO), could take a hit on advertising expenditure (adex) but brands which maintain or increase their spending may reap a stronger presence over the long term.

A recent survey by Dentsu Aegis Network (DAN) showed that brands which maintain or increase their adex during times of change could win the hearts and minds of consumers and sustain long-term growth.

A survey by DAN of clients in China, among others, indicated that people were spending more time at home and that some brands have responded by shifting spend from offline media to online.

Reports arising from the Covid-19 outbreak also points out that despite some marketers slowing their ad spending, there may be some shift to e-commerce and live-streaming.

Publicis Groupe and Leo Burnett Malaysia CEO Tan Kien Eng told StarBiz: “Brands will now be more mindful of the spending but more importantly, the type and tone of the messaging that is appropriate for the audience in that particular situation.

Publicis Groupe and Leo Burnett Malaysia CEO Tan Kien EngPublicis Groupe and Leo Burnett Malaysia CEO Tan Kien Eng

“If we were to learn from past crisis, economic or otherwise, the brands that continue to maintain their presence will emerge stronger when the situation improves.”

Publicis Groupe is projecting adex forecast for the country this year in the region of minus 5% year-on-year from negative 4% in 2019, partly in the event of a protracted Covid-19 outbreak globally and political instability in the country.

It, among others, noted that potential growth would come from e-commerce as well as online food and grocery delivery as consumers reduce out-of-home activities.

It added that rubber gloves, healthcare, property (due to lower interest rates), telecommunications and technology (in-home entertainment) could fare better during this trying times.

Media analysts said more people are now going online and looking for more information and buying the relevant products to help protect themselves from the virus.

They concurred that this would provide brands in the areas of healthcare, wellness and medical products an added advantage to further penetrate their brand presence and forge a closer relationship with consumers.

As the outbreak is evolving daily, IPG Mediabrands Malaysia CEO Bala Pomaleh said the repercussions across the Malaysian ad industry remained to be seen.

IPG Mediabrands Malaysia CEO Bala PomalehIPG Mediabrands Malaysia CEO Bala Pomaleh

“Some brands have started to pause their marketing initiatives and ad spend as they aim to figure out the best way forward to engage with their customers. On the contrary, other brands will go against the grain, continue to spend or shift spends across different mediums.

“This differs across industries and categories, so our agencies take a very collaborative approach with clients to ensure there is no wasting of opportunities. Everything will depend on how quickly normality returns, or what becomes the new normal that gets factored into economic growth, business expectations and removal of the current disruption in the supply chain, ” he added.

At this juncture, Bala said it is hard to predict the long-term impact of the Covid-19 outbreak. There have been predictions of an economic slowdown, so the general sentiment is conservatism, he said.

“Those markets that have seen more high-profile societal impact (self-imposed isolation or urban lockdowns) and/or significant travel disruption such as cities in South Korea, Hong Kong and China are having knock-on effects of clients delaying campaigns or a shift in media type, ” he said.

He added that home isolation translated to increased TV and digital consumption, alongside increased e-commerce activity and a need for digital tools for work communication and education.

“Conversely, there is less likelihood of individuals being out in public spaces, meaning a reduced opportunity to see out-of-home sites and general slowdown across numerous sectors including travel, hospitality, supply chain and large-scale events, ” Bala said.

At the same time, he said there would be a latent demand or new pockets of innovation that advertisers would look to capitalise on.

The challenge, opportunity and to some degree, magic, he said would be from using data, audience sentiment as well as the news cycle to pick the right time to hit the right audience in the right place. “This lies at the very heart of why media agencies exist in the first place, ” Bala said.

Meanwhile, Tan foresees a behavioural change due to the Covid-19 outbreak. “I see agencies speeding up the usage of digital tool and accessibility to proprietary agency platforms for people to work remotely.

“Having to work remotely will force a behavioural change among people and alter the current workflow process, whom in normal circumstances require a lot of face-to-face interaction and presentations to arrive at a solution.

“It will force agencies to set up smaller teams to crack the brief. But it will take a while to normalise and perfect the change in the way of working, ” he noted.

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