Ad Industry Bracing for a Long Road Ahead

In case you were thinking ad revenues might come roaring back any time soon, it’s time for a bit of a reality check.

“While free money is being given away through economic stimulus schemes, it isn’t being spent,” writes Seb Joseph in Digiday. “That brings both opportunity and danger, especially for an ad industry inextricably tied to the flow of that money into their margin-based businesses.”

To be sure, it’s not all doom and gloom. Joseph reminds us that ad spending in Q3 quarter was a little better than expected, and the slight uptick is expected to continue through the holidays.

“As long as people are able to pay the majority of their bills, and the large banks have made appropriate provisions for bad debt, then you’re not looking at a cliff — it’s just the continued challenges in a broader economic environment,” said CJ Banagh, a partner at PWC.

Yet experts warn that brands are rethinking their ad strategies for the near and long term, as economies around the world stagnate and even shrink. Words like “cautious” and “uncertain” continue to litter earnings reports and quarterly results. This means brands may be scaling back accordingly … leading to a significant change to the ad agency model, especially in consumer packaged goods (CPG).

For the publishing industry, this means selling your ad space isn’t getting easier any time soon. So the pivot toward subscriptions and other revenue streams like membership models continues.

While many believe this ad spend slump won’t be as bad as the Great Recession’s, ad budgets aren’t coming roaring back anytime soon. Yet this industry knows how to survive this. It starts with a keen understanding of your audience and what’s truly important to them, delivered in a way they trust and appreciate. If you have been working at truly becoming essential to your readers … and yes, your ad partners … you’re on the right track to weather what comes next.