Gideon Spanier
Gideon Spanier

Ad industry needs to come out fighting for advertising

As the crisis eventually moves from saving lives to saving livelihoods, adland must turn its efforts to championing its effectiveness.

The UK ad industry has a dilemma after a month of the coronavirus lockdown, with no clear end in sight.

Advertising and media leaders should be fighting loudly for the importance of investing in brands as adspend has collapsed.

Yet they know it is difficult to champion an industry that promotes consumption and activity when everyone is meant to be staying at home.

The scale of the advertising downturn in April is appalling.

Campaign reported on 30 March that the UK ad market was facing an estimated 50% drop in April and, with only a few days left, our news story remains accurate.

Claire Enders, the founder of Enders Analysis, told me this week that her company reckons the UK ad market will decline by 50% "overall".

Channel 4 has already warned that TV ad revenues will be down "in excess of 50%" in April and May.

Most of the big, UK media buying groups and leading independent agencies paint a similar picture, confirming privately that billings have roughly halved, although fee income has not yet dropped so steeply.

Traditional media channels are the worst hit, but online ad revenues are also suffering as global demand collapses and all of Q2 looks very tough.

In a worrying development, Google, one of the world’s biggest advertisers as well as the largest media owner, is preparing to cut its marketing budgets by as much as half in the second half of the year, according to internal documents seen by CNBC this week.

Expedia, a huge online spender, has said its adspend could drop by more than 80% this year.

Some of the big global players may be able to weather the storm, but Enders warns the plunge in revenues poses a "catastrophic" threat to many UK media businesses, particularly those in news and magazine publishing and broadcasting that are reliant on ad sales.

Enders has urged the government to look beyond its paid furlough scheme and business interruption loans and to offer special financial support to commercial news media, because she fears "a massive fraying of our democratic fabric" if titles cannot survive.

One significant move has been Whitehall’s decision to spend tens of millions of pounds on a coronavirus ad campaign in UK newspapers over the next three months in a deal supported by Newsworks.

Such is the parlous state of the news sector that Enders likens the government’s ad money to a "handout".

Self-help is also going to be crucial as the lockdown eases and consumption restarts.

Many agencies and media companies have gone to great efforts to show their gratitude to the NHS and other healthcare workers. 

But as the fight eventually moves from saving lives to saving livelihoods, the ad industry must turn its efforts to championing advertising.

The IPA has got the right idea with its latest campaign with the Financial Times about the perils of advertisers cutting adspend too deeply during an economic downturn.

"When others go quiet, your voice gets louder," the copy says, explaining how an IPA analysis of the 2008 recession found that brands that continued to advertise "re-emerged healthier and stronger because the greater their share of voice, the greater their market share".

In truth, many brands are not ready to restart advertising yet because it is impossible to sell anything.

But the ad industry needs to get ready. We need more case studies that prove the value of advertising and more leaders to speak up.

And as the IPA has shown, sometimes the best advertisement for advertising is to advertise.

Adland cannot expect other industries or the government to fight on its behalf.

I would add that media companies that are overly reliant on advertising and legacy business models will need to confront the fact that they must change radically to survive – but that is a story for another day.

Incidentally, when Campaign first reported that the UK ad market was facing a 50% drop in April, a certain advertising knight of the realm publicly accused this magazine of "fake news" and "sensationalism".

He should know better. Campaign is not in the business of publishing fake news or sensationalising the fastest downturn in advertising history.

I have written previously about the importance of kindness and collaboration at this time.

But we also need to be prepared to fight.

Gideon Spanier is UK editor-in-chief at Campaign