Marketing spend: hope for a brighter new year
New research shows a predictable drop in spending as a result of the Covid-19 lockdown, but many advertising and marketing agencies expect a recovery in 2021 — possibly as soon as January
New data from Scopen Africa and the Independent Agency Search & Selection Company shows that during the first six months of the lockdown, 58% of marketers cut their advertising spend. Just over 30% maintained a stable budget, and a paltry 5.6% increased spending by 20%-30%.
The data confirms brands have cut adspend in response to the pandemic — the overall average reduction was 21.3%, though this is a slightly smaller reduction than expected.
The Trend Score 2020, launched for the first time in SA, is a barometer of the marketing industry over the past six months and also gives a view to the next six. Data was gathered between September 15 and October 12.
Of the 36 participating companies, most are SA-owned and the rest are multinationals, and three in five have more than 1,000 employees. Categories covered were fast-moving consumer goods, services and durable consumption goods. Below-the-line spending — promotions, activation, experiential and events — dropped the most (26.6%), followed by above-the-line at 18.8%.
Unsurprisingly, digital media buying dropped only 3.7% and digital media creative and content rose 1.9% as the lockdown forced sudden changes in everyone’s work, leisure and shopping habits.
"Investment per media platform is not astonishing either, given the conditions placed on consumers with regard to gatherings and delivery of essential goods," says Scopen’s Johanna McDowell. "The biggest loss was cinemas, at a massive 81.8%, followed by magazines and newspapers at 65.8% and 64% respectively."
She says it was heartening to see new, SA-made ads running in the first few months of the lockdown, and then in the past two months a switch back to regular ads. The only real rise in spending was for television advertising, with spending by companies in the durable goods sector soaring 50%.
Scopen co-founder and global CEO César Vacchiano believes the pandemic has changed relationships between marketers and agencies. "The single most significant change was remote working. Marketers also found responses and processes quicker, as well as noting closer relationships, with agencies being more proactive and providing solid brand support."
Changes in the way marketing organisations worked with agencies were also notable. The survey found that 42.4% of marketers reduced agency fees, while 12.1% have frozen them. Most advertisers expect to maintain stable investment in both above-and below-the-line spend in the first quarter of 2021, with a greater weighting towards below-the-line.
So, when do marketers see their advertising investment improving?
The study says the overall expectation is within a year, with almost 55% of the largest advertisers in SA believing the industry will start recovering some time in 2021; one in four think it will happen as soon as January. Three out of 10 advertisers see investment improving only in 2022 and a pessimistic 9.7% don’t expect the industry to return to pre-Covid vigour before 2023.
Vacchiano says multinationals are under increasing pressure to show growth but will be feeling the hardships of 2020.
"Independents appear to be somewhat better off, especially where they were able to reduce fees for a few months and clients made payments promptly."
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