Two days (of data) into Q2, here’s what we’re seeing with ad spending, trends across the digital media industry, traffic and overall revenue, and what we’re focusing on right now.
AdThrive COVID-19 coverage
Click here to browse all of our posts about the effects of the coronavirus pandemic on the digital media industry.
What we’re seeing on the ad front
The first two days of Q2 hold a small silver lining
The second quarter of the year started on Wednesday, and as usual, that means that advertiser budgets reset and ad revenue declines. Last week, we mentioned that we expected that this year’s decline would be significantly more than normal due to the coronavirus pandemic and economic downturn. That was true, although so far (with two days of data for Q2), it hasn’t been as bad as we feared.
It’s a small silver lining, since many publishers saw big declines in their revenue from 3/31 to 4/1, but it’s a slight positive sign for the future. “Less bad than expected” is the best we can hope for right now, and April 2 saw a slight increase in RPM across the board when compared to April 1.
What happens in the US over the next few weeks will dictate ad spending
It’s extremely hard to forecast how this quarter will trend, since there are so many external factors at play in advertiser spending. Since most AdThrive publishers have traffic heavily concentrated in the US, revenue trends will continue to be heavily influenced by how the US responds to COVID-19.
If infections are under control within a few weeks or a month, things might start (slowly) heading in the right direction. If infections continue to grow, new viral hot spots form, and most of the country is still under “stay at home” guidelines, ad revenue may flatline or even continue to decline.
Advertisers are notoriously risk averse. They don’t want to spend money unless they are certain that they can make a return on whatever they spend. In a volatile and unpredictable market, like the one we’re in right now, they will generally be cutting budgets. The longer the world is in upheaval, the longer it will take for advertising to see a recovery in spend.
Conversations with our industry partners
This week, we have spoken to a number of other industry leaders including major advertisers, advertising technology firms, and financial services firms. There was heavy agreement that programmatic advertising (which is the primary way we bring advertising revenue to our publishers) will be among the least affected, for some of the reasons we laid out a few weeks ago. Since programmatic advertising is efficient, targetable, and measurable, it is more likely to be used by advertisers over time.
Safari’s latest anti-tracking updates aren’t helping ad revenue
On March 24, 2020, Safari released an enhancement to its Intelligent Tracking Prevention (ITP) feature. Safari had been blocking the majority of third-party cookies already, but this latest release blocked cookies for cross-site resources across the board by default.
Cookies are currently used in advertising to give advertisers information about users so they can match their ad campaigns with their target audience. When cookie information isn’t available, advertisers bid less — at the best of times. In difficult times, advertisers are even less likely to advertise in cookie-free environments.
We’re seeing this reflected in lower CPMs for Safari traffic.
Notes:
- This graph shows the differential of Chrome vs Safari Smartphone CPMs
- It pegs the ratio between Chrome and Safari CPMs to 1 in the first week; Safari CPMs are usually 40%+ lower than Chrome to begin with
- In the two weeks most heavily affected by advertiser cutbacks amid the crisis, Safari CPMs dropped significantly more than Chrome
- The negative impact on CPMs due to the coronavirus global pandemic amplified what is already a challenge in Safari due to 3rd-party cookie blocking (ITP)
This means that if you have a surge in traffic using a Safari/iOS browser (for example, a post goes viral on Facebook and you get lots of mobile click-throughs), lower advertiser bids to reach those users will lead to lower RPMs.
This is just one more reason we’re working hard on testing replacements for third-party cookies and leaning into Marmalade data (our in-house artificial intelligence platform) to help advertisers understand the value of your site visitors!
Traffic continues to spike, outpacing demand, but protecting overall revenue in some cases
Speaking very generally, traffic continues to climb across a wide range of verticals and content topics. Pageviews are up as people around the world adapt to new ways of life centered around increased internet-usage.
Across the AdThrive community, many publishers are seeing historic traffic surges, which are helping to offset falling advertiser spending. You create the absolute best content — and so when people are at home, online, your sites are where they’re choosing to spend their increased free time.
Meaning that while RPMs are impacted, ad impressions are up, so total revenue is seeing less of an impact — staying stable in many cases or even increasing higher overall in some cases!
However, it also means there’s A LOT more ad inventory available and, at times, not enough advertisers who want those specific ad placements for specific readers. This can lead to further impacts on RPMs, if there’s just not an advertiser who wants to reach certain readers on certain pages.
As you can imagine, there are many factors that are heavily influencing RPMs and total revenues right now, like:
- Lower advertising spending: brings RPMs down
- Higher time spent on site (time on page or pageviews per session): brings RPMs down as later ad impressions in a session are less valuable, but drives overall revenue upwards
- Higher pageviews in general: brings RPMs down as this increases supply of ad impressions for advertisers as budgets are declining, but drives overall revenue upwards
- More spikes in traffic from social media: brings RPM down as these users are less valuable to advertisers, but drives overall revenue upwards
What we’re doing
Working to help our advertising partners pivot and spend with confidence
We continue to work very closely with advertisers to help them restart campaigns that were paused, or modify their ad campaigns to work in today’s environment. We are beginning to see some more positive progress on advertisers coming back into the market.
For example, the ad spending drop at the start of Q2 with just the advertisers we work with directly via private marketplaces was less steep than the overall drop we saw. This is a good sign since those advertisers are among the highest-paying of all — a factor in the not-as-bad-as-expected drop that we saw on April 1.
Bringing in new demand and making improvements
We’re releasing lots of new features and adding new demand partners to our ad code. Giving our publishers more tools and analytics can help everyone run their businesses better, and more demand partners keeps revenue from declining as much as it could. And we’re continuing to innovate in these areas and will be doing more in the coming months.
Working to help publishers understand available financial resources
We’re also compiling financial resources for publishers on government assistance that’s available during the COVID-19 crisis. We’re working with banks and accountants to see what other information we can gather and will share more on that front as soon we can!
We know it’s a scary time overall, and it’s looking like this is the new normal for publishers. We don’t anticipate things dramatically improving anytime soon, but we do think that the platform, industry relationships, team, and technology that we have built over the years puts our community in the best place possible to weather this storm together.
No one is alone in this! If you’re looking for community, support, or just to chat, join us in the AdThrive Community Facebook group where we’re staying active and sharing regular updates and resources.
