The Covid-19 pandemic has catapulted the world, and the advertising industry, into upheaval. Indeed, Kantar found that advertising overall declined by 19% in the first half of 2020 as compared to the prior year. However, signs of recovery are being seen across some platforms. As of the week of Nov. 16th, Kantar has found that advertising on the top 25 national TV networks has reached 2019 levels for the first time since the pandemic struck in March. Several key categories and advertisers played a significant role in this recovery.
A bumpy ride
National television is one of the largest platforms for media spend, and Kantar has been monitoring 30-second ad occurrences by key advertising category since the start of the pandemic for the top 25 U.S. TV networks.
With so much uncertainty around the virus, conflicting messages about safety protocols and a divisive election dominating the conversation, many key categories and top advertisers have scaled back this year. Levels of ad occurrences have dropped significantly, with steep declines beginning in April after locked-in March buys ended. Some categories like travel and movies dropped nearly all advertising, while others like automotive, retail and restaurants pulled back initially, but became more sustained as the economy began to reopen in May. The household products category had consistent year-over-year (YoY) increases, as consumers stocked up on home goods like toilet paper and disinfectants.
With major vaccine announcements and the start of the holiday season, ad levels are finally back on par with last year’s figures for the first time since early March, with an equal number of ad occurrences for key categories on the tracked networks YoY.
Automotive ending the year strong
Automotive was one of the hardest hit categories initially, with lockdowns in place and consumers hesitant to visit showrooms as they reopened. Car companies are also traditionally amongst the biggest advertisers on sporting events like March Madness, which were canceled during the first phases of the pandemic. However, limited travel options have prompted many consumers to take road trips and spurred more city dwellers to purchase vehicles. With that, automotive decreases became less severe during the second half of the year, and YoY occurrences have begun increasing with the holiday season and end of year sales.
While many top automakers increased occurrences the week ending November 22, a standout advertiser was Mazda, who increased occurrences 448% YoY during this time, running ads for its “Season of Inspiration” sale.
Retail has room for growth
With the holiday season in full swing, many retailers who pulled back early in the pandemic, have returned to typical levels for this time of year. Several top retail advertisers have increased their YoY occurrences; however, the category as a whole remains down as numerous major players have struggled – and several, including Lord & Taylor, JCPenney, Neiman Marcus, Brooks Brothers and J. Crew, have declared bankruptcy. The winter holiday season is the busiest time for retail, accounting for more than 20% of annual advertising activity for the category, but with so much uncertainty this year, some advertisers have shifted tactics from years past.
Walmart, Target and Macy's typically dominate retail advertising during the holiday season and continue to do so in 2020. The three top retailers had increases of 13%, 17% and 17% respectively for the week ending November 22, compared to the volume of advertising spots during this time last year.
The decreases in the category are partly due to Amazon pulling back 48% this week after kicking off the holiday season early with Prime Day in October. The home improvement segment is another factor. Home Depot and Lowe’s typically advertise heavily during this time promoting getting your home ready for the holidays, but this year both retailers have scaled back with declines of 36% and 13% respectively. With millions of consumers improving their homes throughout the year, these companies have already received strong growth: For example, Home Depot saw sales grow by 23% year-over-year during its third quarter and 18% year to date. Accordingly, they may not have felt any need to drive additional sales during the holidays.
The road to recovery
Much remains uncertain while COVID-19 continues to unfold, but one thing is clear. Brands are advertising again, some at levels we did not expect to see quite yet. Strategies and messaging may have changed, but marketers are finding the right tone to meet consumers where they are as we continue to navigate the pandemic.