How Will Coronavirus Affect the Digital Advertising World?

The advertising industry has been through many crises in the past. It’s a fact that if there is anything wrong in a modern capitalist economy, the advertising industry takes the first hit.

Most of the crises we saw in our lifetime were generally economic ones. As a pattern in a given economic crisis; we took the hit, absorbed it and recovered from it. Making predictions about an economic crisis is something relatively easy for the advertising industry.

But today, we are in the middle of something we’ve never been in our lifetime. Global COVID-19 crisis has created an apocalyptic atmosphere around the world and there is a thick layer of fog preventing us from seeing where we are heading to.

Immediate Effects

Coronavirus crisis has immediately affected tourism and travel industries , since most of the people postponed their vacation plans and some of the countries closed their borders to foreigners. As tourism and travel industries are major spenders in digital advertising, publishing and advertising industries took the first hit from the former. It’s expected that Google will see a 15% decline in travel ad revenue in the first quarter of 2020 and 20% in the second one.

A Slow Economy

As most of the industries will suffer from the effects of Coronavirus, people will be tentative about making long term investments and focus on their daily needs. Most people will feel anxious about their income and won’t consider investing in a new house or a car. Particularly in developing countries, we may see a drastic decline in the high investment and luxury industries. Major players in these industries may go to budget cuts in digital advertising.

However, the retail industry will probably face other challenges. As most people are not willing to do their shopping from physical stores, the demand in e-commerce will dramatically increase. But this unexpected rise in demand may create problems in supply chains and distribution channels and e-retailers can decrease their digital advertising budget to limit the demand.

New Working Systems

Another problem for the digital advertising world will be working environments. Putting 100 people in an office under the same roof is not a good idea these days and agencies have to find remote working solutions without hindering the business.

Remote working was already a rising trend in the digital advertising world, but in the Coronavirus crisis, we have seen that most of the agencies (especially large ones) are not ready to go to full-scale change yet. Most of the agencies are still depending on physical contact. Remote working workflows are not designed at a sufficient level and IT infrastructures are not enough. This crisis can be an opportunity for agencies to redesign their working systems as a more flexible and reactive one.

We are experiencing the early stages of a massive crisis we haven’t seen before. But life goes on and there are new lessons to learn every day. The loss for the digital advertising world is inevitable but observing the situation effectively and rethinking the business will be the path of recovery.

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