US Local Businesses Pivot Digital, Remain Optimistic About Post-Pandemic

This week, Magna announced the global ad market would shrink by seven percent, or $42 billion. Despite this, a new study from Viamedia shows marketers are quickly adapting: in response to the pandemic, 83 percent of local US businesses have overhauled their marketing strategies.

The survey, “How Can We Help Through the Pandemic,” found that, despite the economic downturn, there remains a strong need for advertising—45 percent of business owners from various industries say they’re seeking creative incentives for advertising. Forty percent of respondents also reported an annual marketing budget of at least $75,000, 39 percent of which they allotted to advertising.

In an attempt to pivot, 46 percent of respondents say they’re offering incentives and promotions to drive sales and continue operating during the downturn while 10 percent have shifted to digital during store closures and nine percent plan to expand.

Still, 28 percent are looking for guidance on how to change their marketing strategy to weather the pandemic.

Many respondents expressed optimism over their post-pandemic futures, with 36 percent saying they felt their business would be the same as it was pre-pandemic.

Viamedia’s findings are based on a survey among business owners (59 percent) and advertising agencies on behalf of businesses (29 percent), conducted between May 15 and May 27.

The CMO Survey’s COVID edition survey echoed similar sentiments, namely marketers are doing more with fewer employees. For example, despite nine percent of marketing jobs being lost due to the pandemic, 30.3 percent of marketers have experienced no change in their overall marketing budgets and 62.3 percent report that the marketing function has grown more important amid the pandemic. In fact, 41.3 percent have reported gains, whereas 28.4 percent have reported losses.

Report: Global Ad Market To Decline 7 Percent This Year With Expected Recovery In 2021

This year, the global ad market will shrink by nearly seven percent, from $582 billion to $540 billion, according to Magna’s “Life After COVID” forecast. A rebound that is expected in the second half will expand into 2021 when ad spend is predicted to grow by 6.1 percent to $573 billion—still $9 billion less than its pre-COVID level.

Global digital ad sales, including search, video and social banners, will remain stagnant at a one percent increase to $302 billion. Search will see a one percent decline and banner ads an 11 percent decline. Whereas social media and digital ad formats will increase by eight percent.

Linear will fare worse as consumers increasingly shift to digital channels during lockdowns; revenues from global ad sales are expected to drop 16 percent in 2020. Linear television ad revenues will decline 12 percent; print ad sales 32 percent; and out-of-home (OOH) 22 percent.

Magna’s findings show the US market will contract by just four percent, due in part to $5 billion in political ad sales and a three percent growth in digital media offsetting a sharp decline in linear ad sales (a loss of 17 percent).

Also in the US, ad spend on digital formats will stabilize in the summer and recover in the second half, with a two percent increase to $130 billion.

Despite the economic downturn, US ad sales saw a 3.5 percent increase in Q1, fueled by a 19 percent increase in digital video, 17 percent increase in social media and 12 percent increase in search. However, ad sales are expected to see a 17 percent decline in Q2. US ad sales will rebound in 2021 with a four percent gain.

In Q1, the US economy shrank by five percent, and is expected to see a 32 percent decline in Q2 as retail sales, car sales and clothing sales plummeted in April: 16 percent, 50 percent and 90 percent, respectively. Given many parts of the country have reopened, Magna expects ad spend will begin to stabilize in Q3 and recover in Q4.

Report: Advertisers Will Press Restart In Q3 To Make Up For Lost Time

As the pandemic pushed people to stay inside, advertisers were forced to pause product launches and reorient messaging. Now, as theaters, gyms, restaurants and beaches start to reopen in many parts of the country, advertisers are ready to start anew; 90 percent of advertisers that planned to launch products or services in 2020 say they will introduce them in the second half. That’s according to the fifth wave of Advertiser Perceptions’ report on the pandemic’s effect on ad spending.

As they try to make up for lost time, advertisers are poised to treat Q3 as the start to a lengthy recovery. The data show that 51 percent of advertisers plan to resume or ramp up ad spending in Q3 while 13 percent have already resumed activity. On the other hand, 28 percent plan to accelerate spending before the end of June. 

