A Look at Marketing Spend Recalibrated: Where Are the Green Shoots?

We are well into Q2, and the pandemic is having a detrimental impact on U.S. marketing spend. How much so? That’s where we turn to The Winterberry Group which tracks data, digital, and direct marketing spend vs. general advertising, and releases its Annual Outlook each year in January. As COVID-19 took hold, firm principal Bruce Biegel recently updated some of its numbers, citing various sources — and they are worth a look: [caption id="attachment_86734" align="aligncenter" width="520"] Source: Winterberry Group, April 2020.[/caption] Green Shoots in Media Hey, I see a green shoot here. In digital, while display, search, and social are taking the greatest hits, digital video’s loss is less pronounced — and we might guess why. Consumers are consuming digital media in record numbers. In fact, OTT (connected TV) and podcast ad spend is out of sync with the number of consumers migrating to these media, even before the pandemic took hold. As reported in Digiday: “According to Magna Global, OTT accounts for 29% of TV viewing but so far has only captured 3% of TV ad budgets. And as consumers increasingly flock to internet-connected TV devices, a wide range of players — from tech giants, to device sellers to TV networks and more — are building services to capture a share of the ad dollars that will inevitably flow into the OTT ecosystem.” So if anything, advertisers may need to get their tech stacks ready to enable OTT and podcast engagement. But this is not a linear TV buy based on cost-per-thousand (CPM). This is an opportunity to personalize, target, and attribute on a 1:1 level. Another green shoot: Email remains a staple. Again, as we stay at home, whether as consumers or as business people, it’s been email that is sustaining connections for many brands. So “flat spending” is a positive, even as price compression is underway. Offline is not a pretty picture — right now. [caption id="attachment_86735" align="aligncenter" width="520"] Source: Winterberry Group, April 2020.[/caption] My last post sought to document U.S. Postal Service's woes. I still believe direct mail is a brand differentiator, particularly right now — as I watch my own household pause from the sameness of screens, and take our “print” moment with each day’s incoming mail and catalogs. We’ve dog-eared pages, placed our DTC (direct to consumer) orders, and even some B2B purchases for home office supplies. (Thankfully, all but one of us are still working.) Green Shoots in Verticals The Winterberry Group also examined some primary verticals — which ones will lead our economic recovery? One green shoot is identified as financial services. After the Great Recession (2008-2009), the financial sector — which prompted the Recession beginning with subprime mortgages — recapitalized and strengthened reserves. Banks had to do it, by law. As a result, they are better positioned to weather the pandemic storm; though there may be pressure to lend to less-than-stellar-credit customers, the Winterberry Group reports. We shall see. As of May 7, the NASDAQ had completely erased its 2020 year-to-date market loss. [caption id="attachment_86736" align="aligncenter" width="520"] Source: Winterberry Group, April 2020.[/caption] In the Media & Entertainment sector, live events are effectively gone — except where they can go virtual, but that’s hardly a dollar-for-dollar exchange. The good news is that media subscriptions (for on-demand media) are rapidly increasing, and ad-supported on-demand media also is increasing — pertinent to the aforementioned OTT discussion. And another green shoot candidate, Healthcare & Pharma, is actually on neutral ground. Some trends, such as telemedicine, online prescription fulfillment, and anything COVID-related — are booming, but elective surgeries are on hold, and 33+ million laid-off Americans may wind up uninsured. [caption id="attachment_86737" align="aligncenter" width="520"] Source: Winterberry Group, April 2020.[/caption] Ingenuity — The Greatest Green Shoot of All And my last green shoot is this — our own innovation, agility, and creativity. I leave you with this one anecdote heard last week on National Public Radio. Can you imagine being a member of the Graduating Class of 2020? These students will go down in history perhaps as a model of resiliency. Time will tell. But next door in North Salem, NY, the town and school system landed on a novel idea: The faculty, students and families will drive one hour north to a one of the state’s few remaining drive-in theaters. The commencement address will be projected — and the diplomas handed out vehicle by vehicle. Who knows, maybe Summer 2020 will be the Great American Comeback of the drive-in theater. Maybe Bruce will need to update his out-of-home and cinematic spending accordingly. (You can learn more from Bruce at this upcoming June 17 Direct Marketing Club of New York virtual briefing on your laptop. Registration here.) I love such ingenuity. If you know of other examples, please share them in the comments section. Stay safe — and keep America innovating.

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A Look at Marketing Spend Recalibrated: Where Are the Green Shoots?

Green Shoots in Media

Chet Dalzell

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Chet Dalzell