The Dashboard: The recovery is coming, slowly

Chris Pash
By Chris Pash | 19 May 2020

The ad spend canary, according to a range of indicators, is taking a deep breath at what could be the start of a long, slow recovery from the coronavirus crisis.

Analysts are starting to record activity --- more retail stores opening, increasing foot traffic at big shopping malls, more cars on the road and more people shopping for groceries -- suggesting a starting point for an economic lift. 

The initial core indicators of the economic health of the advertising and media sector showed a grim picture -- a sudden fall in activity, ad campaigns withdrawn, jobs lost, working hours reduced and the holding companies gathering as much cash as possible for the storm ahead. 

Most of the hard data is for the last two weeks of March when the coronavirus crisis was still young. Numbers for April, a full month of the impact of social distancing rules, will show a big downturn.

The most painful is unemployment and demand for staff. Job ads for the sector, according to online classified site SEEK, are down 60% April compared to March. 

The SMI (Standard Media Index) numbers showed media agency bookings down 10.6% in March but a steeper drop is coming for April.

April, with a full month of pandemic restrictions on businesses, will mark the 20th negative ad spend month in a row, a reminder that the SMI numbers were falling even before the coronavirus.

But there is still activity out there with industry insiders reporting pitches going ahead remotely after a period of being frozen as brands decide next steps.

The latest from industry body IAB, working on the second wave of its ad impact research, says about 50% of advertisers who had previously pulled spending are now back in market investing but mostly at a reduced level.

“The number of those who have reduced or stopped their spending all together appears to have decreased though a significant number continue to delay investment or completely withdraw,” says the IAB.

The big question is when will there be improvement? Analysts at a range of investment banks have been trying to develop a series of indicators to work out where the economy is heading during the pandemic.

The trouble with forecasting, or reading the signs, is that no-one has experience with this type of crisis, one driven by health. So, analysts have taken to reading different types of data for clues.

The situation changes so quickly that the analysts have had to create a dashboard of indicators, fed by real-time data, on the run. They track a range of data points including public transport, pedestrian traffic, store openings and flight departures.

“The first takeaway from our review of the data is that across most sectors, the recovery is still an ambition rather than a serious project,” write Citi analysts in a note to Australian clients.

“We do see some recovery in retail activity and in general mobility, but off very low bases. Flight traffic continues to be depressed, and public transport use has sustained its previous decline.

“Ominously, SEEK data has been very poor, although our economists expect some recovery in jobs data to begin in May.”

However, some sectors are making a recovery, or are above previous year’s results. Online food delivery, retailers, discretionary and tax and unemployment agents, have seen web traffic jump between 15% and 167% compared to pre-pandemic.

Here’s the real-time data the Citi analyst team has increasingly been leaning on to track the impact of COVID-19:

dashboard citi

Morgan Stanley also has created its own dashboard with data including restaurant bookings, visits to grocery stores, driving activity and spending intentions.

The good news is that economic activity has already moved out of its trough but at very subdued levels.

“Transport, location tracking and spending intention data all provide different lenses to track activity,” the analysts write.

“At this stage, we are beginning to see some recovery in some of the measures, although all are still at very low levels.”

Morgan Stanley expects a relatively quick initial phase of recovery as lockdown measures are eased in industries that can comply with social distancing.

However, this will be only partial.

“The second stage of recovery will be slower, balancing medical capacity and output expansion until a more permanent medical solution is available (estimated mid-2021),” say the analysts.

“After this the third, post-virus, recovery phase will commence.”

dashboard again

One good indicator of a lift in activity is shopping centers and how many individual stores are opening.

Morgan Stanley analysts, in a Sunday walk through of the Scentre Group’s Bondi Junction mall, counted nearly two-thirds (64%) of retailers open and trading, up from 45% one week ago.

More retailers are expected to open this week.

“We counted a total of 304 retail tenancies during our visit,” the analysts say in a note to clients.

“Of these, 196 were trading yesterday, a 42% increase on what we counted last week (138 stores).

“Foot traffic was comparable to a typical weekend day. A number of stores had queues to enter, including Gucci, LV, Tiffany, Cotton On Body, and Lululemon.”

The closed stores were dominated by mid-range fashion and F&B, while Myer and Event Cinemas were the only major tenants not trading.

Citi also has done work on tracking foot traffic at shopping centres. This is trending higher as more shoppers venture out into the open:


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