Ad Execs To IAB: Pandemic Worse Than Financial Crisis, Having Substantial Immediate Impact

Three-quarters (74%) of ad executives say the impact of the pandemic on their advertising plans is worse than the effect the financial crisis had in 2008 and 2009, according to results of a survey or nearly 300 advertisers and agency executives conducted last week by the Interactive Advertising Bureau (IAB).

Significantly, nearly half (44%) characterized it as substantially more of an impact, and to prove, it respondents indicated they already are making massive cuts to their second- and third-quarter advertising plans.

According to the IAB's findings, traditional media will be more significantly impacted, but both traditional and digital are being cut massively in the March/April time frame (43% and 38%, respectively for traditional and digital media vs. their annual plans), and almost as much in the May/June period (35% and 28%, respectively).



The IAB's findings concur with the sentiment of other industry sources, though an Advertising Research Foundation (ARF) "virtual" Town Hall Thursday featured some of the ad industry's leading economists predicting digital media was actually the first to be cut. One of the speakers, Needham & Co. analyst Laura Marin said that was because digital is almost all "scatter," noting that traditional media such as linear TV have long-term contracts and relationships that likely will make them more resilient, at least in the short-run.

The next potential wave of upfront network TV cancellation options, for example, only exposes upwards of 50% of third-quarter upfront advertising commitments, but they won't come due until May 1.

Meanwhile, the analysts said digital media -- especially companies like Google and Facebook that rely heavily on the "long tail" of small business advertisers, are especially vulnerable. Needham & Co.'s Martin noted that about 70% of Google's advertising revenues come from small businesses.

It should be noted, however, that the IAB survey likely represents the views of bigger advertisers and agency executives, not the long tail, per se.

The IAB study, meanwhile, offers responses breaking down ad budgets cuts by explicit digital and traditional media categories (below), and the full report, which can be accessed here, also includes findings on how ad executives say they are adjusting their ad campaigns' creative and messaging in response to the health crisis and the social distancing, and economic fall-off that have resulted from it.

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