Advertisers also signal a readiness to move ahead with previously planned product launches in Q3 and Q4. While 48 percent of respondents postponed new product and service launches until the second half of 2020, 41 percent will proceed with new product launches as planned. Just 11 percent of advertisers canceled new product/service launches for 2020.

Though the findings reveal advertisers are ready to embrace Q3, many are unsure how to shift away from COVID-19 messaging. For example, while 58 percent say it’s time to replace COVID-19 messaging with product-specific ads, 43 percent are having difficulty producing new creative; whereas half of them aren’t sure what their new message should be.

Rewriting the post-COVID-19 playbook also presents a challenge. Just 29 percent have a strategy in place for the new normal, compared with 52 percent which say they’re still working on one.

Regional differences in reopening the economy are also affecting how advertisers move forward as 68 percent of respondents say that such differences are making it hard to plan national campaigns. 

To ensure regional relevance, brands should look to media with brand reach and targeted, digital platforms such as television and social media. On that note, 64 percent of respondents expect media and ad tech partners to be flexible when it comes to pausing or shifting spending as needed.  

As live events remain canceled for the most part, 75 percent of advertisers are willing to accept alternative content and media in the place of canceled live programming.

Over the past three months, 40 percent of advertisers have relaxed their own media return on investment (ROI) goals and over a third have lowered their media return on ad spend (ROAS) goals. Still, many say they’re raising the bar to make up for the downtime.

Advertiser Perceptions surveyed 151 advertisers comprising 34 percent marketers and 66 percent agencies, from May 18-21.

Brands Will Cut $50 Billion In Global Ad Spend This Year

As a result of the pandemic, brands will cut $50 billion in ad spend this year, an 8.1 percent decrease, according to WARC’s latest global ad trends report exploring the impact of COVID-19. The estimate represents a $96.4 billion downgrade compared to WARC’s previous global forecast of 7.1 percent growth, made before the pandemic.

Ad spend is set to plummet across all of the 19 product sectors WARC examined, with the steepest decline recorded in the travel and tourism sector, down 31.2 percent, or a $7.2 billion reduction in spend compared to 2019.

Leisure and entertainment brands will also make severe cuts, with ad spend down 28.7 percent, or $6.6 billion; followed by financial services, down 18.2 percent, or $8.7 billion; retail, down 15.2 percent, or $10.2 billion; and automotive, down 11.4 percent, or $7.4 billion.

“We note three distinct phases to the current downturn: firstly, an immediate demand-side induced paralysis for sectors such as travel, leisure and retail, combined with supply-side constraints for CPG brands. Second, the recessionary tailwind will exert extreme pressure on the financial services sector as well as the consumer, whose disposable income is now heavily diminished, says James McDonald, head of data content, WARC, and author of the research.

The pandemic will hit traditional media the hardest, with ad investment set to fall $51.4 billion and additional declines across cinema (-31.6 percent), out of home (-21.7 percent), magazines (-21.5 percent), newspapers (-19.5 percent), radio (-16.2 percent) and television (-13.8 percent).

Online media will fare better than traditional media but is not immune from the downturn. At a global level, internet advertising will see modest growth this year, a 0.6 percent increase.

The strongest performer in 2020, social media will increase by 9.8 percent to $96 billion. Followed by online video, which will increase by five percent and online search, which will increase by 0.9 percent. Still, all represent far lower rates than WARC previously projected.

Alphabet, which accounts for nearly one in four dollars spent on advertising worldwide, will see its ad revenue rise by just 1.6 percent to $137.1 billion in 2020. This represents a downgrade of $12.9 billion from WARC’s pre-COVID forecast.

At $77.6 billion, ad spend across Facebook, Messenger, WhatsApp and Instagram is expected to rise by 11.5 percent from 2019, marking a downgrade of $5.3 billion from WARC’s pre-COVID estimate. This means Facebook holds a 13.8 percent share of global ad investment. Together, Alphabet and Facebook account for one in three dollars spent on advertising globally.

The pullback in Latin America will be acute, with ad spend set to decrease by 20.7 percent. Whereas in Africa, ad spend will fall 19.5 percent; in the Middle East, 15.1 percent; in Europe, 12.2 percent; in Asia-Pacific, 7.7 percent; and in North America, 3.7 percent.

