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Advertisers Cutting, Delaying Spending Amid Crisis: Survey

While many advertisers moved quickly to cut ad campaigns as the coronavirus crisis has intensified, many are pausing spending and want to continue to partner with media companies, according to a new study from Advertiser Perceptions.

“Nobody was really prepared for how quickly this came down,” said Justin Fromm, executive VP for business intelligence at Advertiser Perceptions.

The company, which surveys advertising executives and media buyers on a regular basis, did a study on March 2. It asked about the coronavirus and found that 53% felt like it would be business as usual and 82% of advertisers didn’t have a plan in place for this kind of situation.

Advertiser Perceptions quickly followed up with another one on March 17. It plans to do studies every two weeks as the crisis continues.

In the new study, advertisers were taking the crisis a lot more seriously. “It was a gut punch and the response has been knee jerk,” said Fromm. 

The new survey found that 89% of advertisers took action with their ad budgets as a result of the outbreak, with 34% cancelling a campaign completely and 45% stopping or pulling a campaign in mid-flight. Nearly half made adjustments in their media mix and 38% said they paused all new advertising efforts until later in the year.

The advertisers surveyed expect the negative impact on budgets to be most intense during the second quarter. Only 28% said the coronavirus crisis would have a “major impact” in the third quarter and that falls to 11% when asked about the fourth quarter.

Fromm said that might be overly optimistic.

More worrisome is that 81% said the coronavirus will cause significant cuts to ad budgets this year and 68% expect to have reduced ad budgets into 2011.

Linear TV was hit hard early on, but long-term opportunities are likely.

One reason was because 40% of advertisers said the networks and broadcasters canceled or changed the programming they had planned to run commercials in.

The biggest changes involved sports, including the NCAA Basketball Tournament, the NBA, golf and hockey.

The good news in the study was that 70% of advertisers said they were keeping budgets with the same media company, either by shifting spending to sports programming later in the year, keeping the funds with the same media company but not allocating them for the time being, or keeping the funds with the same media company but shifting them to different, non-sports programming later in the year.

Asked what media sellers can do to keep them engaged, one advertiser said “work with us in rescheduling. Be a good partner, Another said ad sales execs should “show us what other clients are doing. Show us quick case studies of the positive impact of advertising each week.” A third advertiser was looking for media sellers to identify where brands can shift dollars to get awareness.

The industries whose ad spending has been most affected by the crisis are the “out and about” categories, while those that encourage consumers to “hunker down at home” thrive.

Those hard hit categories include travel and tourism, restaurants and retail. They accounted for $27 billion in U.S. ad spending in 2018.

Over the long term, most advertisers said they expect to increase their spending on linear TV either a lot or some, with 28% predicting no change.

The advertisers said that with this year’s live upfront presentations canceled because of the virus, the traditional upfront model might change. In the survey, 68% of those surveyed said TV networks will use this opportunity to rethink having in-person upfront events.

The advertisers also said that they expected social distancing to accelerate the shift to over-the-top and connected TV viewing.

Advertiser Perceptions’ study is based on 203 interviews conducted between March 17 and March 20. All of those surveyed are involved in media brand selection decisions.

Jon Lafayette
Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.