Irish advertising faces severe difficulties due to the Covid-19 pandemic and the crisis is expected to see spend this year fall by 30 per cent, Core has warned. In a statement made by the company ‘s chief executive Alan Cox (above), the contraction equates to over €300 million in lost revenues, all of which will adversely impact both media and agencies.
Before the current crisis struck, Core had forecast “sluggish” growth of 1.6 per cent in advertising revenues, but the “entirely new reality” of campaign cancellations and deferments means there will be a serious downturn in spending by advertisers throughout the year, with the lowest point being in May and June, with a 65 per cent drop in activity.
In the second half of 2020, the year-on-year decline rate is expected be “less dramatic, but still substantial”, with the market running 40 per cent lower in July and August and then about 20 per cent lower in the final four months. Core, which employs 320 people and is Ireland’s largest marketing group, has implemented pay cuts ranging from 7.5 per cent to 20 per cent, with the reductions tiered based on salary level.
The cuts, which will be reviewed on an ongoing basis, were based on the reduction in demand that Core is now seeing and expects to record in the coming months. “We would like to thank our employees for their amazing spirit and for their commitment to each other and their clients during this unsettling time,” Cox said. No redundancies are planned at this point.
CONTINUE TO INVEST
Core hopes advertisers will continue to invest in longer-term brand-building campaigns through the crisis. “It is really important that marketers don’t go dark at a time like this, as it will impede their ability to reboot,” Cox added. However, brands that do carry on advertising will have to review their messages so they don’t jar with consumers, while in some sectors, notably travel, it “makes no sense” for advertisers to run big campaigns at the moment.
He said that for media companies that depend on advertising revenues, this is an “exceptionally tough time”. The plunge in footfall and traffic means out of home advertising, which had initially been forecast to grow 3.2 per cent this year, has been “heavily hit”, while the closure of cinemas means advertising will have “existential” difficulties.
Despite a surge in audiences for trusted news media, this sector will also be “particularly hard hit”. While there may be a sharper return to activity in the fourth quarter than currently anticipated, it is not possible at this stage to rely on this happening, with much depending on how long it takes the economy to emerge from recession.
An online survey by Core Research of 1,000 adults, conducted between March 27 and 30, found that 74 per cent were “very” or “extremely” concerned about Covid-19, but 67 per cent were optimistic that Ireland could overcome the outbreak. Cox said he would include himself among the 67 per cent who feel positive that this will pass and we will be able to recover from it, with the help of the Irish Government and governments around the world.
- For more Covid-19 marketing and media related stories, just click on https://marketing.ie/2020/