Dive Brief:

• More than half (54%) of marketers will cut ad spend in Q3 from a year earlier, a slight improvement from the 72% that decreased spending in Q2 as demand recovers from the pandemic's negative effect on the economy. By Q4, only 40% of marketers will be spending less than they did in 2019, per a study that researcher Advertiser Perceptions shared with Marketing Dive.
• With expected budget declines of 12% in Q3 and 7.5% in Q4 from the prior year, advertisers will shift their priorities of among the 36% of their budgets that go to regional and local media. Digital media outlets will be most important, with 75% of marketers using paid social and display for local advertising, ahead of paid search (70%), digital video (64%), digital audio (46%) and over-the-top (OTT)/connected TV (CTV) 44%. Less than half (46%) of marketers will use linear TV for local ads.
• The shift toward digital media underpins marketer demand for greater flexibility in media contracts, with 87% of advertisers planning to negotiate more adjustable terms. Seventy percent of marketers expect to keep budgets at the same media companies, but they also want greater flexibility as the average media planning time falls to 2.3 months from 4.2 months, per Advertiser Perceptions. The firm in June surveyed 150 advertisers and agency executives involved with media-buying decisions.

Dive Insight:

Fewer advertisers plan to cut media spending in the remainder of the year, though they are changing their priorities to reach the growing audiences for digital media, the study by Advertiser Perceptions suggests. The coronavirus pandemic has led to a surge in media consumption among people who were stuck at home during lockdowns while accelerating the shift toward social media, streaming and OTT/CTV platforms. Advertisers will prioritize those digital media platforms, especially in their regional and local spending during the second half of the year.

Advertiser Perceptions also notes that advertisers face a dynamic and demanding media environment that will include the U.S. election, a shift in media dollars that had been planned for the Summer Olympics and a holiday shopping season that's likely to differ by regional responses to the pandemic. As seen with the return of restrictions on businesses in states where COVID-19 infections are surging, circumstances can change quickly.

Marketers will demand greater flexibility in their media spending, including the ability to delay or cancel campaigns on short notice. They also will want more research, with 61% of advertisers saying they want insights into how the pandemic is changing the marketplace, per the study.

Two-thirds of marketers that had planned to advertise during the Olympics are shifting those budgets, Advertiser Perceptions found. Seventeen percent of advertisers will spend the money on other sports programming that's scheduled to return, while their remaining budgets will be allocated among news content (10%), paid social (9%), lifestyle content (8%), paid search (8%), entertainment content (8%) and other opportunities (5%), per the study.

Major League Baseball, the National Basketball Association and the National Hockey League are scheduled to resume play in the next few weeks, while the National Football League's regular season is planned for a Sept. 10 opening. The resumption of live sports likely will boost ad spend for linear TV channels that carry games.