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With the COVID-19 pandemic, companies had to adapt to the new reality that will likely continue for months. For some, the “new normal” will mean changes in a lot of areas of business, including advertising.
ADVERTISING DURING A RECESSION
As past recessions show, there is a direct link between the state of the economy and advertising spending. And for a lot of businesses, marketing is the first thing to cut back on during tougher times.
After the credit crunch in 2008, ad spending in the U.S. dropped by 13% in general, with a 22% fall in radio advertising (second after newspapers), and only 2% in online advertising. But studies have shown it’s actually a good idea to keep advertising during a recession to power through it and reap the benefits once it’s over.
This time, experts predict advertising spending will be most impacted in Q2 and then slowly regaining in H2. The channels most likely to take a hit are:
linear broadcast TV.
Restaurants, cinema, and travel will be the most impacted industries, with retail, automotive, and finance/insurance following suit.
According to Way to Grow, the industries that have already cut back on programmatic ad spending the most are travel and tourism, real estate, and jobs and education. The thing is, as we can see from past crises, brands that cut marketing spending during a crisis can hurt their business in the long term.
WHY INVEST IN PROGRAMMATIC ADS NOW?
There are industries which have increased programmatic ad spending during the COVID-19 pandemic, like mobile apps, computers, and electronics, or internet and telecom. The companies that haven’t stopped investing in ads, or even increased their ad budgets, are more likely to be better off once the recession is over, leaving the ones that did cut back far behind.
There are several reasons why it might be a good time for you to invest in ads if you have the budget:
The competition is usually lower during a recession, with lower noise levels. It’s easier to get through to your audience. Plus, it’s also a good time to innovate.
You can show your customers you’re a stable company that has its ways to cope with a recession.
The cost of advertising usually drops in a recession.
Companies that reduce their ad spend lose their share of voice in their category, which leads to losing their share of the market (and ultimately, profits).
WHY INVEST IN PROGRAMMATIC AUDIO?
With fewer companies advertising in general, programmatic audio ads have multiple benefits that can be used to increase not only brand awareness but also sales and revenue.
They’re cost-effective – and much cheaper to produce than video ads.
They have multiple targeting options, just as other programmatic ad channels, with the same levels of measurability. This means you can optimize and increase their performance as you go, and make sure your ad dollars (or pounds) are well spent and bring the expected ROI.
They’re effective – they’re a great way to engage listeners and keep them thinking about your brand. And get them ready to buy from you when all of this is over.
If you’re in an industry that’s in demand right now, you probably won’t have to wait for the results until the end of the recession. Programmatic audio ads are directly tied to high conversions, and they can help you sell your products and services online right now, while people spend most of their time home and turn to streaming services, podcasts, and online radio for entertainment.
WHO CAN BENEFIT FROM PROGRAMMATIC AUDIO ADS?
Companies offering any kind of online collaboration tools, remote work solutions, and other SaaS platforms that are now in high demand.
E-commerce stores selling computers and other electronic supplies people are now buying to equip their home offices (and home cinemas).
Other e-commerce businesses that still operate and ship their products.
Online food delivery chains.
Mobile apps and gaming.
Consulting services like legal, marketing, etc. that people still need.
Virtually any brand that needs to stay on their customers’ minds.
So if you’re in a position to keep advertising and innovating, programmatic audio ads can contribute to your company’s growth – if not during the pandemic, then once this whole thing is over, and your customers keep you top of mind, because you didn’t stop advertising.
Meanwhile in other parts of the world such as in Italy, media ad spending decreased to 20%.
It’s not really all the fault of Covid-19 that has created uncertainty, even companies are taking the lead with a little forward-looking approach to communication. L ‘ Observatory Internet Media of the School of Management of Politecnico di Milano at the conference “Internet advertising: use of, monetization down” yesterday presented the results of research dedicated digital ADV.
In the introduction Giuliano Noci , Scientific Manager of the Observatory, underlined: «For 2020 we expect a rather significant drop in the adv values in Italy and for the first time the figure also concerns the digital world, around 14%. This is not a surprising situation in the light of the picture we are experiencing, but compared to the European average which will record a 9% drop with Germany at -7% and France at -12%, Italy will lose more. Worldwide, and in particular in China, despite Covid-19, the digital giant Tencent, shareholder of WeChat, has seen an increase in advertising revenue of 32% “.
