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COVID-19 is already having a huge impact on marketing, advertising and media.  How are advertisers reacting to COVID-19? How will different media types ad revenues be impacted by the coronavirus health crisis? Portada got insights from brand and media agencies of the Portada Council System in order to gain some clarity. The answers to 7 crucial questions.

1. How are advertisers reacting to COVID-19?

“In this period, we know that consumers focus on basic needs and expect brands to supply and deliver them reliably. Consumers don’t want brands to stop advertising, but it must not be exploitative or insensitive,” Joseph Kiwanuka, Senior Manager, Cross-Cultural Connections, at UM tells Portada.  A CPG brand marketer in the Portada network says that since the start of the coronavirus crisis, “marketing practices have remained consistent, one insight consistently being practiced is empathy. Messaging reinforces reassurance and value,” he adds.

2. How are brand marketers adjusting marketing expenditures?

Some corporations are freezing or postponing their plans  (e.g. Turbotax as the tax deadline has been postponed to July 15). UM’s Kiwanuka notes that,some of our clients are being tasked with pausing media campaigns and/or turning back media dollars to their corporations to help alleviate the impact to sales. Many matters regarding media budgets are still up in the air and it is still unclear as to the direction that media budgeting for the rest of the year will go. We are taking things a day at a time.”

Many matters regarding media budgets are still up in the air and it is still unclear as to the direction that media budgeting for the rest of the year will go.

3. How are different ad-categories being impacted?

The impact on business and marketing activity will vary across industries, depending on how much demand How are Advertisers Reacting to COVID-19?and investment will be delayed as opposed to destroyed during this crisis. MAGNA, a centralized IPG Mediabrands resource that develops intelligence,  expects the impact to be severe for the travel, restaurant, and the theatrical movie industry, significant for retail (check out Macy’s announcement to furlough 130,000 employees), finance and automotive, moderate for packaged food, drinks, personal care, insurance and pharma, and potentially positive for e-commerce and home entertainment. While the overall impact of the coronavirus on advertising will undoubtedly be negative (more details below), some sectors are actually starting to profit from the increased demand of families for home entertainment.  “We are in a unique position during this crisis since we are the market leader in providing families online education at home. Day to day efforts include accelerating campaigns/creative to be in market sooner and even revising some original copy to align with current events,” a brand marketer in the online education sector tells Portada.

We’re in a unique position during this crisis since we’re the market leader in providing families online education at home. Day to day efforts include accelerating campaigns/creative to be in market sooner.

4. Advertiser COVID-19 Reaction

MAGNA released its revised March 2020 Ad Forecast last Friday and expects all-media full year ad sales to decrease by -2.8% this year as the spending cut from most industry verticals will be mitigated by the incremental political spend ($4.9 billion, up +26% vs 2016), and a V-shaped rebound in the second half (Magna). It remains to be seen if this forecast is realistic, as there is a significant downside risk (see question 7 below).

5. Which media types will be particularly hard hit?

How are Advertisers Reacting to COVID-19?Linear ad sales will suffer the most.  MAGNA released its revised March 2020 Ad Forecast last Friday and it expects media suppliers’ total linear (National and Local TV, Radio, Print and OOH) ad sales to decline by -12% (-20% in the first half, -2.5% in the second half). The decline forecasted by MAGNA would be larger were it not for the political advertising revenues (2020 elections) to be obtained by linear TV, radio and print outlets later this year. Media vendors’ linear ad sales will shrink by -12% (incl. political) this year compared to approx. -4% per year in recent years. The decrease in advertising sales will reach -13% for national TV, -12% for OOH, -25% for print and -14% for radio. The outlook will be slightly more positive for broadcasters and publishers when including digital ad sales. Local TV’s non-political ad sales will also decline massively but political spending (almost US $5 billion, +26% vs 2016) will stabilize full year revenues (+1%).
The sharp decline in ad dollars is not necessarily a reflection of lower linear media usage in the last few weeks. In fact, the opposite is true: for instance in the multicultural space, Spanish-language news viewing increased as much as 50 percent last week among Hispanic adults 18-34 compared to the week prior and 123 percent versus last year. Hispanics over the age of 50 are already heavy news consumers, but their viewing has increased as well (29 and 46 percent, respectively). In addition, for the week of 3/16 -3/22 linear TV usage had as much as 182 percent increase among Asian American teens, compared to the same day the prior week.

The other major loser is experiential marketing as mass gatherings are out of the picture in the next few months. One brand marketer interviewed by Portada who wanted to remain anonymous told us that  “investment is mantained in all channels except experiential.”

Investment is mantained in all channels except experiential.

