Happy Easter! I hope you all get to have a bit of chocolate this festive weekend. I know my kids are looking forward to seeing the Easter Bunny!
As anticipated, April has definitely been a bad start to this quarter. But on a positive note, we are certainly seeing less fluctuation in overall performance for our publishers in comparison to previous global market trends. It is worth noting that every publisher is affected differently because of the different user base.
Below is a summary of what we’re seeing in the 4 markets that we’ve analysed:
- Australian cpm is down by 35% Year on Year
- UK & Italy CPMs are holding ground at a 40% and 50% drop Year on Year
- US is consistently down by 20% Year on Year
COVID-19 has impacted two key areas. Firstly, it is decimating some industries. Advertisers within the Travel, Automotive and Real Estate sector have paused majority of their campaigns, whilst there is still a minority delivering branding campaigns. In total, these make up about 35% of total online advertising spend. When this revenue is taken out of the mix, CPMs will naturally drop.
Secondly, it has increased the lack of consumer confidence. COVID-19 has bred uncertainty. A number of people have lost their jobs, whilst other could lose it at any moment. Consumers are tightening their belts and refraining from making large purchases online. Data points from the buy-side indicate that users are not as lucrative anymore so the prices they are willing to pay for a given user inevitably drops.
So, what does the new world look like?
95% of consumers are spending more time on in-house media consumption activities, as they are adapting to the “new stay at home economy”. I personally have transitioned to working from home and I love it. I get to spend more time with my wife and kids, I can get food when I want, I do more deep thinking with less distraction. Arthur C Clarke famously described in 1976, that there would be no need for executives to run businesses from an office in the 21st Century, and they could live remotely and conduct normal business. I believe this is now finally here.
We can already see many publishers adapting. Publishers like The New York Times, Wall Street Journal and Bloomberg News have lifted their paywalls to give readers access to coronavirus related content. Then there are those that have built new products to adapt with the shift in consumer trends, like PopSugar creating a new health app or b2b publishers creating virtual events to weather the storm.
When they realise the cost savings and relevant efficiency from operating in such a way there will be no way back. Added to that, consumers are slowly getting used to the new normal – after the top of the curve is hit they may start to get some more confidence and look to purchase online. These consumers may have never purchased anything online before but need to now out of necessity. With these changed business conditions online trade will explode.
There may be a time where you start to question whether it is worthwhile to continue maintaining existing content creation levels. However, since the last global crisis, the 2008 recession, technology has gotten better and more people are online than ever before, as we saw the likes of Facebook, Software as a Service and SalesForce rise like a phoenix. On top of this, today’s crisis is forcing everyone to be home, it is somewhat of a perfect storm for publisher and content creators.
How is this going to impact programmatic moving forward?
It is anticipated that advertising global online spend will reach nearly $100B by 2023. Programmatic will account for 75% of this. The US retail economy was worth $4.4 trillion in 2019 with just 16% transacted online. Surely, the impact of this will mean a transition to even 50%. If over $2 trillion is transacted online by 2023 then using the same ratio(8% of online ad spend versus 2019 sales), the online industry will be a $160B industry meaning programmatic jumps from $75B to $120B. So, a bit of short term pain will eventually lead to a prosperous programmatic industry.
Again, I’m happy to discuss any of this in more detail. Feel free to book a call in with me using the link here.