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Adland is Cautiously Optimistic for the Christmas Season

Tim Cross  16 November, 2020

The Christmas period is the ad industry’s bumper quarter. Media spend booms as brands roll out their big budget campaigns, many of which have been in the works for the best part of a year. And it’s arguably the one time of year when consumers really get excited for ads, waiting with baited breath to see what the big retailers and supermarkets have been cooking up.

But as has been the case over the course of the pandemic, CMOs have been under more pressure than usual to justify their marketing spend. At a time when budgets are tight, splashing out on a cinematic Christmas ad might seem excessive.

Those VAN spoke with however say the situation is much more positive than might have been expected at the start of the pandemic.

“Overall we are seeing a lot more confidence in planning for Christmas from our clients compared to the shock to their business many experienced in the spring when the first wave hit,” said Simon Harwood, head of strategy at the7stars. ”Clients are now cautiously optimistic, and we’ve been helping them put their plans in place with flexibility built in to adapt to any further tightening of restrictions.

Harwood added that some sectors are spending about the same as they normally would. “FMCG and grocery retail categories, as well as in home entertainment sectors are about where we’d usually expect them to be,” he said. “While travel and leisure are still down year on year, these sectors are still planning to make their comeback in Q4, especially now that consumer confidence is slowly returning to those sectors with the hope of a vaccine by spring.”

Richard Kirk, chief strategy officer at Zenith, said that overall spend has been boosted by the fact that many brands planned their Christmas campaigns over the summer, when some were predicting life would be returning to normal towards the end of the year.

“Are advertisers Christmas media plans as radically different as we might have imagined in April? No,” said Kirk. “Remember, for many brands the planning and approval period for Q4 was late summer, when the focus was on a return to normalcy.”

A Drop in Christmas Spending Predicted…

Overall, it is still likely we’ll see a sizable drop in total ad spend during the Christmas period.

Even some of the traditional big spenders at Christmas had questioned whether to run a Christmas campaign at all.

British retailer John Lewis, which has built a reputation in the UK for its big budget Christmas ads, considered completely scrapping its annual ad this year. “We did consider whether it was right to produce an ad this year at all,” said James Bailey, executive director of Waitrose (which partners with John Lewis for the Christmas ad).

Fellow retailer Marks & Spencer meanwhile has chosen not to run an ad for its clothing division this year, having run separate ads for its clothing and food lines since 2018.

Some industry forecasts predict a significant year-on-year drop in Christmas ad spending. A report from the Advertising Association and WARC for example projects a £724 million drop in Q4 ad spend this year. This represents a 10.5 percent fall year-on-year, the biggest drop since the AA and WARC began measuring ad spend in 1982.

And Stephen Woodford, chief executive of the Advertising Association, warned that the second national lockdown put in place in England at the start of the month could lead to an even greater drop. “The surprise news of the lockdown U-turn comes at the most critical point in the biggest quarter of the year for advertisers, agencies, media owners and tech companies and at a time when we had already downgraded our forecasts for Q4 2020 and 2021,” he said.

… but Christmas Isn’t Cancelled

But Kirk and Harwood both played down the impact of further national lockdowns in the UK and Europe.

“A short second lockdown hasn’t resulted in a rush to change Q4 media plans,” said Zenith’s Kirk. “It’s certainly not like spring when demand for ad inventory in major channels dropped significantly.”

The7stars’ Harwood said there have actually been some benefits to advertisers of the second national lockdown in England.

“Before the second lockdown we were planning and re-planning at the local level with the three tier restrictions, so in some ways the shift to quasi-national lockdown makes our job a bit easier as large groups of people are experiencing the same thing,” he said. “It has meant some greater certainty with what is in front of us for the next few weeks, and if there’s one thing clients crave it’s some certainty to base their decision making on.”

But while Harwood and Kirk said many of their clients are still choosing to spend, there have been shifts in strategy to accommodate this year’s unusual circumstances.

As has been the case throughout the year, Harwood said he’s been advising brands to work with channels which have been boosted by the pandemic.

“We know that media consumption under national lockdown conditions tends to boom with online video, TV, gaming and radio particularly strong performers across all age groups, while channels such as commuter OOH and cinema take a hit,” he said. “As much of clients’ Christmas activity is launched in the November lockdown window in England, this has had a significant impact on their channel mix this year, with VOD the biggest winner.”

Richard Kirk meanwhile said that his clients have been looking for more flexibility in their ability to adapt their campaigns to changing conditions, and more assurances on ROI.

“Smart advertisers have built their Christmas plans with flex and risk-reduction as central principles. For example, skewing AV more towards VOD and online inventory, or building new commercial arrangements,” he said. “And we have a number of campaigns going live via our APEX offering, where we have guaranteed delivery against client set targets.”

And Harwood said it’s been important this year to understand changes in consumers’ Christmas shopping behaviour.

“We’ve been advising clients to anticipate earlier Christmas shopping from consumers than usual, aided by the acceleration to online we’ve witnessed this year,” he said. “With many retailers shuttered, it’s never been more important for advertisers to raise their ecommerce game.”

The Case for Christmas Still Holds

For some businesses, the financial hit of the pandemic will mean they simply don’t have the funds to pay for a pricey Christmas campaign.

But for those with the means, the case for spending big at Christmas still holds true.

Research conducted by the7stars found that 47 percent of consumers plan to spend as much this Christmas as they would any other year. And 23 percent of British consumers are looking forward to Christmas more than usual this year.

As such, it shouldn’t be too much of a surprise if this Christmas season looks fairly similar to any other, at least when it comes to the ads. “Probably a bit boring to say, but media-wise, many brands’ Christmas campaigns will look remarkably similar to previous years,” said Zenith’s Kirk.

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