The S4 Capital boss talks to WARC’s Head of Content about the impact of COVID-19 on the advertising industry and the possible outline of recovery.
V or W? Or Bathtub?
We all know we’re in a deep advertising recession – last week’s AA/WARC Expenditure Report figures confirmed it. The question now is what shape it will be – in other words, how long will it last, and how quick will the rebound be?
That’s the question we posed to Sir Martin Sorrell, Executive Chairman of S4 Capital, in a recent video interview – part of WARC’s content series on marketing in the COVID-19 recession.
His prediction: a “reverse square root”. So that’s a sharp downturn, then a rapid partial rebound before a plateau at a lower level than previously. But the picture varies by sector – while travel is hard hit, cash-rich tech companies are taking the opportunity to invest in brand. FMCG companies are holding up better than many, and moving money online, while healthcare is (unsurprisingly) relatively unaffected.
Sorrell has also been vocal in his criticism of those advising brands to spend their way through this recession. That is “patent nonsense” for any brand currently unable to sell to consumers and fulfil demand, he says – there’s a case for “purpose”, particularly when that means genuinely helping people, but communications for many brands may have to wait until distribution returns.
Other points to note:
- Many new online behaviours will stick, and advertising investment will follow as a result when advertisers start spending again.
- CEOs will be far braver in terms of digital transformation, partly out of necessity and partly because everyone’s numbers will be so bad that they won’t worry about disrupting the status quo. “All bets are off,” he says.
- Will marketers still want to in-house in a more fragile economy? Sorrell insists they will, as the trends towards first-party data and walled gardens mean marketers’ desire to “take back control” will persist.
You can read, and watch, more like this on our dedicated page for COVID-19 coverage – and watch out for the full WARC Guide to Marketing in the COVID-19 Recession in May.