How Will Advertising Shape Up in the Rest of 2020?

Despite a tough year, advertisers plan to spend more this quarter than the same quarter last year.

Summary:

• Advertising spend is down, but it’s projected to improve in Q4
• Broadcasters have the chance to pick up ad dollars originally slated for live events, sports and other mediums
• An attribution solution can help broadcasters attract ad dollars that could otherwise go online

It’s likely not surprising that the COVID-19 pandemic had a negative effect on advertising this year.

By mid-April, 73% of marketers and advertising agencies said coronavirus had caused them to hold back from launching a campaign until later in the year, according to Advertiser Perceptions’ “The Coronavirus Effect on Advertising” report, which studied survey responses from March 17–June 15, 2020.

But rather than dwell on the past, we’re going to take a look at how the landscape is changing in the fourth quarter of 2020 as we chat with Advertiser Perceptions, a global leader in research-based business intelligence for the advertising, marketing and ad technology industries.

What’s driving the change

When it comes to ad spend, it’s consumer behavior that still drives action. Fifty-six percent of survey respondents said consumer activity had an effect on their spending behavior, while 54% said large-scale quarantines and 45% consumer media-consumption behavior were drivers.

“We know that advertisers are continuing to follow eyeballs and wallets, and this is something that will absolutely hold true for Q4 and the foreseeable future,” said Lauren Fisher, vice president of business intelligence for Advertiser Perceptions.

Where advertisers will spend this quarter

Respondents looked to reallocate spending during the pandemic toward linear TV broadcasting more than any other medium, with 38% of respondents saying linear TV benefitted from budgeting reallocation.

However, despite the seemingly good news for broadcast, another datapoint could be concerning for those that do not have an attribution solution. Sixty-five percent of advertisers agreed that the coronavirus will result in advertisers focusing spend on media that can show direct sales outcomes.  

“Part of this is to make up for lost time, lost spend and lost revenue,” Fisher said.

In July, advertisers said they’d be expanding spending in Q4 2020 in channels such as eCommerce (14.9%), paid search (7.4%), digital video (6.5%) and connected TV (5.6%), at the expense of such channels as linear TV (-2.8%) and terrestrial radio (-16.5%), compared with Q4 of 2019.

Looking for flexibility

Media brands are looking for flexibility, as 64% said they wanted their media or ad tech partners to provide flexibility with pausing or shifting funds as needed.

“This flexibility … doesn’t just speak to being flexible with budgeting and working with partners to shift funds or pause,” Fisher explained. “It really embodies every aspect of the advertising cycle. Flexibility with creative, to modify on the fly if it no longer meets the situation … as well as flexibility with some of the performance goals and criteria.”

Throw out the rulebook

 At the end of the day, the rulebook is out the window for Q4. That’s both good and bad for those looking to pick up advertising dollars.

For instance, because live programing and sporting events were cancelled earlier in the year and product launches were delayed, advertisers are looking to up their ad spend this quarter. Seventy-five percent of advertisers who planned to advertise with cancelled sports or other cancelled live programming are open to substitutes, and those don’t have to be in the same category, as 42% would move to entertainment, 38% to a live streaming virtual event and 30% to lifestyle content. Most respondents (88%) would transfer these ad dollars to some type of video and 28% to audio.

In another boon for broadcasters, respondents said 36% of their ad spend is regional and local. In the second half of 2020, 64% of respondents said they would spend on digital video, 46% on linear and/or cable TV, 46% on digital audio, 44% on over-the-top streaming services and 38% on terrestrial radio.

“That makes complete sense when you think about where these advertisers are trying to affect consumers, how they’re trying to move them from the Q4 season, from a holiday perspective,” Fisher said.

Q4 is looking … up?

Despite lots of uncertainty in the advertising space, optimism shines through. Advertisers surveyed expect spending to be up 1.3% in Q4, compared with Q4 of 2019.

“There is sort of this wild card factor where there’s a lot of money that could potentially move into different areas,” Fisher said. “As an advertiser, you kind of very much go in eyes wide open and continue to work with your media partners to understand how this landscape is moving.”

Fisher added that advertisers can only be flexible if they have the right support from partners. Getting insights from their sellers, platforms and tech players will help give advertisers the insights they need to make the decisions that matter the most.

An attribution solution such as Veritone Attribute can give broadcasters the ability to provide these insights to advertisers by correlating broadcast ad placements of all formats, including scheduled spots, organic mentions and live reads, with advertiser website interaction data in near real-time. Veritone Attribute offers instant access to data-driven insights to inform ad optimization strategies, increase customer ROI and strengthen buy-side relationships.

Learn more about the changing advertising landscape by watching our Uplift Study Webinar here.

Further Reading

Veritone Attribute and WideOrbit media operations platform are moving the dial at TV Stations
How Artificial Intelligence is Maximizing TV Production
5 Reasons Why Ad Attribution Can Boost Broadcast Advertising