What is the future of advertising in times of crisis? How are companies and brands reacting and what are the repercussions on advertising? Let’s find out together.
“People who stop advertising to save money are like stopping the clock to save time.”
This famous phrase by Henry Ford encapsulates all the value and importance of advertising for companies and brands, even in times of crisis.
Unfortunately, it is precisely in times of crisis that consumers’ buying behaviors change and often, with them, companies’ advertising budgets and investments.
From February 2020 to the present, this is precisely what we are recording in the wake of the spread of the Covid-19 pandemic. According to a survey conducted in March by the World Federation of Advertisers (WFA) as many as 80 percent of multinationals chose to freeze planned advertising campaigns for the second quarter of 2020, cutting budgets by between 20 percent and 40 percent.
What about in our country? How did the major players react and what were the repercussions in the advertising world?
- The effects of the pandemic in the advertising market
- How Digital is Revolutionizing the World of Advertising
- Marketing Automation in Advertising
Advertising investment also collapses in Italy: the effects of the pandemic in the advertising market
According to a study conducted by Nielsen covering the first half of 2020, there was a 22.4 percent decrease in advertising investment in Italy compared to the same period in 2019.
Especially the more traditional channels, such as periodicals (-43.1 percent), radio (-37.4 percent), and outdoor (-56.4 percent), suffered drastic losses, while TV (-23.3 percent) and digital (-15.8 percent) managed to contain the loss the most.
Going deeper and analyzing the detail of the main economic sectors, we can see that the reduction in investment has particularly affected the travel (-69.1%), leisure (-68.8%) and personal products and objects. (-53,4%).
Significant, however, were also the investment cuts for the clothing (-41.1 percent), automotive (-37.4 percent), personal care (-46.9 percent) and household appliances (-42.1 percent) sectors.
At a first analysis, therefore, the emergency related to the pandemic has not only changed Italians’ buying behaviors and habits, but has also seen a significant drop in investment in advertising: the economic damage suffered by many sectors has also inevitably led to a cut in resources allocated to advertising and communication.
In fact, from research conducted by theInternet and Media Observatory of the Milan Polytechnic, it is estimated that the Italian advertising market, by the end of 2020, will undergo a very significant contraction, reaching the lowest investment volume recorded in the last fifteen years.
A particularly interesting finding also relates to the change in the way content was accessed in the first half of 2020.
TV and the Internet emerged as the most used channels, with a respective 42 percent and 40 percent, so much so that in an interview also conducted by theMilan Polytechnic’s Internet and Media Observatory shortly after the end of the lockdown, 59 percent of respondents admitted to having used at least one SVOT (Subscription Video on Demand) subscription and to having purchased a Smart TV (38 percent) or other device (25 percent) to connect the Internet to the TV.
TV and the Web thus seem destined to be by far the most-used channels in this 2020 as well, but despite their growth in terms of usage, the decline in advertising investment has touched them as well.
New Technologies and Advertising: how Digital is revolutionizing the world of Advertising
The digital transformation we are experiencing affects the way we live, shop and relate and, inevitably, is having significant repercussions in advertising as well.
One of the determining factors in this process of advertising evolution is, without a doubt, the increasing use of mobile devices (smartphones and tablets), social networks, sharing and interaction platforms.
These have broken down the barriers between content users and promoters: today people move in an increasingly multi-screen and multi-device scenario, the hyper web fragments the audience, and companies are faced with the problem of how to succeed in reaching their targets with increasingly cross-media and engaging communication.
The evolution of advertising has not only seen a shift from traditional, off-line media to digital, online media, but we are experiencing a gradual transformation from invasive advertising to one that is perfectly coherent and integrated within the context in which it is applied (native advertising) and increasingly personalized.
If once, in the planning and implementation phase of campaigns, it was the target audience that was the focus, today it is the buyer personas.
Advertising is following the evolution of marketing with a view to personalizing the customer experience and is transforming from generalist to behavioral. Here it is then that it is no longer enough to know the gender, age, profession of one’s target audience, but it is essential to deepen the analysis, collecting data inherent to browsing behavior, purchasing behavior, searches made.
This leads to the creation of personalized messages, capable of engaging the user, anticipating their desires and needs, creating unique and valuable experiences right from the first click.
In an increasingly crowded digital market, the boundaries between content users and content creators as well as those between players are blurring.
New realities are appearing, including media giants with huge budgets at their disposal, which by upsetting the balance between supply and demand, lead, inevitably, to a significant increase in costs as well.
Already since 2017 there has been a continuous increase in CPC and CPM costs of ads on major channels such as Google ADs and Facebook ADS.
Various factors, such as for example the increase in the number of participants in auctions, with very high spending limits ( in Google), or algorithm changes for ad selection (in Facebook), have contributed and continue to influence costs leading to a constant increase over time.
Rising costs are certainly no small issue facing companies, and this inevitably shifts the focus to the need to better optimize investments.
From user profiling to ad personalization: the contribution of Marketing Automation in advertising
According to the “Digital 2020” report conducted by We Are Social and Hootsuite in the first quarter of 2020 in Italy, nearly 50 million users went online at least once a day.
It is important, therefore, for companies to seize the opportunity to make the most of the web’s full potential in advertising as well
Just in optimizing online investments, a strategy of marketing automation plays a primary role in optimizing costs, as it allows you to better profile and segment your audience, enabling a high level of personalization of the customer experience for online and offline users.
Thanks to advanced tracking technologies, in fact, it is possible to collect information of various kinds: demographic, related to browsing behavior, channels used, or purchasing habits. Of course, all of this is done with full respect for privacy and in compliance with the new GDPR directive on personal data protection. Subsequently, accurate data processing carried out through sophisticated Artificial Intelligence algorithms allows us to devise targeted strategies for each cluster of users and then create “ad hoc” ads and content.
By creating personalized customer experiences, this makes it possible to balance increased advertising costs by increasing the conversion rate of the campaigns themselves.
