While not all consumer industries have recovered, these three sectors are increasing their advertising spending.

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Automotive

Ad spend from the auto industry is accelerating as the country reopens. During the week of July 13th, ad spend was up 7% year-over-year (YoY) with $73 million in spending. This is the first week since the beginning of the pandemic in March since ad spending was positive year-over-year.

Sales have not completely recovered but they are on an upward trajectory. Total car sales were down 17% YoY in June—a significant improvement than the 58% YoY dip in April. China, on the other hand is further along in recovery, and saw car sales increase 10.4% YoY in Q2.

According to data made available by Apple, driving direction requests (used as a bellwether for overall driving levels) have recovered from the pandemic dip, and are actually higher than they were pre-pandemic.

People are on the road even as the pandemic continues—and car brands are ready to sell more vehicles. 

Restaurants and Bars

Restaurants and bars are seeing ad spending slowly return to levels consistent with last year. The biggest drivers behind this recovery are the national chains. Over the past three weeks ad spend from national restaurant chains is down only 15% YoY (slightly better than all restaurants and bars).

The recovery in ad spend mirrors (but also lags) behind the recovery in sales at fast food chains, according to sales numbers provided by the NPD group.

Fast food restaurants, who make up a large portion of the chart above, made adjustments to their business model to cater to consumers in the new normal.

With an increased focus on takeout, drive-through, and delivery services, brands were positioned well to deal with the most recent surge in case counts.

“COVID acted as an accelerator for some of the trends that we already identified in our strategy,” said Matt Dunnigan, CFO of RBI (owner of Burger King, Popeyes, & Tim Hortons), noting that on average the company gets higher average revenue per order for take-out and  drive-through than for dine-in.

Local restaurants, however, slid further down than national chains. They were down as low as -75% in early May. They were on the road to recovery (-43% week of 6/22, right in line with national chains, but fell right back down at -70% with cases spiking). 

Hotels and Lodging

Hotel brands are increasing their ad spending as Americans roadtrip their way through summer. Spending is up over three times the low-point in late May. 

Choice Hotels owns about twenty different brands and they’re acknowledging that people will be on the road and encouraging them to stay in places they know that will be sanitary.

However, without the vaccine, it will still take time for restored confidence among consumers. According to STR, a hospitality industry data firm, U.S. hotel occupancy for the week ending July 18^th was at 47.5%. They note that this is the thirteenth week of increases in the past fourteen weeks, and much better than the low point of 22%, although it remains down 39% YoY.

The WSJ notes (also based on STR data) that surging cases in states like Florida and California threatened this recovery and dragged down the national recovery. From April 18^th to June 13^th, demand for hotel rooms was rising at a rate of 8.3% per week. Since then the rate slowed to 2.9%.

While spending substantially improved since May, hotel spending remains 2/3rds lower than the same point last year. 

As new infections continue to level off or decrease, we will continue watching the industries coming back to life. 

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Big picture: We are impressed by the speed that travel firms are acting. They are conserving cash and dramatically reducing spending. Many brand-name firms have stopped their spend altogether while they assess and develop their plans.

Broadcasters & publishers courting hotel, cruise, and airline advertisers will need to think about what comes next. They’ll need to rebuild public confidence in the aftermath of COVID-19 – and help support these industries fight through this difficult time. 

We encourage you to subscribe to our Blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Here are answers to questions many have when thinking about the impact of COVID – 19 on the travel industry.

Q: Do we see a deceleration in advertising spend in the travel industry?  And if yes, when? 

A: Like a car hitting the brakes in advance of an oncoming accident, the deceleration in ad spend within the travel industry has been swift. Looking at both year-over-year, as well as week-over-week, the shift started in mid-February. Key findings:

•  Digital & TV spend was reduced sharply.  A comparison of the first week of March vs. February, shows a contraction of 33%. The first week of March vs. January is down 30%.
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• TV & Digital spend has contracted by 60% & 51%, respectively.  Magazine spend is booked farther in advance and has shown no contraction yet.  In fact, there was an increase in spend for March issues.
  
  

Q: Was there a decrease in travel ad spend across cruises, airlines & hotels? 

A: Cruise lines began making sustained cuts to their advertising spend in mid-February 2020, possibly in response to the Princess-Cruise quarantine in Japan. Spend has been cut even more drastically, especially among digital channels, since the beginning of March. Airlines also began noticeably shifting ad spend in Mid-February, especially when looking at year-over-year comparisons.  Meanwhile, hotels have only recently changed their ad buying behavior, although it’s dramatic.  

Q: How does ad creative shift over time, if at all?  Are travel companies changing their messaging?  

A: There is virtually no change in ad creative. Hotels, airlines, and cruise lines are continuing to promote destinations and sales. Even Princess Cruises was still promoting its vacations as of last week. In spot-checking the top 5 companies from each category (cruises, airlines & hotels) we found only a single example of a company (Delta Airlines) acknowledging the virus (creative below) with a campaign running on “Business Travel News”. However, Delta was still running regular creative across consumer sites.

Big picture: Last week was astonishing for its speed of change.  We expect most travel firms will adjust creative in the coming 1-2 weeks.

Q: How did the week of Saturday, March 7 to March 14 look for all three categories (cruises, airlines & hotels), week over week?  Is there any shift in spend at all?

 A: All three categories made week-over-weeks cuts to their ad spend when comparing the week of March 8 to the previous week of March 1, 2020.