Nepal's advertising industry, like every other economic activity in the country, has been paralysed by the virus lockdown that has elongated to a month.

During the period mid-March to mid-April, the ad sector missed business worth Rs1.5 billion, including the annual New Year bonanza around Baisakh 1 when advertising spending explodes due to the events, discount offers and sales schemes at this time which were all cancelled, said Rabindra Kumar Rijal, president of the Advertising Association of Nepal.

Ujaya Shakya, managing director of Outreach Nepal, said that this would directly hit consumer confidence as spending patterns would change with consumers buying only items essential for daily life.

Ranjit Acharya, CEO of Prisma Advertising, said that except for a very few awareness advertisements, almost all promotional activities came to a stop after the lockdown went into effect. The print media was already beginning to feel the impact a few days before the stay-at-home order was issued.

“Issuing commercial advertisements in the middle of a pandemic is not the right thing to do as consumers are mentally disturbed due to the current situation,” he said.

According to Shakya, depending on the financial implications, people's spending preferences might change too, so advertisers have to build a business around this new context.

“There might be a change in spending behaviour as people might not go out as often as they used to even after the lockdown is lifted. Outdoor activities will be limited,” he said.

“I think the concept of advertising will undergo a major shift after things settle down. There will be new trends and ways to connect with consumers,” said Shakya.

"It will be a challenging task for the industry to bounce back as it will be difficult to turn around the negative growth even to zero," said Acharya.

Advertisers said that the current situation had created a problem all along the advertising supply chain. “The business is also in a near lockdown state,” said Rijal.

“The media industry will be hit hard too by the drop in the volume of advertisements. As 85 percent of the cost of an advertisement goes to the media sector, it will definitely suffer,” he added.

According to the association, there are 250 advertising agencies operating actively in the country, among which 150 are registered with it. The sector provides 35,000 direct jobs and around 150,000 people are engaged in it indirectly.

The annual turnover from above-the-line and below-the-line advertising amounts to Rs12 billion, Rijal said. Below-the-line advertising has sunk to almost zero, he said.

The digital advertising sector used to have an annual turnover of Rs7 billion from running ads on social media like Facebook, Instagram and YouTube.

Whenever there is a crisis, Nepali companies first slash their advertising budget; and this is what has happened currently amid the virus lockdown, Rijal said.

Ads in the print media, which has the highest share of the ad market, have plunged by 95 percent following the lockdown.

Commercials in the electronic media, which includes TV and radio, have dropped to 20-30 percent despite an increase in TV viewership with people being confined to their homes, he said.

But the industry can still pay its employees for another two to three months, and there is not going to be any salary cuts or layoffs, Rijal said.

Acharya said it would be hard to pay the staff salaries in full after the next payday.

According to him, large advertising agencies are discussing the possibility of slashing the salaries of employees earning more than Rs15,000 per month by 40 percent. “But there are no plans to lay off employees,” he said.

Shakya said that, in terms of digital marketing, there would be many new opportunities to engage with consumers digitally as recent events have widened the digital landscape of the country.

Bhoj Raj Aryal, senior professor and former head of the Central Department of Management at Tribhuvan University, said that a slowdown in the economy first translates into a reduced marketing budget.

Aryal, who is also an advertisement industry expert, said that multinational companies set aside a budget in the beginning, but most domestic companies allocate a budget as needed.

The direct impact of a decline in advertisements on the media industry has been felt in some of the big media houses in the country, he said. From consumer psychology to reviving the market, it will have a long-term impact in the advertising sector, Aryal added.