6. Digital Advertising: More Resilient

How are Advertisers Reacting to COVID-19?At this stage, the total market decline anticipated (-3% or -$6.2bn vs 2019) remains less severe than the decline experienced in 2008-2009 (-20% or -$33bn vs 2007), mostly because of the weight and resilience of digital advertising today. Magna expects digital advertising to be more resilient at +4% (-2% in the first half, +10% in the second half). Digital media ad sales will grow by +4% this year and re-accelerate to +7% next year. Search will slow down to +4.5% growth while social and digital video (including Connected TV) will continue to grow by high-single digits. 

It has to be said that at least in the short term digital advertising, see above  -2% in the first half of 2020,  will be negatively impacted. Third party revenue generating platforms have begun altering their payment processes. Altice-owned Teads and ad tech company GumGum Inc have sought changes to their payment arrangements with publishers, with Teads invoking force majeure on contractual arrangements and GumGum proposing extended payment terms.

Search will slow down to +4.5% while social and digital video (including Connected TV) will continue to grow by high-single digits.

7. Is the advertising forecast realistic? “V” vs “U” shaped recovery

According to Magna, “at this stage, both the macro-economic outlook and the corresponding advertising forecast present a high degree of uncertainty and significant downside risk for 2020. The key question is how long the social distancing imposed demand shutdown will be. The U.S. economy has never been through a period like this in modern economic times. Right now, governments are substantially repressing economic demand through social distancing rules.

Right now, governments are substantially repressing economic demand through social distancing rules. The key question is how long the social distancing imposed demand shutdown will be.

While in Europe substantial efforts are being made to make sure  that companies don’t go bust and employees don’t lose their jobs, that is not true for the U.S. despite the recently signed U.S. 2 trillion fiscal plan. This will become even more of an issue should the shutdown be expanded beyond April 30. Should the social shutdown be expanded to the late spring and summer, the economic and advertising recovery will be U shaped rather than V shaped. Therefore, the 2020 decline in advertising will be larger than the one in the Magna forecast.

Once the virus  is under control the economy needs to be available to hit the ground running and that means that most employees need to remain employed to keep processes and know-how at their companies.
Another caveat poised by analysts is about the quality of the data regarding economic activity (and advertising demand). Most economic data is based on surveys. Are consumers and businesses going to be filling out surveys in this environment? Will data be reflecting accurate information or meaningless noise?

 

What: For audience data analysis, CNN blends and analyzes multiple data streams that reveal its audience’s preferences. Thus, the world-renowned news organization produces content that keeps viewers coming back.
Why it matters:  CNN’s VP of digital research and analytics Seth Holladay outlines the challenge of finding the right data and analytical tools to ensure that content engages loyal viewers and attracts new ones.

 

Audience data analysis tools

Cookies are not enough when it comes to a complete understanding of your audience, according to CNN’s VP of digital research and analytics Seth Holladay. In other words, the bits of data stored on users’ web browsers provide only a partial picture of CNN fans’ interests and viewing habits.

To really know its audience, CNN turns to multiple data streams gathered from its own online properties and third-party data sources. For example, this includes Google and Alexa voice-activated speakers. Moreover, it analyzes users’ behavior on CNN’s websites, Holladay told Portada during a sit-down interview at Portada Miami.

CNN uses multiple sources of data and data analysis tools to inform its editorial, advertising, and content strategies. “We watch how people are interacting with our content,” Holladay said.

For instance, one tool CNN uses for audience data analysis is Adobe Analytics, to track users’ interaction with CNN’s websites. But cookies aren’t enough. Thus, CNN also uses third-party data sources, like Comscore, to better understand its audience demographics.

 

Third-party data and other data sources

“Across the CNN portfolio, we cover a lot of topics. Comscore for the U.S. market allows us to understand the demographics of our viewers,” Holladay told Portada. “We take a lot of our really granular Adobe-level data, users’ actions on our website, and within that we are blending in different types of data using a lot of third-party sources to enrich that data.”

Seth Holladay, CNN

Audience information drawn from third parties includes data from Alexa and Google Home smart speakers that, while not directly connected to CNN, still provides valuable insights, Holladay said.

We have increasing interest from Hispanic audiences across the world in what is happening in the U.S.

 

 

Connecting the dots with mobile

To further close gaps in audience data analysis, CNN looks at data drawn from consumers’ mobile advertising IDs.There is an ability to connect the dots with mobile advertising IDs, what people are doing and the online behavior data from Adobe, and then match those with the advertising side to create a richer picture of the audience,” Holladay explained.

CNN has a “number of initiatives underway” to deploy AI and machine learning to analyze the data it collects. But human decision making is still a key component of how CNN uses data to guide its content decisions.

