Industry Discussion | Author : Gibson Camson, Carousell Media Group
Key learnings from COVID and the ongoing war in Ukraine
During COVID there was a significant drop in ad spend from travel, auto, property and entertainment verticals, and while COVID is in the rearview mirror for most of Southeast Asia, in 2022 we are plagued with other challenges.
For example, the war in Ukraine has surprisingly impacted the QSR vertical by causing chicken shortages in MY, and potato and palm oil shortages in a few markets in Asia. Ukraine is a vital breadbasket, producing around half of the world’s sunflower oil, 15% of global trade in corn and 10% of global wheat trade. With restricted access to these commodities, several SEA countries have been stockpiling their commodities (eg, Indonesia stopped exporting palm oil), leading to regional shortages of food and feed for livestock. Ukraine also produces half of the world’s neon gas, critical for manufacturing semiconductor chips. Chips shortages have resulted in auto brands and banks (car loans) pulling ad spend too.
Asia Demand and Vertical Trends in the Open Market
Looking at the open market demand, it looks like 2022 demand seems to be recovering and is getting better compared to pre-pandemic levels. During the pandemic, advertisers focused on running performance campaigns, while this year more advertisers like P&G are running awareness campaigns and doubled down their spending to increase their brand uplift. We also see a lot of luxury brands spending aggressively this year.
I led an Industry Discussion at an IAB SEA+India Programmatic Council meeting, where we discussed which verticals did and didn’t do well during the pandemic, and which verticals they think would thrive in the next economic downturn. The majority of the council members think that the Finance vertical will do very well once again since consumers will be looking for a way to have buying power when the economy is challenged.
While media spending is lower overall due to a challenged economy, it is also due to a laser-focused objective which is performance; where it has softer spending and stable CPM. In 2022, the objectives are more on brand awareness where CPMs and budgets are relatively aggressive due to the available ad formats (eg, OTT, Audio, rich media).
Conclusion
Taking learnings from the GFC in 2008, three industry sectors continued to invest in marketing during the economic downturn, for example:
Finance: As interest rates rise, banks begin marketing savings accounts. As the economy weakens and people become fearful, banks begin to promote debt consolidation loans. As the stock market crumbles, FX companies ramp up advertising as an alternative for investors.
Low-Cost Entertainment: While consumers may become more cost-conscious, they will still want to treat themselves with lower-cost options like dining in fast-food restaurants. Gaming will continue to boom. In 2008 going to the movies became a cost-effective night out for people, and there was an increase in marketing spending from movie studios.
Government: During recessions, governments tend to step in with a range of initiatives to support their citizens, for example during the 2008 crisis, the Singapore government put together a $20.5 billion Resilience Package. The Resilience Package aimed at maintaining citizen employment, supporting business cash flow and providing support for families and communities. All these initiatives received significant marketing support as the government needed to be seen taking action.