Coronavirus expected to have lasting impact on media landscape
Media agencies are revising their business forecasts, while the advertising landscape is undergoing shifts which are expected to outlast the outbreak and change media habits.
Global digital advertising is likely to slow down to single-digit growth this year, compared with over 20 percent per year in recent years, but will remain the least impacted form of media, according to a new report from IPG Mediabrands.
The world's largest advertising holding group WPP said like-for-like revenue in China slumped 23 percent in the first two months this year, and group like-for-like revenue excluding China went up 1.8 percent.
It also warned of a weak March performance, reflecting the worldwide spread of the virus and government containment actions, but didn't offer guidance due to significant uncertainty over the immediate outlook.
French counterpart Publicis Groupe says it will also "rigorously manage all costs, particularly during this period."
It will unveil quarterly earnings later this month but has withdrawn previous full-year estimates for business performance, citing economic uncertainty.
“As industry peers and other media companies have already communicated, it is difficult to accurately predict the evolution of advertising and marketing spend," it said in a statement.
WPP aims to achieve up to 800 million pounds (US$988 million) in savings this year, including a 20-percent reduction of salaries or fees among members of its executive committee and board of directors for an initial period of three months.
Other measures include freezing new hires, and stopping discretionary costs such as travel and hotels.
Close to 95 percent of its 107,000 workforce are now working away from the office.
China's CTR Research said ad spending in January based on rating cards lowered 5.6 percent with food, beverage, medicine and alcoholic drink makers among the biggest advertisers.
IPG Mediabrands' media investment and intelligence unit Magna estimates digital media ad revenues will be the least impacted, thanks to the explosion of e-commerce.
But small local businesses which are heavy users of search and social ad formats are likely to pause or cut their digital ad spending.
"Deep changes in attitudes, social norms, consumption, and media viewing habits are likely to outlast the outbreak and change our society forever,"said Vincent Letang, executive vice president of global market research at Magna.
Out-of-home media owners might suffer the most in the first half of the year as brands will avoid empty transportation facilities.
Television will remain relatively resilient due to pre-existing spending. Packaged consumer goods related ads will be relatively unscathed by the outbreak and the economic slowdown.