The advertising industry is often described as the ‘canary in the coalmine’ when it comes to predicting a financial recession. That’s to say that it experiences the first warning signs of economic downturn as companies scramble to cut costs due to consumers spending less, so advertisers – the middle-men – are naturally the first expense to be dropped.
Whether that’s actually a wise move or a self-destructive panic response is up for debate. Regardless, it’s the situation we’re in right now. While it’s still too early to say for sure if there will be a recession as economic data takes time to develop long term trends, experts are saying it’s very likely, and the conversation has mostly shifted to forecasting exactly how severe it will be.
Predicting the intensity of a recession can be a lot like reading tea leaves, particularly in a situation developing as rapidly as this, and as such there are many different opinions on what is to come. Economist Bruce Yandle in an article for the Washington Examiner predicts “negative GDP growth in 2020’s first half (a recession) followed by weak growth in the year’s second half.” His forecast is supported by JPMorgan, who, assuming financial injections from world governments, predict a fall in the first two quarters followed by a “return to solid growth” in the second half of the year as the global economy gets back on its feet.
However, these predictions are thankfully among the more negative conclusions, with other economists remaining optimistic. Part of their thinking is informed by the situation in China, where, after a disastrous January and February, people are returning to work and no new cases of the virus have been reported as of two weeks ago outside the epicentre of the Hubei province.
So what exactly does this mean for ad land? Agencies and production companies, particularly those with offices in China, have been feeling a market slump coming on for a while. Fortunately, it’s not the first time the industry has been through something like this, and there are some valuable lessons to be learnt from the past. This article in AdAge recalls the similarities with the economic downturns following 9/11 and more recently the 2008 financial crisis with some stark advice, stating that now more than ever “the economy needs marketers and marketing… [to] help drive commerce.”
While the ad world is undergoing a period of uncertainty and restructure, the work hasn’t stopped, just changed in form. Many agencies have taken advantage of their fluid structures by allowing employees to work from home without damaging output. Production companies, on the other hand, have had their schedules compromised and shoots cancelled due to their physical and travel-heavy nature. Yet conversely there is speculation that TVC and film production will speed up because of the increased consumer demand due to global quarantine measures.
The advertising industry and the people who work in it have a very unique ability to adapt to change. It’s a field that comes with so many bumps and curveballs – tight deadlines, fast turnarounds, entire projects restructuring on a whim – that have provided us with the skills necessary to survive whatever is thrown at us. The current turbulent state of things shouldn’t come as surprise so much as a test of our adaptability, and one that will separate the savvy from the sheep. Kristen Ruby, a PR company CEO, sums this up in an article in Adweek, saying that “the premium agency pros… will know now is a time to pause and reflect… If your brand is quarantined, spend more time on strategy and less time on using this as a quick hit PR and marketing opportunity.”
The only real certainty at the moment is that the next few months will have a lasting effect on how business is conducted in the future. “The bottom of the barrel marketers will keep marketing through this as if nothing is going on,” says Ruby, “they will not pause scheduled tweets or pre-written content for campaigns… As if we were still living in a pre-Coronavirus digital environment.” That is to say that whatever happens now in terms of how brands and companies react to the situation will not only be remembered by consumers, but also define who comes out the other end unscathed or even stronger than ever.
It’s possible with an agile and capable team and a bit of forethought to turn what might currently seem like a looming disaster into a net positive. As Ruby suggests, now is the perfect moment to focus on strategy, improvising and being fluid and accepting of change, getting back-burner tasks done and planning ahead rather than reacting out of fear. The smarter companies – the ones who can look at this holistically and adapt accordingly – will come out on top, but not without changing. The ones that will be worse off will be so because they carried on business as usual. The question now is: to which group will you belong?