Brands will have to ride COVID-19 out until 2021, when WARC predicts there will be a recovery, at a 4.9 percent increase. McDonald notes that during the recovery phase, “there will be an added emphasis on healthcare and wellbeing credentials among brands not normally associated with the field.”

On the flip side, this year’s downturn will be softer than in 2009, when ad investment dropped by 12.7 percent, or $60.5 billion.

WARC’s new projections are based on data from 96 markets worldwide.

Most Ad Buyers Have Now Paused Or Adjusted Ad Spend Due To COVID-19

Eighty-two percent of ad buyers have now paused or adjusted ad spend, according to the next phase of the Interactive Advertising Bureau’s (IAB) COVID-19 survey, which compares changes to ad spend and buyer perspective for the period of March to June. 

Those respondents who were undecided about pausing ad spend in IAB’s March survey have chosen to pause spend by mid-April. A breakdown shows that in March, 16 percent were undecided about pausing activity whereas in April, just three percent were undecided. The amount of respondents who said they paused advertising increased from 24 percent in March to 37 percent in April.

Other insights reveal 73 percent of buyers are shifting messaging and modifying or creating new creative assets: 54 percent are modifying existing creative assets and 19 percent are planning to modify or create new assets. Twenty-seven percent of buyers say they’re leveraging the same assets used pre-coronavirus. Among buyers that are shifting messaging, about 60 percent say new creative in some ways reflects the crisis.

Additionally, brands are increasingly adopting a “we’re all in this together” tone of solidarity for ads, with mission- and cause-related messaging growing from 41 percent in March to 53 percent in April. Performance messaging has also seen growth, going from 28 percent in March to 34 percent in April. 

Creative and messaging challenges have impacted news buyers most as nearly half have canceled or paused ads due to irrelevant or inappropriate creative. Some news buyers (24 percent) are reforecasting an increase in display spend, with a similar amount (29 percent) looking at new key performance indicators (KPIs) such as consumer engagement and sentiment. 

IAB found that a majority of buyers (45 percent) had allocated budget to sports in their original 2020 plans. Among those, sports represented 25 percent of their overall 2020 budget. Despite this, 43 percent of originally planned sports budgets will remain unused. Those who are allocating sports ad spend also indicate a shift to Q3 and Q4 of 2020.

Month over month trends reveal traditional media channels continue to decline, with linear television remaining relatively flat. Digital ad spend is showing growth as digital product agility has benefitted search, social and audio.

This marks IAB’s second buy-side survey, fielded April 15-21 among 294 participants spanning media planners, media buyers and brands, both incumbent and direct-to-consumer. The first phase of IAB’s buy-side survey was fielded March 18-24.

Food Delivery Ad Spend Reaches $269 Million During Coronavirus

A Kantar study of food delivery advertising during February 2-April 11 shows ad spend in the category at $269 million, down just over 5 percent compared to the same time frame in 2019. Despite the modest decline, a handful of food delivery brands actually upped their ad spend during coronavirus.

Kantar’s data show that seven of the ten highest spending food delivery brands increased their year-over-year ad spend. The biggest spender in the category, Domino’s increased its ad spend by 9.7 percent, to $80.1 million, from February 2 to April 11. 

What’s more, five of the top ten biggest spenders in the category saw double digit increases in their year-over-year ad spend during the pandemic: Papa John’s saw a 48.3 percent increase, GrubHub saw a 31.8 percent increase, DoorDash saw a 60.2 percent increase, Shipt saw a 68.9 percent increase and Papa Murphy’s saw a 57.1 percent increase.

Though it’s the lowest spender in the category on the list, Freshly saw a whopping triple digit increase in ad spend—774 percent. 

Brands that saw a decrease in year-over-year ad spend in the period spanning February 2-April 11 include Little Caesars (-7.5 percent), Pizza Hut (-36.2 percent) and Marco’s Pizza (-11.5 percent).

The pizza chains have created television spots with the pandemic in mind and to highlight their new no-contact pizza preparation and delivery policies. For example, a Papa John’s spot stressed that humans don’t touch its pizzas while a Little Caesars ad displayed how customers can pay for and pick up their pizza via an automated machine.