According to Andrea Lamperti , Director of the Internet Media Observatory, “in 2020 the advertising market in 2020 will be worth just over 7 billion euros, the worst figure for at least 15 years (it was worth 8.7 billion in 2019), with all the components ( TV, Internet, Radio, Press and Out of Home) which will suffer a double-digit drop for a total market of -18%. The value of the adv on the Internet will drop by 14%, from 3.3 billion euros in 2019 to 2.84 billion, a result lower than that of 2018 “.
Within Display advertising, Video advertising sales (which have grown strongly in recent years) will drop by 12% and that of Banners by 15%, conditioned above all by the Brand Safety logics of companies. The collection deriving from the purchase of spaces on search engines (-14%) and on E-commerce & Classified advertising portals (-21%) also fell.
«Even the big international players, the OTTs, will be strongly impacted by this crisis. with a 13% drop. However, their share remains very high, equal to 77% – continued Lamperti -. For the Italian Programmatic market, which had closed 2019 at + 14% with 556 million euros in funding, a first estimate of the end of the year is around 480 million “.
If you compare the trend of online advertising with that of other media, only TV will have a drop in 2020 comparable to that of the Internet channel, while Radio, Press and Out of Home (OOH) will have more significant decreases, well beyond the least 20%. TV and Internet will maintain market leadership (respectively 42% and 40% of the share), with Stampa at 9%, Radio at 5% and Out of Home at 4%).
Companies and media system
Noci also painted a picture of what businesses are doing. During the lockdown months, the Research also analyzed how advertising investors intervened with respect to the marketing choices and advertising budgets decided in the pre-Covid period. The survey revealed that over 70% of the brand companies interviewed reduced, postponed or blocked the budget for investments in online advertising.
«Unfortunately, they faced the crisis in a wrong way, even in a context of understandable uncertainty, not so much because they reduced the investments in adv but because they reduced them in a key of behavioral isomorphism, that is perpetuating that obsessive short-term logic that the has distinguished in the last 2 years: an action that leads to the commoditization of the commercial proposal – Noci is convinced -. The Covid-19 crisis, in reality, had to lead in the opposite direction: the brands that decided to focus on brand purpose logic, to return to invest or to invest with even more vigor on the brand equity dimension have achieved results above average:
According to the professor, building a brand today “not only requires a knowledge of the media ecosystem, but also that relating to the customer journey and the behavioral archetypes of individuals”. That is to say: an omnichannel brand perspective that sublimates its value on all touchpoints, to give the right content and services on the right channel, at the right time and to the right individual. Also on the media system Noci expressed a very clear position.
«It is no longer possible for publishers to support their Value proposition only through advertising sales, which, moreover, will decrease significantly this year. There is space and interest in paid content, if the content is interesting to the user. We therefore hope that publishers are aware of the important role they have in conveying quality content, and that they must be more and more capable in personalization activities: the ability to build increasingly segmented offers and to understand what the interests of individuals are. today a differential factor. It will therefore be necessary to accurately calibrate both the mix between generalist and personalized content, and the mix of forms of enhancement through advertising but also subscriptions ».
With the multiplication of touchpoints and opportunities for interaction between the company and consumers, the need also emerged for tools to read and interpret the synergies and integrations between the various media, such as Marketing Mix Model (MMM) and MultiTouch Attribution (MTA ).
“23% only adopt an MMM model, 21% only adopt an MTA model and only 21% have adopted both solutions – explained Nicola Spiller , Director of the Internet Media Observatory -. The reasons why the spenders adopt an MMM model refer to the need to optimize the marketing ROI 63%, followed by the objective of analyzing the impact of the various marketing activities (53%) and the increase in sales (47% ). The adoption of an attribution model (MTA) refers to the need to optimize investments in advertising and the desire to evaluate the effectiveness of digital touchpoints (for both 28%) followed by the need to identify synergies between channels and monitoring of new initiatives (for both 22%) ».