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SMI Tracks Covid Impact on Top Anglo Markets; Shows Average 28.2% decline in ad expenditure

Author: James Fennessy

SMI Measures Mar–May Ad Spend in the US, UK, AU, NZ and CA Markets

SOPHISTICATED media advertising markets are averaging a 28.2% decline in advertising expenditure in the first wave of the COVID-19 pandemic, according to expert data analysis by the world’s leading advertising intelligence company.

Standard Media Index, which collects and publishes media Agency payment ad spend data, based the analysis on its collection of advertising payment data from its multinational and independent media Agency partners in the US, UK, Australian, NZ and Canadian markets from the start of the pandemic in March to the end of May.

The one common factor was that all markets reported record ad spend declines in the three-month period

SMI Global CEO James Fennessy said that while the actual levels of decline varied by 14.3 percentage points across the five markets, the one common factor was that all markets reported record ad spend declines in the three-month period.

“This global pandemic is having an impact on advertising markets which is far more severe than what we ever reported during the 2008/9 global financial crisis when the size of the year-on-year declines being reported each month never reached more than 16%,’’ he said.

“So this has been an unfortunately unique experience given the sheer size of the ad spend declines being reported. The fact the average decline is an extraordinary 28.2% really highlights the level of devastation wrought on some of the media markets where we track ad spend.’’

Canada hardest hit

Fennessy said the largest three-month decline has been in Canada where total national marketer ad spend fell 36.2% over the Mar-May 2019 period while the lowest decline has been in the UK where the total is back a lesser 21.9%.

“The other similarity across each of these markets is that the TV and Digital media are the largest in terms of share of national marketer spending, but a key take-out from our analysis is that the levels of decline are not consistent despite these media featuring numerous global media groups,’’ he said.

Fennessy said the data highlighted the difficulty large advertisers and media companies have in tracking ad spend across multiple media markets as the trends varied by country.

“There are many aspects of the global media industry which are similar – for example some reality style TV content formats translate across markets – but it’s a very different situation when it comes to advertising as there’s no consistency on how product categories move spend across media verticals,’’ he said.

“A good example is that in this three-month period insurance companies reduced their investment on US TV by 9.7% but in Australia we saw them grow their TV investment by 3.1%. The data really highlights the degree to which these mostly large multinational corporates are tailoring their media investments according to the local markets.’’

Digital Sectors

Similarly, SMI’s data tracks the varying ad spend trends across key Digital sectors such as Programmatic, Search and Social across countries.

`We can see continuing declines in Programmatic ad spend through this crisis in the US and Australian markets, but this form of Digital advertising is continuing to at least grow share in the UK and NZ Digital media,’’ Fennessy said.

“And again we can see different Product Categories driving those Programmatic trends in each of those markets.’’

Fennessy said it was also interesting to note the varying Category trends across each media market as growth in Technology-related categories was evident in the COVID period in NZ, Australia and the UK while in the US the Pharmaceutical category was the only significant market to report higher media investment.

`But it is clear there’s one category with universal declines in ad spend and that’s of course the Travel market, with the value of Travel category advertising bookings falling 78% in the US, 61% in the UK and Australia, 65% in Canada and 76% in NZ. In every market, the loss of such a vibrant category has severely impacted many media,’’ he said.

June demand strengthening

But there is good news, with SMI’s data in all countries showing strengthening advertising demand in June with the US emerging as one of the best performing markets with the value of ad spend falling just 20%.

“The key message here is that the advertising markets are moving off the bottom and are beginning to rebuild. SMI will continue to work with our subscribers and Agency partners to help them move through the changing media landscape and grow as the media world tries to return to a new normal,’’ Fennessy said.

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