In the midst of a global health and economic pandemic, all bets are now off for the brands and businesses that we run. Navigating a sea that is continually changing, and for which none of us truly feels prepared, is incredibly daunting. 

The nature of marketing and advertising for the year ahead is changed. To wait and see if social distancing, consumer confidence and financial markets return to normal would be ignorant of the reality that there is no going back. We must first let go of what was, in order to make space for what can be.

Advertising spend in a number of categories has already changed dramatically. Few public companies will speak to it openly right now and are waiting until their next quarterly earnings—rightfully so, given the financial markets collapse and risk to further hamper stock prices.

Impact on the industry

Travel and hospitality spend—representing 9 percent of ad spending—has fallen to near zero. Retail spend, which was forecast to be 22 percent of digital advertising in the U.S. this year, is being impacted in two ways. First, supply chain dependencies on China and other Asian markets are creating a massive backlog and inventory shortages that many retailers are quietly forecasting. Second, in countries in lockdown mode, consumers are not visiting brick-and-mortar stores. P&G, Unilever, Microsoft, Danone, AB InBev, Burberry and Aston Martin have all already made cuts to sales forecasts for the year.

Entertainment feels like it might come out neutral. Heavy spenders are delaying box office releases, including the new James Bond movie. At the same time, digital subscription platforms are increasing online activations to give consumers more choices to watch at home.

Brands in automotive, financial services and CPG, normally big spenders on sports events, will have fewer places to activate their massive campaigns. Many brands have sponsorship commitments to leagues and broadcasters, and I wonder how many of their contracts have provisions for a global pandemic. These partnerships are going to crumble. And yes, I believe firmly that the Olympics will be canceled.

At first automakers were delaying new car launches, typically associated with high budget activations across many offline channels. But last week, Detroit’s three automakers, Ford, GM and Fiat Chrysler, announced an unprecedented work stoppage, closing U.S. factories until at least March 30.

With more viewers watching television at home, many are predicting an increase in TV ad spend, or claim that TV is at least shielded from the down market, unlike radio and outdoor. I disagree. Most of the incremental time spent on television that brands want to be around (other than news outlets) is for subscription video-on-demand services like Netflix that are ad-free experiences. Additionally, TV advertising requires high production budgets and big media spends. The growth in advertising spend is from small- to medium-sized businesses, for whom TV is not an accessible channel.

Ad spend declines

It is for these reasons and more that I believe we will see a decrease of at least 20 percent in overall advertising spend in 2020. Big brands, like big governments, have been slow to respond to the health crisis. So it is no surprise that we have not yet seen advertising agencies, media platforms and publishers report on the declines that I am forecasting.

Not all the news is bad. Given that the digital share of the advertising market was forecast to grow 15 percent, and that there are new categories and applications that will see a bump in digital ad spend in the wake of a global pandemic with new consumer and enterprise needs, I believe that digital advertising will be flat year-over-year. 

In a moment of uncertainty, trust becomes the new currency. In the wake of misinformation spreading quickly on Facebook, the News Feed is now the Corona Feed. It is not the best environment for brands that want to align themselves with trust in this moment.

Across the diversity of digital marketing channels available to brands, there are few creative standards; everyone is offering their unique advertising formats and specifications. This has led to brands investing a lot of non-working media spend on creative production, management and approvals. The costs grow exponentially for multinational brands operating a multitude of brands in diverse local markets. With macroeconomic uncertainty, brands might double down on fewer digital marketing channels and, as a result, not have the budget, time or patience to build, manage and approve new creative for new channels. This will require a greater focus on creative automation capabilities to efficiently connect with audiences across multiple digital marketing channels.

There is a new world order for advertising developing in the wake of the global pandemic. As leaders, we need to make different choices for the brands and businesses we run. It takes courage to make these choices, and humility to change as we learn more. We have an important role in what feels like a pivotal moment in the evolution of our industry.