Opinion: The double disruption of the advertising industry and what might come next
The short-term impact of COVID-19 is going to be huge for the advertising and marketing services sector, but could its legacy include some long-term positives?
An industry with an underlying health condition
As we nervously watch the impact of the coronavirus pandemic spread ever wider, it’s clear the effects on the traditional advertising and marketing services industry is going to be massive. Like a patient with already compromised immunity, the legacy industry stumbled into 2020, hit by declining revenue and share prices—driven primarily by ongoing disruption by technology, particularly the seismic shifts triggered by the mobile phone.
Even before the “black swan” event of COVID-19, share prices of WPP and Publicis had dropped by approximately 40 percent in three years, as growth rates remain anemic and margins narrow. This is not a thriving industry primed and ready to deal with an unprecedented market shock.
And now we have the amplifying disruption of canceled industry events (SXSW, F8, MWC, etc.) as well as a growing list of highly viewed sporting and entertainment events, with the sword of Damocles hovering over the monster viewing event of 2020—the Tokyo Olympic Games.
“Largest work-from-home experiment in history”
We’re already seeing dramatic responses. Broadly implemented policies have boosted Zoom’s share price and kicked off what New York University professor of marketing Scott Galloway refers to as “the largest work-from-home experiment in history.”
Marketing budgets are being slashed and frozen either because supply chains can’t keep pace with skyrocketing demand or, as in the travel and hospitality sectors, demand has simply evaporated. On March 15, the Scandinavian airline SAS temporarily laid off 90 percent of its 10,000 employees because demand has “disappeared.” And we’ve only just begun.
With such dire circumstances it’s hard to see positives, but perhaps some good can come of it. This sustained period spent working remotely could create a tipping point for new working practices that can reduce the climate impact of all those work-related flights. After getting used to conducting meetings from screens, surely we will question the value of so many long trips to spend a few jet-lagged hours in a stuffy meeting room.
People-powered, tech-enabled solutions
We’ll likely also see an accelerated appreciation of tech-enabled “people-powered” content creation models. Already, travel bans have prevented directors and crews from reaching locations, and many shoots have had to be canceled. But brands can use tech-enabled companies that tap into local filmmakers and photographers all over the world to produce content from scratch without anyone having to get on a plane; we’re hearing increasing numbers of this sort of request. Similarly, UGC (user-generated content) platforms can find and deploy preexisting, relevant content shot by customers—often doubling conversion rates of a product page or email as a result.
The authenticity and efficiency of these sort of people-powered models are already well-proven: Their environmental-friendliness and greater safety are now going to increasingly come under the spotlight.
The shock waves from this pandemic will undoubtedly reverberate, possibly for years, but perhaps this painful disruption will change the industry long-term in ways it needs. Although the prognosis for the big legacy industry players looks bleak, there could be other positive outcomes—a coming of age for remote working and dispersed model businesses, and a more diverse and environmentally-sustainable industry.