Green shoots: Publishers see ad activity return in China

“Anyone who’s been following China closely the last few months would have gone through this phase of horror. And then fear, and then more fear. And then finally optimism,” said Brian Wieser, global president, business intelligence, GroupM. “We saw the future in the past. And towards the end of February, they could see that light at the end of the tunnel. They really did do as much as they could to hibernate the economy.” 

To be clear, publishers are mostly reeling from the shocks of the virus devastating ad revenue: an executive at a large digital publisher said it’s seeing 30% lower CPMs on coronavirus pages versus non-coronavirus pages. In a Digiday poll of 50 publishers, 86% said advertising had been negatively impacted by coronavirus, (27% branded content, 18% commerce and 6% subscriptions). In another study, 88% of publishers expect to miss forecasts this year as a result. 

“It’s tough, globally, for everyone. At the moment it would be wrong to say that the green shoots are balancing that out,” said the first publishing executive who expected three signed contracts last week. “Teams of commercial salespeople are resilient and pragmatic, and we are having a number of challenging conversations; our job is to use our expertise to guide our clients around how best to benefit from our highly engaged audiences and what the most appropriate messaging is at this time.” 

Advertising conversations always center on the audience size and the messaging, but like with most current ways of working, they have got harder. News publishers especially are seeing record traffic months but some consider it gauche to crow about how well business is doing during pandemic panic. For campaigns that are still active, agencies and publishers are modifying the message with their ad partners to make sure it’s appropriate. 

“I’ve heard of examples of cars which are focusing more on their hygienic qualities and their capacity to filter air, which might be a somewhat important thing under normal circumstances, but more important now,” said Wieser. The second publishing executive said that oil and gas companies like Shell and BP are dialing up their sustainability pledges in their communications. 

In China specifically, the signals are there of an economy getting back on its feet, albeit in different ways. Tech giant Huawei went ahead and launched its latest handset, P40 Pro on Mar. 26 (without the launch event). Shanghai Fashion Week partnered with Chinese e-commerce giant Alibaba’s online marketplace Tmall to live-stream its entire runway show Mar. 24. New skincare and beauty products are springing up to repair and alleviate ‘mask face,’ said Wieser. EMarketer revised its ad spend forecast for China Mar. 17 down form 10.5% growth to 8.4% growth, the slowest since it started tracking ad spend in 2011. Yet, more positively, China’s official manufacturing index jumped to a record 52 according to Mar. 31 figures for the month, after precipitous drops in February.

“They are all coming back. I’m not exactly surprised but I am really encouraged,” said the first publishing exec. “The third biggest car manufacturer in China is a client. Over WeChat this week they mentioned that manufacturing mode has been on full tilt since mid-February. They are back to business, and they are all doing something for the national effort by producing 600,000 face masks a day.”

According to this exec, the three campaigns are all from separate nation brands eager to get the message out that their country is open for business. According to the exec, these brands had advertised with the publisher before. The campaigns plan to run for roughly six weeks across TV and digital, which is fairly typical, he said.  

The blows to advertising are sector-specific. Technology, consultancy, law and accountancy are still active, according to news publishers. The number of business-to-business branded content campaigns were down 9%, compared with the weekly average, for the week ending Mar. 29. That’s the least decline compared with other sectors like retail, banking and travel, according to branded content research firm DM Squared. Research from CNBC International’s branded content arm, Catalyst, found 90% of business leaders believe brands who advertise during the crisis will be in a stronger position when the economy picks up.

Times like once-in-a-generation-crisis set everyone searching for signs from other scenarios, like financial downturns, to learn lessons from. In 2008, Millward Brown shared evidence that 60% of the brands cut TV ad spend for 6 months saw ‘brand use’ decrease 24% and ‘brand image’ decrease 28%. Brands that cut their ad budget at a higher rate relative to their competitors were at a greater risk of share loss, according to Kunal Gupta, CEO of tech platform Polar, which works with publishers on branded content ad solutions. 

Arguably, for an advertiser with flexibility in their budget, the best approach is to keep spending and they could come out stronger. 

“The reality is most brands don’t do this,” said Wieser. “They judge themselves, and they set expectations to be judged, on a shorter-term basis so they’ll tend to react on that basis.”