We’re just over two weeks into seeing significant economic impacts from the coronavirus pandemic here in the US, and the trend within digital advertising is still generally downwards. As more parts of the US and the world are affected by COVID-19, more advertisers are shrinking or cutting their ad budgets for a variety of reasons. Let’s dig into the specifics from this past week…
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 overall trends become a lot more clear when you start looking at specific categories of advertising.
Note: This data is only a subset of our advertisers and a subset of our advertising technology partners, but it paints a picture of the sort of advertisers who are changing their spend.
Comparing last week to February
This first data set shows the change in advertiser spend comparing March 16–22 to the month of February.
February was a pretty normal month on the advertising side, so this comparison shows you how much that type of advertiser has changed their budget (on average) from a “normal” time to the strange times we live in now.
You can see huge cuts in travel and live entertainment for obvious reasons. Food has also taken a relatively large cut in spend as many food products are out of stock in many stores, or the advertiser is concerned about future shortages.
On the flip side, consumer packaged goods (personal care products like deodorant, hair spray, etc., and home care products like disinfectants, paper towels, etc.) are up a lot. Consumers are buying tons of these products, and advertisers want to convince consumers that their product is best. Technology is also up quite a bit as many people are looking for products they need to set up a home office.
Comparing last week to the week before
The second data set shows how much advertiser spending changed from last week compared to the week before. That shows the most recent changes that advertiser categories are making based on current trends.
Retailers and media entertainment companies made some cuts compared to February, but are stabilizing now. In the case of entertainment companies, much of the cuts were around advertising movies in theaters. Now, that has been replaced with advertising around streaming services and other home-oriented products.
Even the categories that initially increased their spending (finance/insurance, auto, technology, and consumer packaged goods) are now flat or trending slightly downward — there’s so much uncertainty about the near future that brands are being very careful.
Again, all of this data is averages — a specific advertiser within a category may be doing something very different from others, but for the most part, these trends hold relatively true. We’re looking across many other categories to understand what the trends are and get ahead of them for AdThrive publishers!
Advertisers are reducing spending on coronavirus-adjacent keywords
We’ve mentioned advertiser spending drawing back on posts that contain the keywords “coronavirus” and “covid.”
This week, we gathered additional data on coronavirus-adjacent keywords. While spending was not as strongly affected on posts with the following keywords, they also appear to have enough of an effect that it’s worth keeping in mind as you reference current events on your site:
- Shelter in place
- Social distancing
It’s a balancing act between using the keywords users are looking for (and seeing increased traffic as a result) and maximizing revenue on that post. Consider using keywords to promote the content on social media and to your email list, but avoiding them inside the content itself.
Video is staying relatively strong
While display advertising is seeing a decrease, video RPMs are staying relatively strong at the moment. Make sure you’re taking full advantage of this by running a sticky video player on every page — whether that’s a playlist or a video related to that page content. Talk to our team about your video strategy!
Optional ad categories hold some promise for increased revenue
Enabling extra ad categories doesn’t instantly bring more ad dollars to the table, but it does increase the pool of available advertisers for your site so they can bid on your ad slots. For example, if a political ad will pay you more than a non-political ad, it will win the auction and display for that ad impression.
You can see the full list of optional ad categories here, but these four offer the most tangible potential revenue impact — typically a few percents increase to RPM:
- Drugs and supplements: Pretty self-explanatory, from pharmaceuticals to vitamins to supplements, and related retailers.
- Significant skin exposure: Think lingerie and swimsuit ads.
- Social casino games: Simulated gambling games like poker, lotteries, sports betting, and other card games and casino games, but without actual money or prizes involved.
- Politics: With the US general election taking place this fall, this category may hold strong revenue opportunity as it draws near. Note that this category not only includes ads for political campaigns or candidates, but also ads around controversial social issues or events like elections, protests, abortion, animal testing, etc.
Q2 starts next week — here’s what we expect
The beginning of a new quarter virtually always sees a drop in ad spending from the end of the previous quarter, as advertisers start fresh budgets. Then, things slowly begin ramping up as we get further into the quarter.
We expect this Q2 will look different from years past. Advertisers have been adjusting their budgets in the wake of COVID-19 in the short-term, and we expect they’ll enact significantly-altered budget strategies for the next 3 months. The drop at the beginning of the quarter will likely be steeper than normal, and the typical RPM recovery that takes place in the coming weeks may not happen this time around
This is one of those predictions we’d love to be wrong about, but this situation is so different from prior economic crises that it’s impossible to tell the future. We’re staying positive but realistic — in other words, planning for the worst but hoping for the best.
Other upcoming trends
Many advertisers have cut their budgets because they don’t want to appear insensitive. Their main efforts right now are around retooling and modifying their advertising creatives (graphics, commercials, etc.) to be appropriate for current times.
We’re beginning to see a few advertisers step into the market with these new campaigns, and we believe more will be coming back over the next few weeks. Some examples are Hyundai and Toyota’s new campaigns and Nike’s new “Play Inside” messaging.
Additionally, with nearly every major sporting event canceled, and the Olympics pushed to 2021, there is a significant amount of ad spending that has to be redeployed. Some will be cut entirely and some will stay on television in different places, but we do expect a lot of that will move to digital media as it’s so easy to start campaigns and reach consumers on the web.
What we’re doing
Talking to advertisers
We’re continuing to have conversations with our major advertising partners to educate them on trends, help them with challenges they’re having, and work with them on modifying their campaigns.
For a few weeks, we mostly heard about advertisers cutting their budgets, but we are beginning to hear some slightly positive trends and are seeing some advertisers come back into the market or new ones launching campaigns. As mentioned, April could be very rocky, but there are some slight positive signs out there.
Working to safeguard publishers
Times of crisis can bring out the best in people but can also bring out the worst. We’re seeing a rise in fraudulent companies reaching out to our publishers with “too good to be true” offers. We’re also seeing a spike in bad ads.
Our partners at Confiant are blocking the vast majority of these ads, but it’s something we are always diligent about. Please report any issues you see to the AdThrive support team — whether it’s bad ads or suspicious sales pitches you’re receiving!
Doubling down on improvements
We’re also hard at work on a number of new optimizations. While we can’t force advertisers to spend more, we can make our advertising placements more attractive to them. We have a big focus on our video players and improving the user experience, since a better experience for users is good for both publishers and advertisers.
We’ll keep updating you as the situation changes — and it’s changing very rapidly right now. We’ll be sharing more as soon as we can!