Fall ad spending creeps back in spite of scary COVID conditions
This fall, in the run-up to Halloween, Hershey, the giant American sweets maker, had different commercials ready to run depending on the severity of the pandemic.
Earlier in the season, when coronavirus cases were lower, Hershey ran ads in which grown-ups pretend not to be home when trick-or-treaters arrive so they can keep the Reese's Peanut Butter Cups for themselves. But with virus cases soaring and more kids preparing to stay home on the big night, Hershey executives worried the ad might come across as tone-deaf. Instead, most viewers now see spots in which Reese's Peanut Butter Cups magically transform into pumpkins. With positivity rates in flux, Hershey can swap ad types in and out of each market within 72 hours based on the ZIP code.
Hershey worked with Google to make Halloween ads for YouTube that feature user-generated videos of people having costume contests inside their home. "Because of the pandemic this year we put way more thought and planning into it than normal," said Jill Baskin, the company's chief marketing officer. "Every community is different. Are they trick-or-treating or having parties at home or doing a family-only Halloween? We prepared for every eventuality."
As if that wasn't tricky enough, Baskin is also keeping a cautious eye on the agitated mood of the American electorate. She said she will be closely watching the aftermath of Tuesday's presidential election to gauge whether the conversation on Facebook and Instagram has become too divisive for Hershey's taste. If things get too ugly, Baskin can shut off the company's spots within an hour.
"I am a little worried about post-election and what the atmosphere online might be," she said. "I remain watchful and wary."
Welcome to the life of the American advertiser in the fall of 2020. Amid an unusually chaotic fall TV season, they are facing the difficult task of trying to sell upbeat messages about their products while navigating a slew of social, political and epidemiological minefields.
All of which comes on the heels of a particularly grim first half of the year.
When the pandemic shut down much of the economy in the spring, advertisers pulled back sharply. Of the top 16 advertising categories, only one - household products - increased spending in the first half of 2020, according to Kantar. The two biggest declines came from movie studios (down 63%) and travel and tourism companies (down 54%), as film releases were delayed and people curtailed interstate and international trips.
The ad-buying firm Magna said that during the first half of the year, total ad sales decreased by 7.2%, with an increase in online ads helping to offset partially a 23% drop in TV advertising.
Despite it all, many industry observers are now cautiously optimistic that the fall won't be quite so horrid as they once feared. Some advertisers have now resumed spending, and certain categories of products that are in high demand during the pandemic are helping to prop up the market.
Streaming video services - including Disney+, Peacock and HBO Max - have tripled the value of their TV advertising this year compared with last, according to iSpot. TV. DoorDash, a delivery service catering to the large numbers of people avoiding restaurants, has increased its TV ad spending this year by 14%. With more people working from home, Microsoft Office has spent $174 million on TV ads this year after not spending anything in 2019, according to iSpot. TV.
"The pace of decline is certainly abating," said Brian Wieser, global president of business intelligence for the ad buyer GroupM. "The bigger problem that the industry faces is you still have some categories that are important and are unable to advertise."
On an earnings call on Oct. 29, NBCUniversal CEO Jeff Shell said TV ad sales have been hurt by the smaller audiences caused by production delays during the pandemic. "Because we stopped production - we'd normally have our fall schedule in high gear now - and we're just starting those shows, and we don't have a lot of new content," Shell said. "That's what is driving the advertising choppiness and declines." Ad sales at NBC's broadcast-TV division fell 12% last quarter, an improvement from the 28% drop in the second quarter of this year, when major sports leagues were delayed.
Unlike many businesses, Hershey has increased its advertising spending during the pandemic and took advantage of the lower rates offered by Facebook, Instagram and YouTube during the early days of Covid, Baskin said. Amid the online deals, Hershey increased its spending on several brands, including Rolo, Twizzlers and Almond Joy. Hershey also boosted its commercial buys on ad-supported streaming video services, which have seen a surge in viewership during the pandemic.
"It has very much paid off for us," Baskin said. "We have increased our share dramatically during this period."
The pandemic has, at times, forced the company to adjust its messages on the fly. In the spring, sales of Hershey's Ice Breakers mints declined dramatically because people weren't socializing with their friends. Around that time, an employee noticed that local hospital workers were complaining that their breath turned stale while wearing a mask all day. Within weeks, Ice Breakers launched a new campaign slogan: "How about a mint before you mask? Because mask breath, it's real."