Major multinationals are postponing ad campaigns and slashing marketing budgets, new report finds

Thought provoking message on the giant advertising boards at Piccadilly Circus almost deserted due to the Covid-19 outbreak and social distancing on what would normally be a busy, bustling day with hoards of people out to shop and socialise on 22nd March 2020 in London, England, United Kingdom.
Mike Kemp

The world's largest advertisers are deferring planned ad campaigns and cutting budgets due to the coronavirus pandemic, according to a leading marketing industry body.

Some 81% percent of large advertisers are deferring ads, according to the World Federation of Advertisers (WFA), which surveyed its members that collectively spend $57 billion on media buys and marketing fees annually, for a report published Tuesday. WFA members include AB-InBev, Airbnb, Diageo, L'Oreal, Coca-Cola, Unilever and Visa.

More than half (57%) of those surveyed said they had decreased budgets greatly or somewhat due to the virus outbreak.

Thirty-four percent of WFA's surveyed members had postponed ad campaigns for one or two months due to the outbreak, while 6% said the delay was indefinite.

But nearly a fifth (19%) said the coronavirus had had no impact on the timing of marketing campaigns so far.

Many brands tweaked or pulled ad campaigns as the coronavirus became a pandemic last month. Following medical advice to avoid touching your face, and contact with other people, KFC paused a U.K. spot that showed people licking their fingers and Hershey removed an ad showing people hugging.

While many large advertisers have postponed planned campaigns, they are now creating new ones in response to the pandemic, according to the WFA. Half of those surveyed had either launched new ads or were about to, with 29% planning new campaigns. 

But the overall impact on marketing budgets is set to be significant, with one analyst suggesting the U.S. ad industry could lose almost $26 billion. Ad groups WPP and IPG have both withdrawn their guidance for the financial year, while ad agencies are working to help clients set the right tone in their campaigns during the crisis.

The WFA's survey suggested that 21% of large advertisers had decreased marketing budgets greatly, while 36% had decreased them somewhat. Just under a third (32%) said there had been "no change" in spend.

Some companies have moved to reassure their ad agency suppliers over payment terms. Unilever will offer early payment to some small and medium-sized suppliers, it said in an online statement last month, while the WFA's members said they had "provided guidance" to their ad agencies.

"Brands around the world are adopting very human, often brave, approaches to supporting society at a time of dire need," WFA CEO Stephan Loerke said in a statement emailed to CNBC.

It comes as some companies switch up their efforts to help during the pandemic, with car manufacturers making ventilators and face shields and large alcohol producers making hand sanitizers.

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