“From a business perspective, at our core we are a news service. We have a lot of editorial oversight so that will remain the main driver in our decision making.”

 

Multi-cultural advantage

CNN en español allows CNN to isolate the Hispanic audience in a unique and discreet way, Holladay noted.

And the current political climate in the U.S. has turned into a plus for driving new Hispanic viewers to CNN’s properties.

We are blending lots of different data.

 

“What we have now is a platform for people that want to consume news in both languages. We have an increasing interest from Hispanic audiences across the world in what is happening in the US,” Holladay told Portada.CNN discusses audience data analysis

Moreover, CNN en español also allows the news network to draw a deep understanding of content preferences in the different countries in Latin America where it is available. This is also very useful for audience data analysis.

“One of the most basic things we collect is the geography of the user,” Holladay said.

 

Informing editorial decisions

First, CNN collects and analyzes “tons of signals” to understand its visitors. The company examines what digital properties they’re clicking on, what causes them to leave a site, and their digital touchpoints.

Then, it deploys a real-time dashboard to give its editorial professionals a true picture of the impact of content. In this way, they see “what types of topics and subjects resonate with different types of audiences,” Holladay said.

 

What: Stephanie Borges, VP for North America Strategic Marketing & Partnerships at Six Flags Theme Parks, shared insights on how the park deals with marketing to Hispanic consumers.
Why it matters: Six Flags Theme Parks is trying to expand by targeting U.S. Hispanics. It is also growing in the Latin American market.

 

Six Flags Reinforces Its Marketing to Hispanic Consumers

Portada: Why did you decide to reinforce your marketing strategy towards U.S. Hispanics at this particular moment?

SB: The Hispanic market has always been important to us. With its growth, we have put a dedicated focus on creating unique and innovative platforms in partnership with other brands that want do Hispanic marketing.

Portada: What have you discovered in these consumers that makes them great clients?

SB: Our research shows that Hispanics are very family-focused and want opportunities to spend quality time together.

Portada: How are you approaching U.S. Hispanics?

Six Flags Marketing to Hispanic ConsumersSB: As a brand, we purchase Spanish-language media in markets across the U.S. We constantly monitor media consumption and the growth of SL audience delivery. Each year, we have increased our SL media investments. From a partner perspective, we have built a variety of in-park Hispanic focused programs. Through “Festival Latino,” “Cinco De Mayo,” “Día Del Muerto” and “Fiesta Fin De Verano,” brands and guests interact in a relevant way. As an example, Ortega was a “Cinco De Mayo” partner, utilizing Six Flags’s in-park assets, and conducted an on-pack in market retail program. Additionally, Six Flags host concerts with some of the hottest and up-and-coming Latino artists.

Also by Portada: Multicultural Marketing: How to Use Seamlessly in Total Market Campaigns

Differences Between Hispanics and General Market

Portada: What differences have you found in how you do marketing to Hispanic consumers compared to your strategy for targeting the general American market?

SB: From a marketing perspective, we recognize the importance of family. We understand how it connects the Six Flags experience with moments and media we select to reach the Hispanic audience.

Spanish-language TV provides programming that delivers co-viewing, and enhances our opportunity to motivate a family visit to Six Flags.

For example, Spanish-language TV provides programming that delivers co-viewing and enhances our opportunity to motivate a family visit to Six Flags. We will tailor advertising developed in the Spanish-language, but always communicate how Six Flags delivers thrills on a broader level. Our “Go Big” campaign in the general market becomes “A Lo Grande” for the Hispanic market.

Portada: What advertising platforms are you using and which ones have been working best?

SB: Broadcast TV and radio have been our primary mediums for reaching the Spanish-language market. Six Flags buys media on the local level, and these mediums help us reach our local Hispanic markets while tailoring relevant creative for each. Spanish-language TV and radio also offer us the opportunity to bring our brand to life with messages that deliver news, reasons to visit and a sense of urgency.

Growing in Latin America

Portada: You are also growing in Mexico, where you are opening a new water park next year. How important is the Mexican market for you?

SB: The Mexican market is very important for us. Our existing park is the gem in Latin America and we are excited to add a water park in that market that will open in early 2017.

Portada: Are you using similar marketing strategies for reaching out to U.S. Hispanics and Mexicans? Why does it, or doesn’t it, work?

SB: We have found that all cultures across the world understand the language of thrill. At its core, the Six Flags brand is synonymous with delivering thrills for all ages.

We found that staying true to our ‘thrill’ brand heritage while communicating the brand in a manner that is relevant to each culture and tailored to the market and language is the key to success.

As a result, we have found our park in Mexico City to be one of our top-performing parks, and recently announced the addition of a new water park to open in the spring of 2017.

Join us at PORTADA Mexico!

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