'The marketing calendar has been thrown out of the window': Ad buyers deal with the coronavirus fallout and brace for an uncertain future

'The marketing calendar has been thrown out of the window': Ad buyers deal with the coronavirus fallout and brace for an uncertain future

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  • Media buyers are scrambling to manage disruptions to their businesses as the coronavirus wracks advertising along with other segments of the economy.
  • Consumers have pulled back on spending, leading brands to cut their advertising, said buyers.
  • Some brands are looking to postpone campaigns and run the ads later in the year and others are changing their messaging, creative and copy.
  • Buyers are also bracing themselves for their jobs taking a hit as the economy slides toward a recession.
  • Visit Business Insider's homepage for more stories.

As the coronavirus pandemic causes consumer spending to nosedive, marketers are forced to rethink their advertising plans and media buyers are scrambling to manage the disruptions.

Coors, Hershey, and KFC have already hit the brakes on ad campaigns, and many other brands are suspending or pausing campaigns until later in the year, media buyers sold Business Insider.

Consumers are hesitant to spend on all but some categories of products, while possible supply chain disruption threatens commerce.

Purchases driven by online ads dropped in half in the past week, said Justin Marshall, founder of Ad Hoc Media, an independent New-York based media buying company, while John Max Bolling, head of US operations at ROAS Media, said that conversions on Facebook were down 14% year-over-year.

The decline in shopping is causing brands to cut ad spending between 20% and 60% depending on the brand and vertical, said Nick Shackelford, managing partner at Structured Social, another media agency.

"The marketing calendar has been thrown out of the window because the way consumers are interacting with brands has completely changed in recent weeks," Bolling said. "Everybody is being extremely cautious."

Media buyers are experimenting with messaging and postponing campaigns

Other brands are changing their messaging.

One home goods brand changed its ads to focus on how people can redo their home offices in an "empathetic and useful way," said Daniel Pearson, co founder at San Francisco-based performance marketing agency Bamboo.

A beauty brand is live streaming its founder doing activities with her three kids as more parents stay at home with their children, Bolling said. It has also started testing new messaging on its ads, focusing on how it's still important for mothers to take out time for self-care during containment.

Ad inventory is getting cheaper - but people are buying less

With travel grinding to a halt and people hunkering down at home, it's become cheaper to advertise on digital platforms like Facebook, Instagram, Snapchat and Pinterest. Shackelford said that CPMs were the lowest he'd seen in five years, while Marshall estimated that CPMs on Facebook had dropped from $17 to $8.

"It's hard because while your investment is going further and you're paying half as much as before for a thousand impression, customers aren't buying as much," Marshall said.

Even with cheaper ads, brands would still find it hard to break through unless they were resorting to other techniques like deals or gift cards, Shackelford said.

"Despite the cheaper traffic, the conversion rate is not there unless brands are making an offer to consumers that is too hard to pass up like buy-one-get one or spend a certain amount and receive a free gift or product," Shackelford said.

With the virus continuing to spread and the economy sliding into another recession, buyers are bracing themselves for harder hits. Direct response spend has already seen sharp cuts and is likely to witness "real violent cuts" this week, according to a report by Pivotal Research analyst Michael Levine.

Most agencies are paid either on a retainer, or retainer plus a percentage of the ad spend they manage on behalf of the brand, or just based on a percentage of spend. So when clients spend less, agencies make less. Some buyers said they were anticipating the crisis to exacerbate extended payment terms as businesses start to struggle - already a prevalent issue within the industry where clients push off paying their agencies longer and longer.

"Being a media buyer, regardless, is a stressful job," Bolling said. "And this makes it worse because if a business is hurting for cashflow, the first thing they will do is not pay their vendors."

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