The coronavirus pandemic continues to have a huge impact on the paid advertising industry. When GDP falls, the general trend is for advertising spending to follow suit.
Subsequently, it has emerged that Europe has seen ad spends decrease by 9%, while China’s year-on-year revenue has dropped by 15% according to data from Publicis.
These figures accompany the revelation from the Interactive Advertising Bureau following recent surveys that: “Nearly a quarter (24%) of respondents have paused all advertising spend for the remainder of Q1 and Q2 while 46% indicated they have adjusted their ad spend for the same time period.”
While these figures are striking, there remains evidence to suggest that the digital paid advertising market is set to grow in spite of, or perhaps in reaction to, COVID-19.
Latest trends in paid advertising
Let’s begin by exploring some of the emerging digital marketing trends that might be linked to the ongoing pandemic.
- Consumer behaviour is changing due to COVID-19: The introduction of global lockdown measures saw a shift away from the physical and a new focus on the digital. In-home digital consumption increased, with social media platforms, TV memberships, online shopping, gaming and streaming platforms booming. Print advertising was temporarily dismissed in favour of digital marketing, specifically ‘direct response’ campaigns which push for quick purchases from buyers. Set against the backdrop of numerous failing corporations, Facebook and Google saw their first quarter profits soar. Meanwhile, China, the country with most consumers online, is predicted to have its ad market grow by 8% as a result of COVID – perhaps they are setting an example for the world to follow.
- The motives behind advertising are shifting: As consumers values, perspectives and opinions shift during the tumult of COVID, their priorities are shifting too – something that paid advertising is responding to. Whether this translates to new focus on customer engagement, greater highlighting of the company’s ethos and mission or more/less engagement with coronavirus-related content, media companies must choose wisely where to focus their ad attention. IAB revealed that 73% of advertisers have modified or entirely changed their assets since the pandemic started, adjusting to the new normal of a mainly in-home consumer base.
- Preparation for long-term changes: The nature of consumer behaviour has been turned on its head. Businesses, once back on their feet, will have to learn how to approach these new habits. Changes could include a shift away from TV advertising, as smart technology takes its place and OTT providers prevail. Equally likely could be offline channels becoming digital, forcing the paid advertising industry to re-evaluate how it measures investment returns.
How have digital markets reacted to COVID?
The Interactive Advertising Bureau revealed some staggering statistics following a survey of ad buyers. These figures included:
- Ad spending is anticipated to decline by 8% this year
- However, digital ad spending will grow by 6% regardless
- Traditional media can expect a 30% drop
- Linear TV ad spends will drop by 24% while CTV will increase by 19%
- Print investment will see a 33% decline while social media and paid search will soar at 25% and 26% respectively
- Out-of-home methods will witness a devastating 46% decline with regards to traditional methods while the digital side sees little improvement with a 43% decline
- Audio platforms take a beating too, with terrestrial radio ad spending decline by 31%, digital audio by 5% and podcasts by 8%
Seemingly under the radar, Patreon has triumphed amidst COVID disruption, currently valued at $1.2 billion with six million subscribers. Patreon encourages the creation of online content and so is obviously appealing in these digitally focused times. Striking a balance between supporting online creators and generating substantial profits, it perhaps sets a blueprint for other businesses to adopt.
Recent paid advertising developments in a COVID-influenced society
- TikTok for business: TikTok is witnessing massive steps forward in the paid advertising world through the introduction of ‘TikTok For Business’. Operating as the hub for all marketing ventures for brands, the site will include features such as Branded Effects, Hashtag Challenges, In-Feed Videos, Brand Takeovers and TopView. These features are offered alongside a designated e-learning centre which will help marketers learn about the numerous ways TikTok can help boost their business. TikTok is remaining secretive about pricing, but it has been suggested that its rates are competitive. With its innovative thinking, focus on viral content and trend-setting nature, TikTok has acclimatised perfectly to a COVID-influenced world, with its US revenue expected to hit $500 million this year.
- Marketing innovations: Clever brand campaigns have emerged encouraging consumers to stay at home: IKEA’s ‘Your House’ campaign, Wagamama’s #WFH, Oreo’s ‘Stay Playful’ slogan, Heineken and LEGO to name a few. Their smart, funny and relatable digital ad campaigns spoke to consumers on an equal level while also reimagining their own products to best suit to #StayHome logic. They demonstrate an example of companies choosing to set their ethos, values and mission at the forefront of their business, appealing to customers on an emotional level before then inviting them to view their products.
- Increased streaming: It has been suggested that Italian YouTube saw a 49.04% increase in its traffic as the country turned its focus to online entertainment. This figure seems indicative of a wider trend which has seen “Online streaming services provided by brands such as Netflix and now Disney+ likely to see 12% growth” (Maria Rua Aguete of Omdia). It was reported that, just six months after its launch, Disney + had gained 54.5 million global subscribers, a lucky U-turn after it was discovered that Disney had been hit exceptionally hard by COVID, with its earnings dropping by over 90%.
It seems undeniable that amidst the chaos of COVID, opportunities are emerging for paid advertising to elevate business.
If your company is struggling to adjust to the new normal, please feel free to get in touch and let us help you discover ways that paid advertising investment can benefit your business.