Though battered and bruised, advertising is emerging from its Covid-19 cocoon
There is a slow emergence of trade in SA, but brands, advertisers and consumers are still feeling pretty battered and bruised, and revenue streams are still low for the majority of industries. A new report by the Publisher Research Council (PRC) distils advertising and ad-tracking data to reveal a clear picture of the impact Covid-19 has had on advertising in the country.
There have been no winners in the advertising game since the Covid-19 pandemic landed on SA shores in March. The PRC’s six-month lockdown adspend and ad-tracking report is based on Nielsen’s WizzAd data and reveals a devastating picture of a decimated sector.
In January and February 2020 advertising spend rose 3% and 8% respectively compared to the same time in 2019. But this, says Karen Phelan, on behalf of the board of directors of the Advertising Media Forum (AMF), barely covers inflation. Members of the AMF – a collective of media agencies and individuals including media strategists, planners, buyers and consultants – are responsible for buying 95% of all media that is sold in SA.
By March, adspend was flat lining. It dropped 28% in April, 38% in May, 26% in June, 17 % in July and 15% in Aug.
Marketers, says Phelan, were faced with enormous challenges, and this is apparent across the report. “How do you invest in advertising when you’re unable to trade, or your ability to trade is extremely limited, with the result that your revenue and profit margins are taking a beating? Phelan asks.
“Another challenge was, what to communicate? What messaging do you use in a situation like this that would not offend, irritate or seem flippant? What are your brand communications and objectives in a new world and how do you adjust?” she asks.
Lockdown reduced the revenue of virtually all media types, Phelan says. “Cinema, in particular, was unable to generate any revenue, and continues to be negatively affected even at Level 1 due to having to operate according to Covid-19 regulations.”
“Many publishers, aside from those that were deemed as essential because they carried Covid-19 news, were unable to print. In terms of magazines, we’ve seen the closure of Habitat, Caxton Magazines and Associated Media Publishing, while Media24 has reduced the frequency of printing some of its publications,” Phelan points out. “A number of newspaper publishers have reduced their distribution areas, others have closed titles or chose to go digital only.”
Veteran adman, author of Media Planning: Art or Science and owner of GSM Quadrant, Gordon Muller, believes the magazine sector is “arguably … the worst off” and questions whether there is even “a viable magazine sector left at all”. Some publishers, he adds, “have used Covid-19 as the catalyst to make the decisions that needed to be made anyway”.
The revenue of the out-of-home (OOH) media sector, which took a hit due to the decline in vehicle and foot traffic during the hard lockdown, decreased. But, says Phelan, the sector was “starting to see some improvement in July compared with May and June 2020. While it’s still not at the levels of 2019, there is an improvement.”
As Muller reiterates, there were no winners – even the behemoths of digital advertising, Google and Facebook, “took a bath”, he says. But television was the “relative winner”, though the figures do not reflect discounts and pro bono flightings. Still, Muller says, TV should sustain its relative competitive advantage over radio and print. “The global shift to holistic audience measurement is a catalyst for TV to remain centre stage for the foreseeable future while digital screens are underpinning the recovery in the OOH sector.”
Television viewing peaked during the hard lockdown, but the size of viewing audiences is already starting to move downwards. “The decrease is, however, also attributable to more than one factor: load shedding and power outages, and the lack of sports events – though these are now starting to return – in 2020 vs 2019,” says Phelan.
She adds that from a technical point of view, the degree of Nielsen’s ability to service the “peoplemeter” households had an impact on the information that was available. Again, this is improving with the lifting of the lockdown – as well as the increase in streaming. Looking at a share graph, TV appears to be the winner. However, the truth lies in the detail: even the broadcasters are hurting, as January-July 2020 adspend was 12% down on 2019.”
To see which were hardest hit, the PRC also drilled down into the various advertising sectors – FMCG, automotive, business-to-business and industrial, financial services, government education and health, multimedia, professional services, retail, small display ads (classifieds), social responsibility and welfare, travel, sport and leisure.
“Under the lockdown, so many industries were unable to trade. This has resulted in the negatives we see in the graph Ad Spend by Category ’19 vs ‘20. In fact, aside from social responsibility, welfare and government education and health – which were all key in Covid-19 communications – all industries show a decline. Retail’s investment has decreased by 22% year on year for January-July 2020 and FMCG is down 18%. The automotive sector shows the largest decline, at 61% over the seven-month period year on year,” Phelan says.
Muller recounts personal experience to highlight the impact on consumer behaviour. “My overall household budget declined hugely during the lockdown, but expenses on food and groceries were consistent. Folks gotta shop and eat. So food retailers are okay, but clothing retailers are on the sidelines,” he says.
The media made much of the need for advertisers to continue buying ad space, based on historical studies, but Muller stresses that “there has never been anything like Covid-19 before and if people cannot buy your products, then continuing to advertise makes little sense. Alcohol, restaurants and fast foods are a case in point. So [these sectors switched] branded presence into corporate social investment (CSI)-type activity. For example, SAB did ‘drink responsibly’ and ‘look what we contribute to the economy’-type stuff”.
It is understandable, then, that CSI and government spend continued. Who the big spenders in these categories were “makes sense, as the majority of the investment was around Covid-19 communication,” Phelan says. “Some of the biggest ad spenders were the national and regional governments, the WHO, the Solidarity Fund, the SA Tourism Board Association and the Covid-19 hotline. But the detail shows that some of these organisations were already starting to reduce their spend in July. In my view, as we move into Level 1 and if the number of Covid-19 cases continues to decrease, I think the key advertisers who are focusing on Covid-19-related messaging will continue to decrease their investment levels,” she predicts.
There is more to this than simply spending, says Muller. “During the lockdown, global reports all consistently indicated that brands with a conscience were the key. This is an underlying theme in all the SA Top Brands reports. Look at the Arena Future of Media webinar … it was all about brands with conscience. Empathy in advertising. This is the No 1 theme emerging from the global crisis,” he says. He says that 90% of South Africans [questioned in a survey] “believe brands can play an even greater role in providing stability to the world at large and 88% say brands should talk about how they can be helpful in the new everyday life.” (Source: Kantar).
Then there was the bad news impact, which was major, says Phelan. Who wants their ads to appear beside really bad news? “Everything was flying at the consumer and not much of it was good,” she says. “Understandably it felt like the entire industry became a tortoise – ‘retreat within our shells until the danger passes’.”
She says: “We need to acknowledge and be aware that this is going to be a slow road to recovery – the large majority of consumers’ incomes have taken a beating and their spending patterns will therefore also remain depressed for some time to come.”
The adspend and tracking report is another first in a series of technological advances to make the PRC’s data more accessible to users. The deep insights inform effective media buying decisions.
- The writer is CEO of the PRC.
The big take-out:
A new tracking report reveals a devastating picture of a decimated sector which is going to require time to recover given that consumer’s spending patterns are likely to remain depressed for some time to come.
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