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Cutting through the Covid clutter: Advertising in a pandemic

19 Apr 2020

By Uwin Lugoda The Covid-19 pandemic is impacting every part of people’s lives, from the places they can go to the way they spend their time and money. This sudden increase of people being indoors has led to a change in consumer behaviour, leading to the disruption of many industries. An obvious victim of this has been the advertising industry. Companies in countries like the US slashing their marketing budgets could lead to the ad industry in the country losing nearly $ 26 billion in revenue, a 10.6% decline according to a research note released by MoffettNathanson, an independent research boutique in the country. Similarly, the UK’s advertising industry has also shown a similar struggle, as a survey done by Econsultancy and Marketing Week showcased that 86% of the country’s marketers are now delaying or reviewing their marketing campaigns as of 9 April. Seeing this impact on the global ad industry, The Sunday Morning Business spoke to several of Sri Lanka’s ad industry stakeholders to find out how the industry is being impacted and the issues they are currently facing due to this outbreak. Current climate Sugibun Sathiamoorthy, the President of 4As Sri Lanka, the Sri Lankan Chapter of the Association of Accredited Advertising Agencies (4As), noted that marketing and communications are usually the first victims in times of crisis, as most businesses naturally switch to survival mode, and look at managing and prioritising their spending. While empathising with a business’s need to save money, he explained that what really matters is how brands have been investing in brand building before the crisis. “If you have genuinely built more than a transactional relationship with the people, your brand can survive, even thrive, without spending at a time like this. But if you haven’t, stopping advertising to save money at a time like this will be like stopping the clock to try and save time.” He stated that brands that have made a genuine effort to connect with their audience during this crisis have created long-lasting loyalty for themselves. Sharing the same sentiment, Sarva Ameresekere, the Director/Chief Executive Officer (CEO) of Triad, one of Sri Lanka’s biggest creative advertising agencies, stated that the advertising landscape has been changing for some time; brands understand that advertising must cover not just their products and services but must also be used to manage their reputations. So a lot of mature advertisers now use their messaging to connect with people in a meaningful way to build love and loyalty. “The current development has given brands an opportunity to engage with society by doing something positive for the nation at large; it’s the right moment for responsible, impactful campaigns,” he said. Ameresekere stated that social distancing means people are spending more time online and watching television, so there is opportunity in these spaces for brands that want to stand out. However, according to Lalith Sumanasiri, the Managing Director (MD) of Ogilvy Media, one of the country’s biggest advertising, marketing, and public relations agencies, the local ad industry has never experienced this kind of situation. He explained that the closest experience they have had to this is the Easter attacks that took place last year. However, Sumanasiri stated that even during that time, the industry knew how to tackle the situation because there was an end to the issue and recovery from it, so they could plan out a strategy and share it with their clients, having also dealt with similar incidents in the past. In contrast, the situation today is something with a lot of uncertainty along with its global and economic impacts; this makes it hard for the industry to predict aspects relating to its consumers, their jobs, and their purchasing power. Sumanasiri explained that currently, there are two issues the industry is facing. The first is that almost all companies have either completely stopped advertising or are maintaining a low presence. This is due to consumers being in a desperate position and thereby opting to buy generic products rather than branded products. The second issue he spoke about is brands not being able to run their usual campaigns as it might result in some form of backlash from the consumers. Therefore, brands are taking a safer approach when it comes to advertising. “This is not the right time for us to promote non-essential items, because people’s purchasing power has gone down and they cannot leave their homes to get these non-essential products.” Speaking from a digital advertising side, digital consultancy agency Boust Co-Founder Thisara Jayasinghe stated that most businesses are currently desperate, as they are unable to perform the way they usually do. This has led to many businesses coming up with new ideas on how to keep their businesses on track; using digital platforms to create brand traction and to keep up engagement at a constant rate. Jayasinghe stated that the digital sphere is currently expanding, leading to businesses that did not initially believe in the power of digital marketing coming on board with agencies like his. He shared that due to this, it is also the perfect time for already established digital businesses, such as e-commerce sites, to market themselves digitally. Media landscape Speaking about the impact on traditional forms of advertising, such as print newspapers which are heavily impacted, Sathiamoorthy stated that he does not think that people actually miss print newspapers as much, as news still reaches people in various ways. “Communication mediums also have a challenge today to become ‘essential’ to people. The drop in drive time must have impacted media like radio, while TV, which many experts predicted would be dead, somehow maintains relevancy and is essential to our lives.” Sathiamoorthy explained that while there has been an increase in viewership when it comes to TV, he has not seen any increase in advertising spending on TV. Similarly, he stated that he does not believe that the use of digital advertising has improved just because there is more traffic online; digital is instead active due to it being a cheaper medium and because it allows more engagement opportunities. However, despite being cheaper and arguably bringing in faster results, he stated that people must also remember that brands can be completely destroyed on digital platforms, even when trying to do good for the people. Sathiamoorthy said: “Social media can be a merciless place where brands get bashed, sometimes unfairly. So, before you jump to digital, I would caution brands to have a strong strategy in