COVID-19’s impact on ad revenue: What advertisers and publishers should do next
As the scale of COVID-19 rapidly impacts multiple sectors of business and consumers worldwide, advertisers and publishers must respond just as swiftly. Media plans that make sense on Wednesday could be debunked by Thursday. Case in point: the NCAA moved March Madness from no audiences to completely canceled, which jeopardized millions in sponsorship and advertising dollars.
Global ad revenues will be impacted by many of these uncertainties; ranging from the product inventory and supply chain disruption of Amazon retailers and cleaning products to global media reviews halted because of travel concerns.
New York Times CEO Mark Thompson said the publication “is seeing a slowdown in international and domestic advertising bookings, which we associate with uncertainty and anxiety about the virus,” and that it now expects first-quarter digital advertising revenue to drop 10%.
The 2008 recession caused a 13% dip in advertising revenue. Newspapers were impacted the most with a 27% decrease, and online the least with only a 2% decline in revenue.
While a decline in ad bookings can sound ominous, there are measures both advertisers and publishers can take to ensure they use the rapidly changing ad ecosystem as an opportunity to optimize and thoughtfully target their ads, rather than slash spend altogether.
Strategies for advertisers
- Negotiate shorter contracts with publishers and networks. CPMs and available inventory will fluctuate quickly. Leave room for your brand to get the best deal possible.
- Explore premium networks or channels that may have been previously out of budget scope. With more inventory available, it is possible to negotiate richer deals for bonus impressions, placement, or attractive CPMs.
- Audit your creative – now. Any visuals, copy or promotions that could breed negative sentiment should be optimized or paused. If your sector is directly impacted by the pandemic, consider a message shift to support over sales
- The availability of more inventory means brands can control the share of voice among coveted demographics. Consider how to optimize buy strategy across all channels against groups the brand previously had limited access to. To balance this, ensure frequency caps are in place so consumers aren’t overexposed to your ads in a way that will fuel negative sentiment or creative blindness.
- The reality is many consumers worldwide, and here in the United States, will be spending more time at home. Advertisers should anticipate these shifts and invest accordingly – shift emphasis to mobile over desktop buys, consider tests with smart speaker ads and streaming video. Conversely, revisit investments in outdoor or event sponsorships as major public gatherings continue to be canceled or postponed.
- When in doubt, go with video. Consumers are turning to the news daily for updates on the virus. This, combined with the increased potential of a temporary remote workforce, indicates video – whether linear TV, streaming, or mobile pre-roll – will be a savvy channel investment. Negotiate for any live events to ensure delays will be offset with favorable substitute placements. When professional and college sports resume, we can anticipate an uptick in viewership.
- Partner with your agency on thoughtful digital templates and iFrames that will allow you to pivot messaging quickly during precarious times. HTML templates will also eliminate the need for dozens of creative, saving costs on media development.
Strategies for publishers
- Double down on ad integrity practices. Ad integrity is more crucial than ever. While many advertisers shift tone and message to align with consumer sentiment, it is imperative that any ad units adjacent to Coronavirus or stock market updates are put through extra scrutiny. Deploy tighter constraints and quality control measures to ensure visitors do not have a jolting experience, and advertisers are not put in a compromising position.
- Digital publishers should showcase unique visits, pages per visit, time on site, and repeat traffic. Consumers are turning to online news, social media, and television for frequent updates on COVID-19. Premium publishers can showcase increased traffic coupled with increased frequency.
- Over-service key clients or prospects. Excess inventory can be a boon to give bonus impressions to that key account or run a test for target brands.
Harvard Business Review reported that brands who continued to invest in advertising during the 1980s downturn experienced longer-term growth than those who pulled all marketing efforts. With that said, and given the many opportunities at the ready to maximize ad buys, marketers should first and foremost consider consumer mindset and invest in research to understand consumer sentiment about COVID-19. Advertising creative and value proposition should above all consider consumer’s anticipated behavior changes and the emotional impact in response to both the virus and market shifts.