In addition to safety, another major theme for pizza chains has been solidarity. In employee recruitment ads, Domino’s said it’s looking for extra hands during “these tough times,” while Papa Murphy’s re-purposed an existing spot with the messaging, “We’re in this together.”

To maintain activity, food delivery services like GrubHub and DoorDash are running television ads that urge Americans to support the restaurants they love and have always been there for them.

TV Ad Spend In First Half Of 2020 Expected To Be $10 to $12 Billion Less Than Expected

Emarketer’s updated television ad spend report reveals that television ad spend in the US will decrease by between 22.3 percent and 29.3 percent in the first half of 2020, $10 to $12 billion less than expected in its previous forecast, which predicted a two percent increase in television ad spend for all of 2020—an estimate that was reached before the coronavirus outbreak.

While television ad spend was down last year and eMarketer expected the trend to continue in 2021, the 2020 Summer Olympics and presidential election were expected to offset the downward trend. NBCUniversal estimated ad commitments for the Olympics amounted to nearly $1.25 billion. 

Political ad budgets will also be hampered in Q2, in part to avoid insensitivity in light of the pandemic. However, Kantar believes fewer political ads now doesn’t mean less ads later, as it noted in a blog post: “But with travel, rallies, and in-person campaigning severely curtailed, and campaigns striving to maximize communication channels that they can control, paid advertising in general, and television advertising in particular, will likely be the best vehicle for campaigns to deliver the messages they want delivered.”

The cancellation of the Olympics coupled with postponed sports programming such as the National Hockey League (NHL), National Basketball Association (NBA) and NCAA March Madness games will contribute to billions lost in ad revenues for television networks.

A March 2020 study from Kantar found that the aforementioned sports content collectively accounted for nearly $2 billion in television ad revenues in 2019. Similarly, MoffettNathanson Research estimated in March that due to the NBA season cancellation, 2020’s losses to ESPN, TNT and ABC would equate to about $700 million.

Emarketer believes television advertisers will adopt a wait-and-see approach as the economy continues to stall.

Half Of Consumers Approve Of Brands Running Ad Campaigns Not Linked To Coronavirus

About 50 percent of people approve of brands running “normal” advertising campaigns which aren’t linked to coronavirus, according to a multinational GlobalWebIndex study, fielded in 17 markets between March 31-April 2. The report marks the second installment of the researcher’s coronavirus-focused study, which initially surveyed 13 global markets, from March 16-20.

Compared to half of respondents that are okay with brands running “normal” advertising campaigns not linked to the pandemic, about 20 percent expressed disapproval of these campaigns. Consumers in Brazil, India and Italy showed the highest approval for “normal” advertising (an increase in 60 percent vs. 40-50 percent in most other places).

Nearly 90 percent of respondents approve of brands providing practical information and tips to help deal with the pandemic. About 80 percent of respondents expressed high approval ratings for brands running campaigns showcasing how they’re responding to the pandemic, how they’re helping customers and how they’re reaching out to customers to let them know how they’re responding. 

Respondents also expressed high approval ratings for brands that provide funny and light-hearted videos or content to entertain people, and brands suspending their normal factory production to help produce protective gear (77 percent for both).

Though half of respondents expressed approval of brands running ads unrelated to the coronavirus, about 75 percent approve of brands running promotions, offers and loyalty perks for customers.

This finding echoes consumers’ increased online shopping behavior. Across the 17 markets GlobalWebIndex surveyed, nearly half report they’re doing more online shopping, with China at the forefront. Two-thirds of Chinese respondents reported online shopping a lot more whereas one in three in the Philippines say they’re online shopping a lot or a little less.

Among those who said their online shopping has increased—Gen Z, millennials and higher income groups—the focus has been on essential products like food (33 percent are shopping online more for this), household essentials (29 percent) and personal care products (27 percent). 

The situation isn’t as positive for fashion retailers for just two in 10 online consumers say they’re shopping more for clothing. Among those who reported a drop in online shopping, eight percent say they’re shopping less for clothing.

