Digital Advertising

Digital ad rates drop: What is happening on the advertising market?

Digital Advertising

Companies are massively cutting back on their advertising budgets due to the efforts to control coronavirus and quarantine introduced by governments around the world. As a result, this did not have the best effect on the activities of many advertising companies and online media that risk not surviving quarantine.

How the advertising market has changed during quarantine

In the US market, where changes are taking place most dynamically, one can observe a reduction in budgets for PMP-contracts (Private Marketplace). It is the most expensive and high-quality type of placements in programmatic advertising. At some sites, this type of revenue from content owners fell by 60-80%.

Digital Ads
Digital Ads

Due to events in the world, such special projects have suffered, which are one of the main sources of income for large media. For example, Amazon refused to cooperate with Buzzfeed, Vox and Vice both on special projects and on direct advertising contracts. So far, while quarantine, but their renewal remains in question.

According to a survey of almost 400 media buyers and brands, conducted by IAB, showed that expenses on digital advertising decreased by 33%, and on advertising in traditional channels – by 39%. In other countries, the figures are likely to be even more depressing, but it would be a very big mistake on the part of brands to refuse advertising at all.

How has the portrait of the client changed

Not only the portrait of the customer has changed, but the portrait of the consumer along with his habits. The world will never be different again – the digitalization of society will accelerate at times, many offline-oriented companies and businesses will cease to exist or significantly reduce their activities.

Some categories of goods and services are now in such high demand that suppliers and manufacturers do not have time to rebuild the supply chain to ensure that orders of magnitude increased demand.

Among the rapidly growing product segments, we can distinguish the following equipment for working from home (monitors, office chairs, tables and others), food and meal delivery, vitamins and medicines, home sports products and personal care products.

How did quarantine affect prices

Average prices globally fell by 20-25%, but this is still very deceptive statistics. Some segments fell by 80% (special projects, premium placements), while the categories of advertised goods were more likely to change in e-commerce.

In the future, everything will depend on how events related to COVID-19 develop. Digital advertising, like any other type, is part of the global economy and cannot exist outside the existing relationships.

During the crisis of 2008-2009, among all advertising channels, digital was the only one that showed growth, albeit very modest, compared to previous periods, which can be predicted in current events.

Advertisers should try to correctly calculate your needs and opportunities for advertising their products, but do not give up advertising at all – then you will have to catch up with those who did not.

What products are currently the most advertised

Since the beginning of the pandemic, the number of advertisements for goods related to protection against coronavirus such as masks, sanitizers and contactless taps has increased significantly. Now most networks and sites are cautious about such advertising.

Now, advertising costs are growing in the categories of video games, home goods, beauty and health. People are at home, so they try to entertain themselves or spend this time to good use.

How much does the most popular form of advertising cost now

The most demanded now is performance-based advertising. This is an ad aimed at a specific digital result. In the context of reducing the cost of conducting outreach campaigns, even big brands have become more rational in allocating budgets.

Certain formats cannot be distinguished, but more expensive direct postings on sites with high audience loyalty and special projects have suffered the most.

Digital Advertisement
Digital Advertisement

The increase in traffic imposed on budget cuts for large advertisers has led to cheaper advertising in most channels.

Facebook traffic grew by 27%, and many news media are seeing an increase in traffic to 75%. At the same time, advertising prices fell by 30% or more, due to oversupply and falling demand.

In addition, large advertisers are trying to avoid mentioning their brand in a context related to coronavirus, fearing for their image in the light of such an ambiguous informational neighborhood.

Advertising market forecast

This crisis has changed not only principles, but also the planning horizon. In fact, no one knows exactly what the consequences of the pandemic will be and when recovery will begin.

A negative consequence on a global scale will be the bankruptcy and potential closure of many local sites and content creators. Economic recovery, according to all forecasts, will begin only in 2021. And although the digital advertising market is less affected by the economic consequences of the crisis, it cannot but suffer.

At the same time, it can be predicted that the lowest point in the world will pass soon. Businesses will adjust to new realities, classic retail will go online and restructure their logistics processes.

Most likely, a gradual recovery in prices and advertising budgets will occur in the IV quarter, if the dynamics of the pandemic are downward.