One of the most prominent slumps faced by the advertising sector was during the Great Recession. It was a global economic downturn which affected the financial markets and caused them to decline drastically causing the stock markets to crash in some countries.
As for in the United States along with other sectors funding for media ad considerably stopped for around 2 years. Furthermore, spending on digitalized ads hit rock-bottom in 2009 due to the recession; the first and the last time that has ever happened.
Surveys were conducted, under the pretense of the Corona virus pandemic, by the International Advertising Bureau. They questioned the buyers-side decision makers about their opinions about the kind of affects the virus will have on the economy. Majority of them ruled in that the current situation can have a way more drastic effect on the ad budgets.
According to the findings provided by the Bureau, 75% of responses pointed towards the possibility that recovering from the damages caused by this crisis will be harder than the recovery needed for 2008-2009 recession.
Out of the 75% responses 44% of them were of the view that the impact would be sizeable. As a proof to this statement, it was reported by the respondents that they had already started seeing negative changes being made to their ad spending. 25% even stated that advertising has been brought to a complete halt.
It was further stated that these changes could possibly be short-term. 66% of the respondents also said that their firms had not made any decisions to adjust or reduce the budget in the second half of 2020. A global research based business intelligence for advertising operating under the name,
Advertisers Perceptions conducted survey involving the buyers side of the market in late March about their plans such as adjusting or halting spending. From the survey, it was found that out of all the respondents around 9 out of 10 of the advertisers had made a change to their spending and budget to adjust with the economic downfall.
Actions like halting preparation for campaigns which were supposed to launch later in the year, at 49%. 48% of them made changes in their media and shifting budgets and 45% of them stopped their campaigns mid-term.
The above mentioned respondents made changes based on their calculations which concluded that the current crisis would have the greatest effect in second quarter. They also stated that the effects may continue onto the third quarter, where the effects may decrease greatly but would still be considerably more than the first quarter.
However, by the end of the financial year they think the market will return to its normal state and business may continue as planned earlier.
To deal with the situation for now, advertising agencies are downsizing on their display, social media and digital media. According to the research put forward by Advertisers Perception, it was found that there is a possibility that linear media will follow suit. To normalize budget and improve income it was decided that paid search would be the best option. However, only 24% of the responses were in support of this idea whereas 47% of the respondents said they’d be pulling it from display. Most of them believed that the recognition for performance media would improve in the following months.
Respondents of the IAB survey expected a major decrease in ad spending to occur in OOH, digital OOH and terrestrial radio, in March and April. The main reason for this was the fact that consumers could be experiencing these medias much less due to quarantine. One of the good thing derived from this survey was that the most of the respondents believed that the budget situation would improve by May.
There was a considerable difference between the two surveys;
The respondents for IAB had unfavorable opinions for performance marketing being the solution for the current crisis. Most of them were adamant on the fact that performance would decrease. Plans to increase mission based marketing, cause related marketing and brand equity messaging were suggested by 42%, 41% and 37% of the respondents respectively.