INMA economic, advertising predictions with Deloitte, Boston Consulting

With pandemic lockdowns slowly lifting, businesses begin to envision what the "new normal" will be - and with it will come clues to what will happen next in advertising. Which ways could things go next for advertising? What levers do ad sellers have available?

In the opening session of the INMA Virtual World Congress last Monday, Neal Zuckerman of Boston Consulting Group and Duncan Stewart of Deloitte shared their research and opinions with attendees about what the industry might expect in the months and year ahead.

Zuckerman, managing director/senior partner and co-head of media practice for Boston Consulting Group (BCG), opened by saying that while the information he would be presenting wasn't optimistic, it was important information for publishers to know. He shared a chart of growth trends in the global ad market, covering television, digital, video, social, and print.

"The trends have been gently growing for overall advertising, but certainly not in our favour," Zuckerman said. "Spoiler alert: It isn't pretty for print, and digital display over the last six years has been anaemic."

Historical comparisons

Stewart, director of technology, media, and telecommunications research at Deloitte, shared a graph showing how advertising spending was affected by the Spanish flu pandemic of 1918, which killed tens of millions of people around the world. Despite the severity of that pandemic, it did not trigger a global recession. However, ad spending plummeted more than a decade later as the result of the Great Depression, he said.

"Pandemics don't cause advertising slowdowns," he observed. "Recessions do."

Zuckerman took a look at how different categories were affected during the financial crisis in the United States. Some industries, such as auto, were most severely hit, while industries such as food and beverage were more resilient and seen as "affordable luxuries."

Advertising declines

The trends aren't the same across the globe. In the United States print has been hit hard, while in Japan it has remained fairly steady, for instance. But before COVID-19, the overall global view was a decline in print advertising of nine per cent a decline in digital display of four per cent, and a decline in TV of one per cent Digital video and social grew by 14 per cent and digital search grew by nine per cent.

"You go into this crisis with an unpleasant forecast," Zuckerman said. Then advertisers immediately restricted ad budgets. He shared BCG's recent global findings in various categories. One slide showed the percentage of advertisers that have cancelled and/or adapted their campaign strategies.

"It's the figure on the right that gives me pause," he said, referring to the 48 per cent of advertisers that adjusted the media type of usage or shifted budget among media types. "[This] tells me that it is easier to leave more restrictive environments like print than it is to stay with them."

Stewart shared details of categories going up (ad-supported video-on-demand, broadcast video-on-demand, antenna TV, automobiles) and those going down (podcasts and public transportation).

Economic recovery models

Zuckerman looked at the V, U, and L shaped models for economic recovery. With the financial crisis, Canada emerged closest to the quick recovery V model, while the United States followed the U-shape, returning to growth but more slowly. Greece, on the other hand, experienced a sustained depression and L-shape trend.

"Where will we go? That's the question on everyone's tongue," he said. At this point, the prediction is that the recovery from COVID-19 will be at least a deep V-shape, with a clear risk of a U-shaped recovery. A global recession is likely.

"Our assumption is that we're looking at a 'V' -- Q1 good, Q2 bad, Q3 we really have some trouble figuring out, but recovered by Q4," Stewart said. "Bad for the year as a whole but we're looking for 2021 to be up -- but that's still terribly early."

The way forward

Stewart had an out-of-the-box suggestion: the mashup of printing plants with private 5G trials.

In addition to public 5G, fifth-generation wireless networks installed inside private companies could eventually find their way to printing companies and broadcast companies. Originally Deloitte predicted that private 5G would have more than 100 test deployments during 2020, but that number now appears to be much too low and could exceed 1,000. Some of that is the result of COVID, which shut down certain warehouses and plants -- providing the perfect opportunity for a 5G trial.

"It strikes me that, over time, a printing plant of the future may well want to use private 5G as well because it's faster, better, cheaper, and more resilient," Stewart said.

Zuckerman shared eight suggestions that he had for new publishers to consider during this downturn. One was to shift to consumer pay models:

"I do think the shift to consumer pay models is coming from consumers that are already working with you," he said. "I do believe this is the moment to ensure that those consumers that have come to you for the COVID bump are embraced as future consumers."

INMA/Paula Felps & Shelley Seale with thanks

Banner image courtesy William Iven/Pixabay.

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