Will advertising budgets weather a second lockdown during the crucial Christmas period? – The Drum

Marketers hoping for a bumper festive trading period after a forgettable year have been dealt a blow with the news of a second national lockdown in England this month. But having learned lessons from the first, can clents really afford to slash spend again in the lead up to a crucial Christmas? The Drum asks media buyers which clients will keep spending – and which won’t.

Boris Johnson’s announcement that England would return to lockdown from 5 November was greeted with trepidation from many businesses, not least those in the creative industries. Characteristically, the Advertising Association was quick out of the blocks to condemn the “surprise news” of the restrictions during “the most critical point in the biggest quarter of the year for advertisers, agencies, media owners and tech companies”.

Stephen Woodford, its chief executive, warned there will be “an adverse” impact on Christmas trading and the industry will have to act to protect jobs. Before the lockdown was forecast, an increasing number of marketers were already seeing budget cuts. And in the UK, Christmas advertising spend was predicted to be down £725m even before the new stay-at-home measures came to light.

Tom Laranjo, managing director at Total Media, says the latest lockdown will “dampen an already depressed market”. Clients were already focused on weathering the storm and starting 2021 with the best foot forward, but “there is only so long that any business can endure having no customers,” he warns.

England’s second national lockdown comes into force in the same week that advertising’s biggest spenders, primarily the retailers, have started launching their Christmas creative. They arrive at an inopportune moment with city centre footfall about to reduce again.

“The lines about ‘opportunities in a crisis’ ring pretty hollow when you are not able to fly, sail, serve or open your doors to customers,” says Laranjo.

He hopes, however, that clients will have shifted their businesses enough following the first lockdown to be in a position where they can still serve customers, or at the very least, have a marketing message to tell. But it won’t be suitable for all brands to keep spending on marketing because it’s not “universally the right course of action for all businesses”. And any cuts that do come to marketing spend, he argues, should “not be lazily trotted out as a means to berate marketeers who are facing unprecedented supply-side and demand-side contractions”.

Those who do keep spending should be wary of resorting to social purpose, he warns. “We are smart enough to see which businesses are simply trying to use social purpose messaging as a cynical move to attract customers. We know which businesses are genuinely playing a real and heartfelt role in supporting communities.”

He predicts casualties, particularly in retail, if the lockdown lasts and bites through a vital shopping window that was already deflated by tighter consumer purse strings.

Meanwhile, Jeremy Hine, chief executive of MullenLowe Group UK, believes we can be optimistic about ad spend – in some categories at least. Some spend grew in the immediate aftermath of the first lockdown, particularly in digital, social and video. That’ll come to no surprise to anyone who’s been in lockdown, since these are sectors that can continue to service customers. While media spend is down year on year, it has shown an impressive recovery in Q3 and Q4 (with the exception of cinema). Overall 2020 UK ad spend is down more than 20% across non-digital channels.

Some sectors won’t, or can’t, turn up. With retail hamstrung by the lockdown, travel will also be assessing its spend. Aviation activity is down 90% this year, says Hine. It is a sector that was just starting to find its voice again. Similarly, the European luxury sector had a tough year with fewer high-spending foreign visitors. “Sales are forecast to be down 30% this year and could take up to three years to recover. Luxury retailers, who normally rely on in-store sales have had to work hard to develop their online business.” These sectors live off each other. One’s absence will hurt another.

And finally, there are the hospitality and leisure industries which were artificially inflated by initiatives like Eat Out To Help Out first time around. “Gyms, restaurants and pubs will be hit hard as this sector puts the brakes on for a second time. They will hope to bounce back, although in a somewhat muted way, for the festive season.”

The saving grace is that lockdown action now could salvage Christmas activity.

Hine urges marketers to “keep pushing on with projects already in the pipeline”. He says: “Many agencies have worked incredibly hard this year to support their clients and some momentum, although fragile, is returning. Agencies are planning for 2021 already, trying to forecast ahead so this second lockdown won’t have as significant an effect on agencies this late in the year”.

He sees Black Friday (27 November), “or more probably the 10 days surrounding it,” as being more fiercely competitive than ever before.

Ciaran Deering, head of digital and co-owner of The Grove Media, believes advertisers and their agencies won’t be as caught out this time because any pre-Christmas recovery was already “unlikely to happen”.

He’s optimistic that the best planners would have accounted for a second wave and been ready for this situation. “This decline won’t come as a surprise to many UK agencies who have had the difficult job of forecasting clients spends this year.”

Deering points out that it has already been a difficult time planning budgets around government strategies, be it containing the pandemic or delivering Brexit.

“Our view is that the sector needs to take this one step at a time and that long-term planning is problematic.”

A Christmas like no other awaits, in every sense. But action now may just give clients something to cheer in the new year.

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