CEE advertising markets after the COVID-19 pandemic

Advertising industry was amongst the firsts that felt the relapse after the coronavirus lockdown, and it might be one of the lasts to recover from its negative impacts. While CEE experts have different views on how this pandemic will affect budgets and advertising foci, online can undoubtedly be declared the winner of one of the biggest crisis of all time.

“Marketing budgets are the first to be cut during a crisis” – goes the saying, which has been quite often heard since the COVID-19 lockdown in March. With still vivid memories from the financial crisis in 2008, advertisers sounded the alarm bell, when it became evident that living with social distancing and other preventive measures will stick with us for months.


Instant drop – with a visible rise

Industries most heavily hit are tourism, catering, events, transportation, automotive while pharma and retail sectors were not that much affected by the crisis, according to Sonja Litaj, Client Service Director at Slovenian PAN Communication Agency. It is evident that those sectors that were hit the hardest by the coronavirus reduced their budget significantly or to zero as they had to lock up or limit their services for months.

With concerts, restaurants, cinemas shutting down, the first wave of cancelled campaigns hit BTL and event divisions early, and since then print, OOH and cinema are in a downfall as well. A lot of those clients, who didn’t necessarily have to stop, paused their campaigns out of fear or due to the suspension of production induced by the lockdown. Most of the planned campaigns were cancelled or postponed, and many times the budgets of ongoing campaigns were severely chopped.

Anita Király, COO of Media Services at Café Communications says media agencies expect a 10-15% drop in Hungary, and the recent survey of HURA, Croatian Association of Communications Agencies shows, that only 7,7% of agencies are not affected, while over 65% of them expect revenue drop up to 40%.

The experienced fall is also strongly client- and industry-related: Maja Paić, Account Director at Croatian Ascanius Media said, that the crisis decreased their revenue until May by 35% compared to last year, with the largest decrease in OOH.

Fortunately, there are always hopeful exceptions. Péter Zsembery, Associate Creative Director at Hungarian Café Communications doesn’t see significant relapse, with one of their clients, a shopping mall being “in the direct line of fire” but still communicating, they see a 10% drop compared to plans.

The absolute winner of this havoc is online: besides TV securing a small increase, anything that we can do online, skyrocketed in numbers: advertising, shopping, media consumption. This also created a make-or-break situation in many countries, as weCAN experts see, those companies, who can ride this wave, and those who can make up the missed shift to digital, they can be the real winners after the crisis.


Hanging in there

Coronavirus affected not only our clients but us, agencies as well in many aspects. Some of the weCAN partners, including Bojan Popović, Managing Director of Ascanius Media Slovenia claimed that they encountered increased workload, mostly generated from rescheduling advertising activities, and along with Simona Tencheva, COO of Argent, strategic partner of Café Communications Sofia, their team were asked by their clients to develop various scenarios for the time and after the pandemic.

Agencies had to learn how to react quickly, and there are some changes they will adopt in the future. weCAN experts agree on a warm welcome to more home office, as it proved to be equally efficient, but cheaper and more comfortable than the in-office life. Maja Paić hopes that digitalization of certain agency workflow processes will stick, such as more frequent online client meetings.

Advertising budget cuts mean dropping agency revenues, and this quickly creates a difficult situation for employers. All weCAN partner agencies claimed that keeping their employees has been the top priority, but this doesn’t mean that cost reducing actions weren’t necessary. As an almost general rule, hiring was frozen, and most of the agencies had to introduce salary cuts, which usually depended on the measure of missing revenue, but at the same time it allowed agencies to keep all of their colleagues. According to Maja Bajić Rudinac, Client Service Director at New Moment Bosnia and Herzegovina “the biggest challenge was to ensure people that they will keep their job and can count on their salary”, and Jan Rauschert, CEO of Comtech_CAN added: “as always, we have to take care of ourselves and we will take care of it.”

However, agency leaders and owners believe that this situation is only sustainable on a short run. In case a second wave of the virus appears soon, creating similar circumstances like the spring lockdown, they are not that optimistic about the measures they must take to further tighten their belts.


What may the future hold

COVID-19 not only hit the advertising industry but some of our partners benefited from it throughout the changed situation. Experts from Slovakian 01People shared, that since their agency focuses on leads, they’ve managed to deliver more business. Also, the Slovenian PAN Communications Agency has obtained two new clients during the pandemic.

While some acquired new businesses, others see new opportunities. Simona Tencheva expects consumer sentiment shifting towards supporting the local economy, and she foresees the “silver” segment of the population (50+) who have been forced to adapt to digital solutions as a new addition to the online environment.

While companies cannot plan for the long-run and agencies are adapting week after week, one thing seems to be sure for now: the trends observed before the COVID-19 breakout cease to be relevant, media market is not expected to be on the rise anymore.

Everyone wants to return to business-as-usual but it might be affected by the coronavirus again, later this year. Mirjana Mandic Jovanovic from Croatian creative agency Pink Moon explains that tourism being the main industry in Croatia, a revival is very much needed there, but a second wave of COVID-19 can have devastating effects. “Autumn will be our first checkpoint. We need to see what will happen in the tourist season. If we try to judge by the first days of June – It doesn’t look good.”

Maja Paić says that at Croatian Ascanius Media they expect advertising to increase in Q4 – in case there is no second wave of the virus. If there is a second wave, the advertising industry will encounter historically the highest drop of investments, which can even reach 50%. In 2020 they estimate a 30% drop of investments compared to 2019 and that the industry will have to endure an additional 15% cut in 2021.

Weronika Szwarc-Bronikowska, Vice President of Polish Media People says: “the history of crises shows that active brands are winning in these difficult times. Crises give a possibility of dynamic change of market share for brands. Courage and vision are the keys.” Ljiljana Bojanić, Account Director of Serbian New Moments is more specific: “Clients who have digital in their core are winners in this crisis, digital transformation of every business is a must in these times, and businesses who do not adapt will gradually lose market share.”

Companies creating stronger online presence seems to be the only thing boosted by this crisis, and Anita Király adds that those media segments will have the advantage where lead time is shorter: online and TV are the winners under these circumstances.

Vanda Virovecz, Regional Business Director of Café_CAN International believes that permanent changes are expected in our industry in the long-term. The change in the consumer behaviour triggered by the pandemic eventually resulted in change in advertising – brand messages and communication channels as well. But it did not change just the agencies’ outcome but the agencies themselves who had to adapt quickly to the new situation while keep on servicing clients. As for now it is still considered an interim period and there’s a long and interesting way ahead, she says.


If you want to read more on how weCAN agencies first reacted after the pandemic breakout, or coped with the never-before-seen home office season, click the links!

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