The ongoing COVID-19 pandemic has marked a steep decline in the global M&E industry leaving traditional media like print, TV and advertising most affected and cinema worst affected, even as it has accelerated the shift of businesses and organizations towards digital, said Mark Read, Chief Executive Officer – WPP
Citing the example of 2008-09 economic recession, he also emphasized that some of the spend that was growing in certain traditional media may not come back. Mark said that he anticipated market cap shifting from traditional to new digital media globally.
“I think aggregate advertising spend will bounce back. I think that the biggest difference is changes in consumer behavior, which I think are resilient. We saw in the US and in the UK, in the 2008-09 financial recession, a massive decline in newspaper advertising, and a big decline in newspaper reading subscriptions, purchases, and that spend never came back,” he said.
Speaking at FICCI Frames 2020, Read emphasized that more things are expected to move towards digital powered by technology. He said that businesses including those in the M&E sector are currently witnessing a shift to digital for “many-many activities”, which was actually started before COVID-19 crisis but has been accelerated across sectors and is here to stay with big implications for office spaces.
“I think one of the challenges here has been that as our clients get used to driving demand through digital channels, they’re not going to go back to traditional media at the same pace and at the same level. So I think that we will see some decline in traditional media, and digital media’s continued acceleration in growth,” Reed observed.
He said that WP is trying to reshape the company by “really putting technology at the heart of what we want to do”.He said that in a post COVID world it would make sense to put together fantastic brands and bundle them together to form some sort of integrated businesses that are more client centric and not organized around analog media channels.
“I think airlines are going to have to think about what they need to do in a more limited demand for air travel. Certainly, I’d argue on a three to five year outlook where I think a lot of business travel, you know, may or may never come back. That has implications for the size and shape of airplanes. Boeing has announced that they are stopping making the 747,” Reed added.
He also argued that every industry has its own course to think through. “Sectors like luxury goods are really starting to think through that are they going to sell online? See, online sales has been a big barrier for luxury goods. Companies in this space believe that you need to have a face to face selling experience to really create the luxury experience. I would argue that the fact that they haven’t been able to sell really at all in the last three to four months, is going to put much more demand on them to think about what is an online luxury experience.”
Highlighting what the major businesses across the globe would be focusing on in these trying times, he said, “I think companies are going to have to start to think and invest more in technology. Interestingly, what we haven’t seen is companies cut back on big sort of transformation and technology transformation efforts.”
On the investment outlook of WP in India, he said: “WPP has cut its expenses in India by 5 percent in Q1. We are looking at average figures for at least three months with 50-60 percent cut in Q2, may be 30 percent in Q3 and a little less in Q4. Although these are not official figures these are based on a rough projection.”
Speaking on the anticipated changes in consumer behavior, Mark pointed out that priorities are bound to shift towards healthcare, physical fitness, business travel, remote working and family.
This, he said, will mean that businesses will have to develop consumer trust in brands as “trust” will play a major role in post pandemic world. This will require businesses to build social platforms based on freedom of speech.