TV Ad Budgets Dwindle, Productions Shut Down in Pandemic

With the presidential election and the Tokyo Summer Olympics, television networks expected robust advertising in 2020. But MoffettNathanson noted that, with the Olympics postponed and presidential campaigns muted due to the coronavirus pandemic, advertising revenue is expected to drop 12 percent; the WARC research group predicted that will pencil out to a $25.5 billion loss in spending. Although viewership has exploded during the shutdown, research firm Kantar said that companies have cut advertising budgets more than 40 percent.

The New York Times reports that, “in response, networks have offered commercial time at double-digit discounts.” Last year, for example, as measured by iSpot.tv, Lowe’s spent $1+ million for elaborate ads promoting Memorial Day discounts. This year, the company did a bare-bones 15-second commercial.

Walmart skipped TV ads altogether, substituting an ad for social media showing “a store manager reciting an inspirational poem.” NYT notes that, “the pandemic has only hastened the trend away from lavish TV ads.” “TV was already in the middle of a huge revolution, and it’s only going to intensify, because now advertisers’ money is tight,” said Coalition for Innovative Media Measurement chief executive Jane Clarke.

Pre-pandemic, 56 percent of advertising went to digital platforms and 30 percent to TV. According to MoffettNathanson, by the end of 2020, we’ll see TV advertising “falling more dramatically,” and “this gap is really going to blow out.”

The pandemic has also shut down commercial production, with Joan Creative reporting that social distancing “helped drive a 25 percent increase in requests for ads made without the usual production crews.” Commercials made with animation or social media videos or shot by drones are on the uptick — and also tend to cost less.

The pandemic also shook up the annual upfronts, where companies typically buy up to 80 percent of the upcoming TV season’s available ad space. This year, instead of glitzy events, network executives held virtual ones. Macquarie Capital analyst Tim Nollen said the number of deals inked is “probably not coming close to the usual volumes.” Innovid co-founder and CTO Tal Chalozin noted that, “advertisers have a lot more questions about actual metrics, and they’re putting fewer dollars in less accountable environments where it’s harder to measure results.”

Smart TVs also allow advertisers to make more targeted ads. “You might see ads that feel more like they’re talking to you, and you won’t see as many of them — not those big, expensive ads over and over again,” Clarke said.

Duke University advertising expert Edward Timke noted that, “this is going to be a watershed moment in history, where ad agencies or their clients are going to be forced to rethink how they produce and how they create.” “Maybe ads with big productions will become the exception, rather than the norm,” he said.

No Comments Yet

You can be the first to comment!

Sorry, comments for this entry are closed at this time.