As we approach Q2, we know that advertising spend is going to look dramatically different than it did in 2019.  In large part, this will be part of the aftermath of the novel coronavirus pandemic, which includes nationwide shutdowns and disruptions to businesses. Here at MediaRadar we dug into our most recent advertising spend insights, as well as an analysis of Q2 2019, to better understand what is happening – and what is at stake in the coming months. 

Our deep dive revealed that some industries under duress will likely adjust their advertising spend, or have already begun to do so. Others, however, are seeing their businesses flourish and are marketing aggressively to take advantage.

Industries “at risk”

While all types of businesses are being impacted by the Covid-19 pandemic, some industries are certainly getting the short end of the stick. Last year, in Q2 alone, more than $31B was spent on advertising across all media formats, and over 205k unique brands ran ads. When looking at industries that appear to be the most “at-risk” due to the impact of Covid-19 (restaurants and bars, films, lodging, US tourism, cruises, airlines, auto dealerships, foreign tourism and movie theaters) we saw that last year, these industries had about 12.5k brands advertising, collectively spending just over $2.6B on advertising in Q2 2019.

Restaurants and bars

The largest category in that group, in terms of advertising spend, is restaurants and bars. Last year in Q2 over 4.5K brands advertised, spending about $1.2B on advertising. The majority of this spend (91%) came from major chains, such as McDonald’s, Taco Bell, and Burger King. Now, as dine-in restaurants and bars are being ordered to close or shift to take-out/delivery only across the US, this industry is facing hardship. This crisis will not only change how restaurants do business, but how they promote products, too. 

McDonald’s has already closed its dining rooms and moved all of its services to takeout. Other major chains have done the same. These businesses are not immune to the impact of coronavirus. However, they are also not at risk of going under like smaller local eateries. Instead, Charley Grant at the Wall Street Journal predicts they’re likely to take up even more of the market share after this is over as they will have the ability to rebound in a less-saturated market. 

We have not yet seen any shifts in advertising spend from these large chains, although we are seeing the first wave of brands shifting their messaging. We’ve seen Outback Steakhouse and Panera Bread are promoting their delivery capabilities, while Dunkin has shifted its marketing to support their line of home-products like Dunkin K-Cups, Creamers, Coffee Grounds, etc.

Travel and tourism 

While restaurants can temporarily pivot to take-out and delivery, the travel industry, including lodging, US tourism, cruises and airlines, are facing true hardships. In Q2 of 2019, the advertising spend of these categories was about $850M, combined. 

In terms of companies withdrawing advertising spend, we will be keeping an eye on airlines, in particular. During Q2 of last year, 72% of their budgets were spent on digital advertising, a format that is bought – and canceled – on the shortest of notice. So far, the travel industry has reduced its advertising spend with spending cuts starting mid-February of 2020. Comparing the first week of February 2020 to the first week of March 2020, we saw the travel industry decrease advertising spend by 30%. 

Ads on the rise

While there are certainly businesses suffering due to the changes Covid-19 has brought to our economy, others will benefit from millions of Americans staying home for weeks on end. We analyzed a few of them to see how their marketing has changed in recent weeks.

Streaming services

Subscription streaming services have already seen how quarantines abroad have impacted their business. For example, during the first week of quarantine in Italy, downloads of Amazon Prime Video increased over 2x when compared to the week prior. Meanwhile, Netflix downloads saw a 60% increase in the same time period. 

Armed with that knowledge, streaming services were quick to adjust their marketing strategies once Covid-19 began impacting daily life in the US. According to our analysis, streaming services increased their own ad spend by 155% WoW during the first week of March. Looking at the first week of March YoY, it was a 34% increase in ad spending.  Two advertisers during this surge, Amazon Prime Video and Hulu, spent $29M in advertising in just the first half of March 2020. That is 16% more than they spent during the entire month of February.

eCommerce

The eCommerce industry is also fully aware that many Americans will be spending much more of their disposable income online in the coming weeks. Based on our data, in just one month, eCommerce sites have doubled ad spend, jumping from $4.8M during the week of February 17th to $9.6M in the week of March 9th. 

Companies with e-commerce sites should be aggressive in the market right now, as it’s not only good for business but, more importantly, it’s good for the economy. For example, on Amazon roughly 50% of all sales are from third party sellers, many of which are small businesses. Furthermore, the company has announced they will hire an additional 100,000 employees, explicitly inviting those who were recently let go in the retail and food service industries to apply for one of its open jobs.

Conclusion 

Everyday there are heavy developments and news surrounding the Covid-19 crisis and its wide-ranging impact across nearly every industry. And, as the country grapples with the realities of the pandemic, brands are faced with the question of whether or not they should increase ad spend due to larger audiences spending more time at home, or decrease spending as a way to cut their own costs. Our study underscores that there is not one answer, and brands are moving in both directions as the pandemic continues to affect life across the country.