Concern over the coronavirus pandemic has significantly grown since mid-March, particularly in the US, UK and Australia. The percentage of respondents who said they feel “extremely” or “very” concerned about the situation in their own country went from 75 percent from March 20 to 83 percent on April 2, 77 percent to 87 percent and 73 percent to 83 percent, respectively. 

Concern over the pandemic in China, the Philippines and Italy has remained stable. Levels of concern in China have only grown one percent, 55 percent to 56 percent, from March 20 to April 2 whereas levels of concern in the Philippines have increased one percent from 97 percent to 98 percent, from March 20 to April 2.

As for how respondents view the pandemic’s impact on personal finances vs. national finances, the biggest gaps are evident in Australia, the US, the UK, France, Germany, Ireland and New Zealand, all of which show a 50-point difference. Still, 80 percent or more respondents in all markets anticipate a dramatic impact on the global economy.

Nearly All Sellers Expect Ad Sales Revenue To Be Down For 2020

Nearly all (98%) sellers believe ad sales revenue will be down for the year against original 2020 plans due to the coronavirus pandemic, according to a new Interactive Advertising Bureau (IAB) report. “Coronavirus: Ad Revenue Impact On Publishers & Other Sellers,” published April 15, confirms what we already know: that the pandemic will rattle media spend and revenue to their core.

Seventy percent of both buyer and seller respondents have already adjusted ad revenue or are making adjustments. Both buyers and sellers expect the greatest impact on media spend and revenue from March to June with digital ad revenues less impacted than traditional ad media revenues. Depending on channel, digital ad revenues are down 19 percent to 25 percent while linear television and print ad revenues are down 27 percent and 32 percent, respectively.

The crisis has fueled significant growth in news consumption with digital news site visits reaching 523 million from March 9-15 according to comScore, the highest week of news visits in 2020. Still, publishers are unable to monetize this growth. News publishers are hit the hardest with pauses and cancelations from buyers and they’re twice as likely to have ads blacklisted because of coronavirus content (17 percent blacklisted for news publishers versus eight percent for non-news publishers). All publishers are creating flexible advertiser options by either publishing campaigns to a later date, creating different content and sponsorship opportunities or creating entirely new content.

Also on the publisher side: they’re suffering more from cancellations than programmatic specialists. Eighty-two percent of publishers said buyers have requested advertising pauses versus 60 percent for programmatic specialists. While both sides are having to adjust advertiser buys, more buyers are canceling campaigns for publishers than they are for programmatic specialists (77 percent versus 49 percent).

On both the buy and sell side, short-term spend shifts are affecting legacy channels more than digital channels with publishers more optimistic than buyers about the extent of digital ad reductions—69 percent of sellers expect revenue change versus 70 percent of buyers.

Respondents said the most reduced advertising categories from March to December will include travel and tourism (68 percent), brick-and-mortar retail (56 percent), restaurants (49 percent), automotive ad related (48 percent) and apparel and fashion (26 percent). Seller categories expected to be least impacted include cosmetics and toiletries, household products and online retail.

A majority of ad buyers and sellers haven’t changed revenue forecasts for Q3 and Q4—25 percent of buyers said they’re adjusting spend forecasts for Q3 while 30 percent of sellers said they’re adjusting revenue forecasts in Q3.

On the sell-side, IAB surveyed 205 publishers, media platforms and programmatic companies from April 1-8. IAB conducted a similar survey on the buy-side among agency media buyers and sellers and brands on March 25.

Ad Fraud By The Numbers

Advertisers lost more than $23 billion globally to ad fraud in 2019, according to a report from CHEQ called “Ad Fraud 2019: The Economic Cost of Bad Actors on the Internet.” Another report, released from WhiteOps and the Association of National Advertisers (ANA), found that advertisers would lose $5.8 billion to ad fraud in 2019, down from its $6.5 billion estimate reported in 2017. 

Compared to CHEQ’s eye-watering estimate, WhiteOps and the ANA’s prediction makes it seem like the fight against ad fraud is winnable. WhiteOps arrived at its estimate by measuring 27 billion impressions across 50 brand marketers, counting fraud that was actually effective plus the price of the ad rather than using a high-CPM average. This methodology, then, explains the disparity between CHEQ’s conclusions and WhiteOps and ANA’s conclusions. In any case, WhiteOps’ finding—that ad fraud declined by 11 percent in two years—could mean there’s hope for marketers battling ad fraud considering digital marketing ad spend increased by 25.4 percent between 2017 and 2019.

