Before the coronavirus pandemic, the TV networks were expecting a strong 2020. But things have changed — and perhaps permanently.
Instead of its usual prime-time commercial for Memorial Day, Walmart skipped TV this year, going with an ad made for social media that shows a store manager reciting an inspirational poem. It was filmed by a small crew at a Walmart in Arizona and augmented with animation.
This could be the future of television advertising: fast, cheap, minimalist.
“TV was already in the middle of a huge revolution, and it’s only going to intensify, because now advertisers’ money is tight,” said Jane Clarke, chief executive of the Coalition for Innovative Media Measurement, a trade group.
The economic fallout of the pandemic has caused companies to slash TV ad budgets by more than 40%, according to research firm Kantar. As a result, networks are expected lose out on $25.5 billion in spending before the year is over, the research group WARC predicts.
Things also have changed in the way ad time is sold. In a typical year, up to 80% of the space available for the approaching TV season is sold before a single show is aired. This year, advertisers are waiting to see how the season goes before signing on the dotted line.
So far, the number of deals is “probably not coming close to the usual volumes,” said Tim Nollen, an analyst with Macquarie Capital, in a note to investors in May.
And more companies are demanding proof that TV commercials actually work. As online platforms like YouTube make a play for TV advertisers, networks are making the argument that they can match certain ads to specific households and track how many sales result. Clients are holding them to that promise.
“Advertisers have a lot more questions about actual metrics, and they’re putting fewer dollars in less accountable environments where it’s harder to measure results,” said Tal Chalozin, co-founder of Innovid, an ad-tech company.
In the new mediascape, big-budget TV commercials could become something of a rarity, said Edward E. Timke, an advertising expert at Duke University.
“This is going to be a watershed moment in history, where ad agencies or their clients are going to be forced to rethink how they produce and how they create,” he said. “Maybe ads with big productions will become the exception, rather than the norm.”