place to see it through.” However, Sumanasiri stated that from what he has seen, clients are more keen on moving to the digital sphere since the Covid-19 situation hit, as the number of Facebook users in the country had risen by 200,000 since the islandwide curfew was imposed. He explained that clients have reduced their traditional media budgets by 60% to 70%, and accelerated their adaption of advertising digitally. “Digital has been growing in the past few years, but this crisis has accelerated it. The situation has forced digital transformation from the consumers’ side and the companies have followed suit. This type of transformation would have taken another five to 10 years if we were going at our normal pace.” According to Sumanasiri, while print media has been disrupted by this pandemic situation, other media usage such as that of TV has gone up by 42%, with minutes spent on TV by an average person going up from 129 minutes to 183 minutes per day. Ameresekere added to this, stating that there has been a considerable growth in the consumption of digital media, with digitally savvy brands looking for more time on digital spaces and competing for a larger share of voice on the medium. Even more noteworthy is that brands that have had very little digital presence are being forced to very quickly execute digital solutions in order to sustain their businesses. Similar to Ameresekere’s statement, Jayasinghe also stated that due to the current pandemic, they have seen more people focusing on the digital sphere citing its convenient factors, and are looking to thrive through it. He explained that this increase in digital usage also presents its own set of problems, as there is a high demand for digital adverts. “This increase in digital usage also creates competition when it comes to paid media promotions on platforms like Facebook and Instagram. So I am not sure if we can expect the same results from a $ 1 promotion as we did before, because the demand for adverts is now higher.” Campaigns According to Sathiamoorthy, right now many brands are hesitant to advertise for fear of being seen as “opportunistic”, especially after having observed other brands being bashed on social media. However, he explained that people need products and services in times like this, and if a brand is genuinely adding value to people’s lives or serves them in some way, those brands do not have to feel guilty about advertising that. “Look at big brands like Keells. Despite the initial criticism, people kept waiting online every day to get their products. They saw how the brand was making a sincere effort to better themselves, and kept pushing. Now, it has won people over. People don’t buy perfect brands, they want genuine ones.” He explained that what he is seeing right now from brands, especially retail brands, goes beyond advertising and instead is the greater willingness to act. Retail being a critical lifeline to people’s lives and the economy as a whole, Sathiamoorthy stated that he was heartened to see how retail has risen to the times, even if they have cut their advertising budget, and channelled that into improving the brand offering. “The ultimate aim of the advertising industry is to see our brands doing better. It is up to us to figure out the part we can play in that journey,” he said. Sumanasiri shared this sentiment, and stated that clients will not be able to run their normal campaigns, and therefore must adapt to the situation. He made an example of hygiene products which immediately adapted to the situation by promoting the notion of washing hands and keeping clean. Speaking on digital campaigns, Jayasinghe explained that the best way for companies to run a digital campaign during this time is to show their range by educating consumers on the convenience factor they offer, which will drive more people to try their services or products, whereas industries that cater to walk in-customers should focus on building brand traction. “I believe that irrespective of whether you’re promoting a product or a service, running campaigns to educate people about that product or service would be the most efficient way to go. “I have seen people trying to divert their businesses into different avenues after spotting potential business leads in this time period, just like the potential of delivery businesses and e-commerce, however we cannot predict the market potential of these avenues once this situation is over, so this is not the time to divert; it is the time to serve better by utilising what we already have.” Client payments While not experiencing it himself, Sathiamoorthy stated that something he has seen in the industry is client payment delays during a crisis such as this one, which heavily impacts the cash flow of a service industry such as theirs. However, he went on to state that having more than a transactional relationship with clients really helps in this regard. Delayed payments are not just a problem that affects advertising agencies; other third parties such as production houses, voice artists, storyboard artists, animators, etc. are also impacted by the payment policies of some agencies. “If we are to expect better treatment from our clients, we must treat our partners better as well,” shared Sathiamoorthy. Sumanasiri explained that payment delays are due to clients not being able to run their usual operations, and there being no cash collection from their retailers, wholesalers, and clients, leading to the client’s suppliers, such as advertisers, not being paid. “This is not intentional on the client’s part, so we need to be empathetic and understand the situation they are in. Even after the curfew has been lifted, it might still take a while for them to get back up to speed, because consumers’ purchasing power has gone down. “Most companies will forget about profit maximisation and focus on cash flow management.” Jayasinghe added to this by stating that since everyone is currently going through a tough period, most clients are not functioning until the curfew period is over, leading to delayed payments for the advertising agency. However, he stated that seeing as everyone’s goal right now is to rebuild the economy, they are being patient with all their clients until this is over. According to Ameresekere, no one expected a lockdown of this proportion and length, so any delays they faced have arisen due to logistical issues faced by the entire advertising ecosystem. “I’ve seen clients and suppliers and our own companies quickly finding ways to navigate through the various challenges. As always, I trust that our good relationships with clients will enable us to sort out any prolonged delayed payments in the near future.”

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