But inside CHEQ’s clairvoyant ball, there is no future with less ad fraud as its report states, “Where studies have shown that ad fraud is lower or even declining, we think this particularly unlikely. Digital ad marketing is growing at a high rate and thus is an attractor for increased fraudulent activity.” Left unchecked, CHEQ says the level of ad fraud is expected to reach $26 billion by 2020, $29 billion by 2021 and $32 billion by 2022.

Neither estimate paints the whole picture because marketers prefer to keep data private. But ad fraud is still prevalent, and not just for digital marketers. In its Global Insights Report 2019, DoubleVerify found there was a 120 year-on-year percent increase in fraudulent ads in connected television (CTV) and mobile apps. DoubleVerify defines the majority of mobile app fraud as ad impression fraud or invalid traffic practices such as misrepresentation, laundering and hidden ads.

Mobile apps are a breeding ground for deception. So much so that Google recently removed nearly 600 Android apps from its Google Play app store and banned them from its ad monetization platforms, Google AdMob and Google Ad Manager. The apps, Google wrote in a company blog post, violated its disruptive ads policy and “disallowed interstitial policy.” Google says it’s working to protect the mobile ecosystem by mitigating a type of disruptive ad on the rise called out-of-text ads, which are ads that malicious developers serve on a mobile device when users are not actually active in their app. The consequences of out-of-text ads running rampant include a poor user experience and wasted ad spend. Google has developed a machine-learning-based approach to detect these out-of-context apps and prevent threats that can produce invalid traffic.

According to DoubleVerify, both CTV and mobile app fraud have shown growth. Fraud rates remained steady year-over-year with 3.1 percent in 2019 compared to 3.5 percent the year prior. Yet while desktop fraud rates decreased by seven percent, mobile app fraud grew by six percent.  

In February 2019, DoubleVerify detected a new kind of ad fraud that involved launching bot networks to avoid ads.txt protections that publishers use to list authorized sellers of their inventory. In a nutshell, the botnets wiped websites clean and created new ad slots to falsified versions of the websites then sold the fraudulent ads under fake URLs through ads.txt authorized sellers. The Wall Street Journal reported that the activity potentially cost advertisers $70-80 million. 

Shortly after the ads.txt scheme, another kind of bot emerged, what the Integral Ad Science (IAS) Threat Lab called 404bot, which was imitating domains. Since its arrival, IAS estimates that 404bot has impacted 1.5 billion ads, mostly targeting publishers in digital markets worldwide, specifically videos. Similar to ads.text, 404bot activity includes false misrepresentation of a URL so that buyers think they’re getting valid inventory when in fact the domain doesn’t exist.

Fraudsters have also siphoned away ad dollars from online video streaming, which a new CHEQ report projects will cost advertisers $4 billion in over-the-top (OTT) ads in 2020. In short, OTT spend will reach nearly $24 billion in 2020, with ad fraud levels reaching 17 percent.

“Marketing budgets are steadily flowing to OTT, offering a mouthwatering proposition of brands being able to reach consumers on their screens with relevant messages at the right time,” said Guy Tytunovich, founder and chief executive officer of CHEQ.

Knowing what ads are appearing and where can prevent fraudsters from exploiting ads. Or Lencher, chief executive officer of Luminati Networks, cites IP proxy networks as one viable solution. Because proxy networks provide access to accurate data in real-time from anywhere in the world, brands can use them to follow their ad campaign exactly as target audience sees them and test multiple different ads that might be presented to the consumer. Leveraging proxy networks then ensures brands know their ads are being delivered to the right customers at the right times.

To win the fight against ad fraud, marketers’ efforts must also match the sophistication of ad fraudsters’ methods. That starts by partnering with reputable verification companies in the supply chain and updating ads.txt files often. It also means avoiding the use of high click-through rate as a primary campaign metric as much as possible because buying will encourage scaled cheap inventory that’s fraudulent.