Adapting to a ‘New Normal’ by Michel Malkoun

By Michel Malkoun, Chief Operating Officer, DMS.

Adapting To A ‘New Normal’

When the news first broke about Covid-19, the advertising, media and marketing world hadn’t drastically felt an impact on their business. But in just a few weeks, they’re now facing a new reality. One where they have been forced to cancel events, reevaluate budgets, navigate at-home work schedules and reassess their digital and media spend.

While times may be challenging, great opportunities lie ahead. It’s situations like these where creativity and innovation are paramount for brands to ensure their business remains afloat during this uncertainty.

Here’s how I see the current situation affecting our industry;

  1. Decreased spend (in obvious categories)

a) Travel & Tourism have cut spending to almost zero. Publishers who over-index on spend from the travel category will be hit harder, as well as agency teams operating on an undisclosed or % of media spend (versus FTE model).

b) Retail was forecasted to be 20% of digital ad spend. This is due to Chinese supply chain dependencies (huge backlogs and inventory shortages) and fewer walk-in customers with store closures (impacting hourly workers and commercial real estate).

c) Entertainment & Sporting Events such as the IPL Cricket, UEFA Club Finals, Euro Cup and the Olympics have been cancelled. Restaurants and luxury goods will also have their spend impacted.

Overall, I estimate that the above categories we will see a 30%+ reduction in ad spend for 2020. Given that digital advertising has proven to be more effective, measurable and accountable, digital ad spend will be the least impacted of all channels.

2. Increased spend (in niche categories)

a) Productivity and Collaboration Technologies, be it cloud-based (e.g. Slack, Zoom, Teams) or physical device makers (e.g. home office equipment) should see accelerated growth. Investment in technologies will help companies become more efficient while working remotely.

b) Trade and B2B Marketing should see a boost with business travel reduced and industry events cancelled (see Adweek and AdAge for live trackers). B2B companies will reallocate travel, entertainment and marketing budgets to digital advertising.

c) Consumer Services such as gaming, music and subscription videos, are attractive to investors as people are now looking for entertainment and social connection.

d) Education Technology will be another growth area for long-term investment as we realise how weak our digital education infrastructure is (outside of the few elite, well-funded schools).

e) Online Brands including direct-to-consumer goods and services, that do not have a supply chain reliance on China have a unique opportunity to build brand awareness.

Other categories, such as healthcare, pharma and home fitness may also see growth. From the categories above, I would estimate digital spend could see a 10% boost in new budgets if companies invest in brand opportunity.

3. Brands increasing media spend through creative automation

There are no creative standards in digital advertising today. Facebook, YouTube, Instagram, Twitter, LinkedIn, Pinterest, Snapchat, the programmatic web and publisher branded content all have their own formats and specifications. This has led to brands investing heavily in creative production, management and approvals.

With macroeconomic uncertainty, brands may double-down on fewer digital marketing channels and as a result, not have the budget, time or patience to build, manage and approve new channel creative. We have been investing aggressively in creative automation technology to enable brands to repurpose existing social ads, posts and videos (Facebook and Instagram) to run across trusted publisher environments. As the market leader when it comes to programmatic buying we help our customers integrate into our platform so they can avoid incurring creative production costs and prioritize efficiency.

4. Opportunity for “brands with purpose”

a) Publishers are doing their part to lower paywalls and increase usage limits to ensure Covid-19 coverage is available for all. They are now witnessing a spike in their subscription.

b) Trusted Publishers have a responsibility to create reliable journalism in times of confusion and uncertainty.

c) Ad prices in some categories will go down with less competition in their auctions from advertisers willing to spend less in some categories and more in others.

d) Brands should question if social media is a safe space for spending. In the wake of misinformation spreading quickly, the News Feed is now the Corona Feed. This is where the trusted voice of Publishers should come into play.

Brands are not yet doing their part. Many advertisers are targeting digital spend away from pages that even mention Covid-19. This is understandable from a brand safety perspective, but it is inconsistent as Facebook spending patterns have not changed. It is also short-sighted and sends a message to publishers that brands do not want to support trusted journalism in times of need.

This is an opportunity for brands with purpose to step up and show leadership. I believe this will lead to winning the hearts and minds of customers over the long-term.