The only area that seems to be withstanding this coronavirus storm is the digital landscape. On the surface, drawing the relevant connections is easy. People are practicing social distancing. Most countries and major cities are under lockdown. With events and offices standing cancelled,going digital is probably the only option left on the table. This means online businesses should largely benefit. Advertisers should flock to digital marketing channels. And companies should spend all their saved revenue from physical public marketing on digital to ensure that they capture their customers where people are spending their time. But nothing, in reality, is that straightforward. The coronavirus pandemic is transforming the digital landscape in ways both good and bad.
Social Media networks are obviously benefiting
The rise in social media traffic was already predicted amidst calls of social distancing and home isolation and as the COVID-19 has strengthened its grip on the world, the number of people logging in has naturally gone up. Along with using social media for staying connected with friends and family, people also tuning in to the major networks to consume news. And during the ongoing crisis, it is only logical to assume that more and more people are getting their daily dose of global news from Facebook and Twitter. The Pew Research Center has already shown that more than 55% of US adults consume news from social media. eMarketer predicts that in 2020, those adults are likely to spend an average of 54 minutes daily on social media.
E-commerce shopping up and retail shopping down
Consumers from two of the worst-hit countries are pretty much painting the picture of the e-commerce sector. As per the findings of Ipsos MORI, nearly 31% of Italian consumers say that they are now shopping online more frequently,and that number is a staggering 50% amidst Chinese shoppers. Before the coronavirus, more than 57% of Vietnamese, 55% Indians, and 27% of Russians were already preferring e-commerce shopping over retail stores. With lockdowns in effect, these figures are bound to rise globally where the United Kingdom is likely to join the bandwagon as well at a time when only 18% of UK shoppers prefer to online. Panic stockpiling has already surged e-commerce traffic beyond controllable limits globally.
So, what do all these do to advertising?
The intuitive prediction should suggest that the above transformations should boost online ad spending but the case, in reality, is not so. The coronavirus is keeping people away from their jobs. Companies are taking revenue hits both due to reduced workforce and supply-chain disruption. Take Apple for example whose major manufacturing wing Foxconn had to shut doors in China because of the coronavirus outbreak and the tech giant now stands to see 10% fewer shipments in the first quarter of 2020. One of the major areas that such suffering companies will cut down on is online advertising. Survival requires resources to be diverted to other crucial areas.
As China slowly recovers from the COVID-19, eMarketer has come up with predictions and estimates of a possible Chinese ad spending slowdown. Right now, the agency says that China is likely to spend $113 billion behind media ads in 2020 which it previously estimated to stand at $121 billion. In digital ad spending as well, eMarketer slashed the growth forecast to 13%, down from 15.2%, and says that China is likely to see its total ad spending grow by only 8.4% rather than 10.5%.
Globally, eMarketer predicts that the advertisement market will suffer owing to the cancellations of major events like Facebook’s F8, the NBA and UEFA leagues, along with the Tokyo Olympics hanging by a thin wire. The combined effect will bring down the slowing ad industry further that was already seeing a reduced growth rate of 0.4% in the year 2019.