HOW THE CORONAVIRUS PANDEMIC IMPACTS ADVERTISING INDUSTRY
Although the advertising industry was on hold with the appearance of the virus, pulling back the campaign launches at the beginning of 2020, many of them increased their marketing activities in the third and second quarters. During the lockdown, people are spending more time on social media, and brands that have increased investments in marketing and organic social media campaigns could naturally expect more profit.
Since the economic recession of 2008, last year was the worst for the ad industry -- according to Forrester, with 49,000 ad industry jobs being lost worldwide, and US ad revenue declined by $20.6 billion compared to 2019.
The biggest losers in 2020 were agency employees, reports Business Insider, including job losses and pay cuts. Even there are some indications of recovery in the advertising industry, hiring is less likely to reach the pre-COVID heights. Despite the latest trends and companies' pledges on diversity, the most affected are Black people and those over 50.
In 2021, more jobs are expected to be cut off in the US agencies, over 50,000, except for social media and tech giants like Google and Amazon. Facebook is standing right next to them, even in the light of the recent boycott when many companies, including Coca-Cola and Starbucks, stopped buying ads on the platform because of hate speech. Unlike them, small companies increased the investments in Facebook ads, hoping to cut the losses due to the pandemic.
COVID-19 pandemic has a major impact, changing the struggling industry -- the big players are getting even bigger, in a way forcing advertisers to collaborate directly with them, bypassing the agencies. On the bright side, job losses could result in an increased number of start-up agencies, according to Forrester's prediction. The importance of launching their very own e-commerce platforms has also been emphasized during the pandemic, driving growth and pushing advertising agencies to evolve.
Social distancing means that consumers are spending more time watching different streaming services, like Netflix, which do not have any commercials. Because of the shifted habits of the consumers, digital media and ad industry have and will gradually continue to grow, pushing traditional, printed media (who were already among the worst hit) even more in the background.
As the world going towards increasing digitalization, the advertising industry has to upgrade to stay relevant and create a more resilient business system for the future. The ones who started evolving immediately in March 2020, are most likely to rebound from the pandemic recession this year. For others, there will be no major comeback in 2021.
“Brands are reminding people that they exist,” says Andrew Stephen, L'Oréal Professor of Marketing at Oxford University for BBC News. “Research shows time and time again in a crisis that turning off advertising altogether slows down the recovery.”