Editor’s Note: Ralf continues to submit his posts while stranded in Costa Rica. Since sending us his Profile in Quarantine, he was robbed of his cell phone and camera, among other things. We appreciate Ralf’s dedication to continuing to bring us his insight from afar.
The Covid-19 crisis is not only affecting everybody’s lives, it is affecting all kinds of business aspects as well, especially advertising. WARC – the world advertising research center – already speaks of the biggest drop in advertising budget since the introduction of the Global Marketing Index eight years ago.
According to WARC, the current consensus among advertising analysts is that there will be a “V” shaped recovery, with spend returning in the second half of 2020 after sharp reductions in the first. There is some insecurity however, as recent IAB research suggests that the majority (67%) of US ad buyers are still to determine budgets for the final six months of 2020. Undoubtedly for many companies advertising is currently not a core issue in the near term, as companies have to contend with business fundamentals such as safeguarding staff members and ensuring their supply chains are getting customers what they need when they need it most.
Of course, the current situation of companies will differ a lot on a case-by-case basis. Netflix and manufacturers of face masks are thriving, but the majority of companies are struggling.
There are some lessons that became evident:
- During the last recession, ad money moved into paid search, but pure online players as Facebook and Google are more vulnerable now and all types of advertising are negatively affected. An IAB survey on the Coronavirus Ad Spend Impact shows paid search investment – 25about a quarter of the total US ad market – could fall by 30% in March/April.
- Out-of-home (OOH) ad spend will suffer the most among all ad categories
- As digital channels are often the easiest to switch off owing to shorter lead times, they are suffering despite an increased use of online channels
- Fast moving consumer goods (FMCG) sales on on-line platforms are booming. Online players are likely to become and remain more significant to FMCG buyers
- Small and mid-size companies will cut down the most on advertising spend. Large enterprises have large budgets and contingency plans for a crisis, while for many smaller companies Covid is a matter of survival.
- Spending on luxury goods is down and will remain so for a while. This pattern was observed in previous crisis’
- Previous recessions did show that longer periods off air will weaken brand health and damage market share due to a reduction in share of voice. Brands that focus on customer satisfaction fare better during recessionary periods.
There are parallels being drawn to the 2008/2009 financial crisis and other historical disruptions of the global economy, but these comparisons are falling short. Covid is far more encompassing and has a profound impact on all people’s lives. Accordingly, the media consumption is changing considerably.
- Consumers are having to adjust to ‘living a new normal’, and new buying habits may prompt permanent shifts in behavior. In China, even after lifting restrictions, there is a clear hesitancy about returning to old habits, such as going to restaurants.
- Increased e-commerce activity is that online players may become more significant as the gatekeepers to FMCG shoppers.
- More digital media is consumed, but other indoor activities like reading, games, home improvement have been rising as well.
- Consumption of newspapers and magazines is up and according to a WARC survey about half of the consumers surveyed will stay with an elevated news consumption – including printed news sources.
- Health and safety will remain a big concern for consumers, even when the acute phase of the Covid-19 crisis has been mastered.
Impact on Print and New Opportunities
The impact on the printing industry is grave, no doubt. Intergraf – the European lobby group of print associations – states that about 40% of print volume is advertising driven. Currently many companies are in survival mode, but companies should take a look at the transition phase ahead of us.
While some market segments will be down for a while, there are opportunities for high speed and flatbed print as well.
Inkjet produced custom puzzles printed, diecut and packaged by PortraitPuzzles
Obviously, the general reduction of ad spend is an opportunity for those continuing to invest in ad spend and brand building. But even reluctant businesses will need to resume advertising sometime.
There are some things printers should take heed of:
- There is considerable insecurity among businesses on how to go ahead with their marketing activities. This is the opportunity to give advice to businesses on opportunities and trends.
- Fake news is increasing in crisis times and has become a major concern for consumers. Trust in print remains high.
- Many consumers at home will experience screen fatigue and print will be a welcome alternative.
- Print will become more effective with more time spent at home. Mailings and catalogs are passed around more and kept longer.
- The brick-like all-encompassing catalog is dead, but low page count (e.g. 32 pages), customized catalogs, enriched with editorial content can be very effective. They can even be cheaper to produce and send than a google AdWord.
- Print can become a unique way to address consumers now. While a restaurant is closed, it can still deliver – but how would a potential customer know about this? An easy way would be sending a mailing or postcard to potentials or former punters in the vicinity. Work together with a list provider to stay clear of the perils of data privacy laws. Different methods exist from door drops to partially addressed mailings to fully personalised mailings.
- The current situation of distribution channels (postal services, newspaper delivery) has to be observed. When traditional distribution channels struggle, inserts for parcels ordered from online stores are an effective method.
- One area which consumers lack now is home entertainment. Boredom is a big issue for people under lockdown. Enhance advertising print with diverting add-ons like puzzles, games or coloring sheets will be welcome.
It is no doubt print providers will need to approach businesses differently during and after the quarantine is over. Both printers and businesses have an opportunity to help each other advertise their goods and keep each other afloat by utilizing small run personalized print. Print providers have the opportunity to approach customers as a solution provider with creative marketing options.
Coloring book sample page from the Restaurant Menu Doodle Book
One area which consumers lack now is home entertainment. Boredom is a big issue for people under lockdown. Advertising print enhanced with diverting add-ons like puzzles, games or coloring sheets will be welcome.
More than ever, inkjet provides a creative avenue for businesses to produce marketing in a cost effective way while adding value add and personalisation for various print products they would not have considered before.