Advertising world a rabbit in headlights after virus

AS THE economy continues to deal with the full impact of the Covid19 crisis, it’s probably fair to say that the wider marketing industry has been caught like a rabbit in the headlights of an oncoming freight train. Nobody saw it coming and nobody knows when it might end. Six weeks ago, Ireland was the best-performing economy in the eurozone. Six weeks later, it has entered a foggy and scary economic and social twilight zone.

In times of economic difficulty and uncertainty, one of the first casualties is marketing and advertising, as companies scramble to conserve cash and rethink how they conduct their day-to-day business. And marketing hates uncertainty.

Last week, the UK company Econsultancy published details of a survey it carried out among 900 marketers in Britain about their reactions to the Covid-19 outbreak.

The survey — which was carried out before the UK went into lockdown — showed that 55pc of marketing departments are either delaying or reviewing campaigns, while 60pc are reviewing their budget commitments for 2020.

With a lockdown now in place, it’s likely that this bearish sentiment has only intensified.

While I have no evidence to suggest similar levels of negative sentiment exist in Ireland, it’s abundantly clear from conversations with a number of advertising agencies, publishers, broadcasters and senior marketers earlier this week that this country is probably feeling the pinch a lot more than the UK at the moment.

The knock-on effects of all of this are being felt everywhere in the wider Irish marketing communications industry.

Over the past three weeks, planned activities relating to PR and communications campaigns, new product launches, sponsorship initiatives, shopper marketing campaigns, market research projects and advertising have been put on hold, axed or cut back, as companies struggle to get their heads around what might unfold in the weeks and months ahead.

Advertising is one of the more visible and tangible outputs of marketing. It’s also one of the costliest. In times of crisis and uncertainty, it’s also first in the firing line when companies are faced with these kinds of systemic and existential shocks.

There is plenty of empirical evidence that clearly demonstrates brands which continue to advertise during a downturn always come out the other end with increased market share and brand visibility.

On the other hand, advertisers that pull the plug or reduce their investment often struggle, initially at least, when the economy returns to normality.

Unfortunately, this is a message that has failed to resonate in the boardrooms of Ireland Inc for many reasons which I will not go into now.

But what is unfolding on the global stage is unprecedented and calamitous.

What normality might look like in three or six months’ time is anybody’s guess. The current Covid-19 crisis is not a dotcom collapse. Nor is it a result of a financial contagion like the one that wreaked havoc on the global economy between 2008 and 2012.

This time around, every country, every sector and every person has been affected in some way.

Two months ago, I wrote in these pages how advertising investment in 2020 was likely to be in the region of €1.06bn based on figures supplied by Core. But this was before the Covid-19 outbreak. This was a modest 1.7pc growth on the comparable figure for 2019.

With the Covid-19 crisis in full flow, this forecast now seems wildly optimistic.

Depending on how long it lasts, a decline of up to 30pc is entirely conceivable, according to some analysts. In other words, many tens of millions of euros could be lost to the market this year, reversing the very modest gains since 2013.

This may be a worst-case scenario. And it will ultimately depend on a range of factors, including the post-Covid-19 taxation regime and its impact on both consumer spending and sentiment; the fiscal stimuli required to reboot certain sectors of the economy; and whether or not brands can reclaim lost marketing and advertising budgets.

Unfortunately, there may be casualties along the way, with pressures already mounting for a number of regional publishers and broadcasters, as well as some of their national counterparts.

In addition, some agencies in the creative and PR space may find it difficult to survive post-Covid-19.

At a time when our indigenous media has excelled in providing truthful and trustworthy news and information to a concerned public, all of this is worrying.

Suddenly, Brexit seems like a very jolly, but socially distant, walk in the park.