THE advertising industry in Asia, much of which has Singapore as a regional administrative and innovation hub, has experienced a significant slowdown over the last two months.
We are now all looking to markets such as China and South Korea, where green shoots of recovery are beginning to sprout, to see whether the shape of the recovery will be a “snapback”, or V Shape, or whether it will be a longer and slower climb.
Of course the massive increase in the amount of time people are spending at home means people are engaging even more with digital platforms than they did before.
Data from China collected by McKinsey shows more than 50% of the adult population spending more time online engaged in activities related to education and learning, lifestyle and wellbeing, and entertainment, especially gaming.
This pattern seems to be essentially the same across most of the region, with countries with lower levels of digital sophistication, such as Indonesia, also seeing big increases in TV viewing.
Connecting With The Customer
Under most circumstances, these increased opportunities for consumer engagement would be good news for advertisers; but of course these are extraordinary times.
Quite apart from the disruption to their own revenues, supply chains and business continuity, advertisers have to recognise the lack of consumer confidence in most markets.
Research conducted by The Asian Parent amongst their audience of current and expectant mothers shows the vast majority of mothers reducing their household spending across all categories.
As you might expect the only categories experiencing growth are household consumables (especially if they can be delivered), health, technology and virtual goods. Any discretionary spending is being postponed till, at minimum, the second half of the year and very possibly beyond
Any predictions about recovery then, are obviously nearly impossible to make at this early stage.
What is certain is that the crisis will embed certain behaviours and that new habits will be formed.
- E-Commerce, which was ubiquitous in China and growing quickly in the rest of the region, will be firmly established as the default shopping channel in most countries including Singapore. Payment mechanisms will reflect that.
2. Upmarket food and beverage outlets that have been offering pick-up or delivery services, will be expected to continue to do so.
3. Remote working will become more firmly entrenched. Video conferencing has boomed (for example video conferencing platform Zoom was downloaded more than 200 million times in March) and despite it not being a perfect substitute for face to face interaction, CFOs will look at their much reduced or travel expenditure and come to the conclusion that any disadvantages can be borne.
And it also seems certain that when restrictions are relaxed and when a semblance of normality has been restored, that there will be significant pent up demand ready to be unleashed at the back end of the year, no doubt further buoyed by government incentives to consume.
But it still may be a while before people and businesses are ready to travel extensively again, or make long term financial commitments. So the most likely scenario is a fairly rapid bounce back in some categories, but a much longer and slower trajectory in others.
Guy Hearn is principal of Fullbeam, a Singapore based media and communications consultancy.
If you have a point of view on COVID-19, or think someone you know could present a thought-provoking perspective on the subject, please email firstname.lastname@example.org with your details and a short summary.