Dive Brief:

• Advertising and marketing executives have become more pessimistic about the effect of the COVID-19 pandemic on ad spending, with many predicting the fallout to last into next year. More than three quarters (77%) of those professionals expect at least a minor effect on ad spending during Q1 2021, according to the latest tracking survey that researcher Advertiser Perceptions shared with Marketing Dive.
• Digital video felt the biggest effect of changes to ad spending with 78% of advertisers saying they had delayed, canceled or cut budgets of such campaigns, ahead of display advertising (78%), paid social (73%), linear broadcast TV (66%), out-of-home (66%) and paid search (65%), among other formats, per Advertiser Perceptions' survey of 152 marketers and ad agency executives.
• Ad spending plans also vary by industry group, with "out and about" (OAA) brands in the restaurant and travel sector being more likely than brands in the "hunkered-down-at-home" (HDH) brands in groceries, beer, wine and liquor categories to cancel their campaigns. OAA brands have canceled 50% more campaigns and stopped 60% more in-flight campaigns than HDH brands have, per Advertiser Perceptions.

Dive Insight:

While advertisers were more pessimistic about the outlook for ad spending in the most recent survey by Advertiser Perceptions compared with previous surveys conducted at the start of the health crisis, those attitudes can change as quickly as developments with the pandemic. Most advertisers (89%) said they're looking at coronavirus-related reasons to know when to resume ad spending, more than economic-related reasons (51%) and ad industry-related reasons, the survey found.

The most important developments advertisers are watching include the relaxing of social distancing (50%), slowing growth of new cases (40%) and no new cases (37%). Some are also looking at the lifting of U.S. travel restrictions (30%) and the resumption of live sports (28%) for a sign to resume ad spending.

Until advertisers see more signs that the pandemic is being contained, they are likely to have a grim assessment for ad spending between the current quarter and the first quarter of next year. The percentage of survey respondents who observed a "major impact" on ad spending in Q2 rose to 86% in early April from 69% in mid-March, while the effect on Q3 rose to 43% from 28% in those study periods.

The percentage of advertisers who said they held back a campaign until later in the later grew to 64% in early April from 49% in mid-March, when Advertiser Perceptions first surveyed executives about the pandemic. The portion of respondents who said they canceled a campaign completely in the pre-launch stage rose to 44% from 34% during those survey periods.

Looking ahead to the critical holiday shopping season, the outlook is somewhat better. Only 13% of advertisers expect a major negative effect on advertising in Q4, while 47% expect a moderate effect and 33% forecast a minor effect, per Advertiser Perceptions.

Less than half (41%) of advertisers said the crisis had created significant creative challenges. More than two-thirds (68%) of survey respondents are modifying existing creative, while 55% are running what they already have. Only 18% of advertisers would consider user-generated content (UGC) as a solution, per Advertiser Perceptions.