How the Coronavirus is Changing Digital Advertising

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The COVID-19 pandemic is sweeping the globe, changing the way we live, work, and engage. It is also having a transformative impact on every industry — digital advertising among them.

As consumers and brands grapple with a new reality, what should marketers expect in the near term? How can they safeguard their businesses and brands? Most importantly, what should they prioritize moving forward?

Balancing Brand and Performance for short- and long-term goals

The crisis has effectively reshaped digital ad budgets overnight. In January, a report by the Winterberry Group predicted substantial growth for the industry, with spend nearing $390 billion. Now, given COVID-19’s sudden economic impact, brands are being understandably conservative and tightening their belts. The pandemic is reorienting the way they invest and where they allocate dollars.

Advertisers – depending on industry and goals – will need different strategies to weather this dramatically evolving environment.

  • Businesses whose economics are challenged and need to drive the utmost performance. They should look deeply at what and where their consumers are now engaging in content with insights tools that provide transparency into how omnichannel campaigns perform.
  • Businesses who seek to strengthen their brand through these trying times. For them, contextually relevant and brand-safe presence is most important. In particular, make sure that the context is one of trusted content and news. As the landscape – and brand association – is changing more rapidly than ever, it’s important for brands to be more flexible and responsive with their creativity. All existing creative should be immediately audited for sensitivity to the current pandemic. New creative can and should be built but of course, take the current situation into account.
  • Companies whose business models are shifting in the current climate and need the flexibility to engage consumers in this new context and drive growth. They are focused on redefining their target segments, leveraging qualified data to help them engage with these new sets of consumers in new ways, gaining transparency into their media buys, and measuring in rapid cycles to ensure their campaigns are on track with the ability to optimize.

Expect a new normal 

Several industries have been hit especially hard by the pandemic, such as travel, hospitality, and dining. Advertisers in those industries are navigating the situation, working to make smart decisions that address the current financial climate but also prepare for the future.

Alternatively, other categories are thriving. CPG buying has soared, rising 10 percent in the U.S., powered by hand sanitizer, toilet paper, and frozen foods. Quantum Metric says general retailers have seen online sales grow 106 percent compared to the same period last year.

We can’t know when, but at some point, the pandemic will subside. Travel, hospitality, dining, and other affected verticals can expect a rebound. Based on consumer behavior from China, where the outbreak has slowed, in-person dining is already coming back. Expect an uptick in consumption once things normalize, with affected categories recovering — and quickly. Consumers will want to connect again in person and reward themselves for getting through this difficult period. Yet their needs may be different, and now is the time for brands to plan and strategize to meet them. Offline-to-online models are helping these brands evolve their current relationship with consumers and future hybrid models may be the norm. Adjusting marketing plans and campaign approaches to support this transition will separate top marketers from their peers.

Post-COVID-19, marketers will be operating in a new reality where consumption has fundamentally changed. There are some behaviors and coveted products that will stick around and become the norm, driving continued purchase. Think of medical supplies and household cleaners, medical and life insurance, several health and wellness categories, as well as entertainment and learning. Across all of these areas, higher structural spending could continue beyond the end of the pandemic, and advertisers should act and plan accordingly.

Trusted news is table-stakes for everyone

With the coronavirus situation evolving daily, consumers are turning to news content like never before. We’ve seen that firsthand with readership on HuffPost and Yahoo News, increasing by nearly 80 percent in recent days. Some advertisers, however, have expressed concerns about brand suitability and coronavirus content, complicating the ability for news publishers to monetize new visitors. We believe though that will change as more consumers flock to trusted news publishers for updates on the pandemic, and it becomes part of everyday life. Studies show that running ads adjacent to trusted news sites support positive brand sentiment. Blocking coronavirus content would serve only to limit scale and force brands off of high-value, heavily trafficked webpages—for no reason. A number of industry organizations like the IAB and DCN have shared guidance on how marketers can comfortably support coronavirus news content while staying brand-safe.

Streaming, streaming, streaming

With Hollywood and in-person experiences hit hard by COVID-19, consumers are looking to CTV, OTT, and streaming like never before. Reports indicate that streaming video consumption has surged 60 percent as communities around the world self-isolate to blunt the spread of the virus. From movies to exercise classes to “experiences” for children (zoos, etc.), streaming is having a very strong moment. And while streaming’s audience has been growing sizably every year, the health crisis has accelerated years of evolution in a matter of weeks.

Advertisers are following suit. Even before the pandemic, the biggest brands wanted to get in on the growth of streaming. CTV ad spend, for example, approached $7 billion last year, a 38% increase over 2018, while US viewership is expected to crack 200 million in 2021. As consumption rises, spend will follow. Beyond the pandemic, we’re also in an election year that has already broken records for ad spend. Streaming video will undoubtedly play a role in that, attracting hundreds of millions in dollars.

Iván Markman
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