COVID-19 has thrown many traditional models of monetisation in publishing into precarity. Over the next few weeks, we’ll share our thoughts and insights into how small and medium-sized publishers can react to protect their businesses and build stability in a transformed post-pandemic world. We’ll be focusing on publishers whose main revenue source is advertising, touching on areas like direct display and programmatic advertising, affiliate revenue, video, events, print and digital alternatives to print. To be updated on this series of articles please add yourself to our mailing list.
Today, we’re looking at advertising and audience trends, and how to react to these changes.
Where we are
As entire nations protect themselves from this health crisis, huge portions of the planet are effectively paused, and will be for months. People have lost jobs, businesses have closed and those sheltering from COVID-19 have changed their lives to exist within four walls. Publishers have had to shift entire operations into remote businesses and have encountered immediate setbacks, not least a huge upheaval in the world of advertising.
There are some notable changes in audience behaviours at present across the digital publishing board. People are already spending significantly more time online. The week of March 16, web traffic grew by 20% across the board in the US, and Cloudflare reported usage was up by 40% in Italy. These spikes come with changes in user behaviour; fewer people are taking a morning and evening commute, and lunch breaks no longer fit a consistent pattern as many work from home. Downloads of news apps like Apple News and SmartNews have exploded, and news publishers have observed a spike in subscriptions over the last four weeks, fuelled by readers’ desire to stay as informed as possible on the COVID-19 pandemic.
In the thick of the crisis, ad spending is down in general. As companies continue to lose money, one of the first things to be cut from budgets is digital ad spend. Many Q1 budgets are already committed, but the start of Q2 on April 1 could see a huge drop in ad spending across all sectors. The New York Times expects total advertising revenues to decline at percentages in the mid-teens in the current quarter due to uncertainties surrounding COVID-19. But where spending is down, particularly in areas like travel, sports and politics, it’s up in areas like hobbies and interests, education, careers and news media.
Where we will be
Once a recession hits another shift is likely to happen. This graph displays the estimated revenue of the total ad industry in the years immediately before and after the 2008 financial crash:
Our current situation is unlike any other crisis, but it’s likely we’ll see ad revenues continue to drop, only to increase again as soon as some of the uncertainties alleviate. Brands’ anxieties surrounding the viability of long-term financial commitments during COVID-19 should not alter the long-term trend. Advertising is resilient – it will bounce back.
What should we do right now?
Put simply – monitor, test and adjust.
Here at Mathematics, we’ve built dashboards to allow clients to monitor CPMs, ad impressions and total ad revenues on a daily basis in a single place. As publishers continue to shift more of their business from direct display to programmatic, this kind of data is displayed across various dashboards – bringing this data together makes it easier to track downward and upward trends and adjust partners accordingly.
Now is the time to try out new partners and test alternatives to underperforming setups. If traffic is growing you may find your niche is better served by particular partners – we’re going to compile a list of companies to look into later in this series of articles.
But more than ever it’s time to adjust. To continue driving revenues through advertising in the long-term it’s imperative that publishers’ websites act not as a ‘nice to have’ but as a serious selling tool for brands. Publishers need be serious about ad viewability, the uniqueness of the platform they offer and their connection with a niche, valuable audience. More than ever brands will monitor conversions from the publications they place ads on and remove under-performing partners – it’s imperative we offer them a valuable platform.
We’ve observed a trend for advertisers adding hard news and features pertaining to COVID-19 to their blocklists to avoid hypothetical brand safety fallout. Many publishers are frustrated by a perceived over-zealousness in how advertisers add to their blocklists, which has seen entire publications being blocked as a result. Consider integrating your own blocklists internally if you fear this is having an impact – running only house ads on stories that might trip you up.
The ad verification company DoubleVerify has begun advising clients to consider not blocking the category “natural disasters”, under which COVID-19 is categorised in its system, on the sites of trusted publishers. DoubleVerify COO Matt McLoughlin said:
“Brands should take a very hard look at supporting those publications producing legitimate information and analyzing whether consumers will really associate the brand with the content when it is so prevalent … it really becomes part of everyday life.”
Publishers should note, however, that these moves to block hard news aren’t new, and with increased competition and a decrease in advertisers an approach to blocklists should be mulled over.
The US is likely to see a large rise in ad spend over the next nine months as 2020 is a presidential election year. Every four years, there is an observable rise in ad rates as political content floods the online space, so we’re likely to see digital publishers’ advertising revenues recover in the US as election day looms closer. And typically, changes in the US economy are felt worldwide, so we’ll likely observe some international economic improvement over this period.
As tough as COVID-19 will be on publishing, we hope this will prove to be no more than a bump in the road. If publishers can adapt, they’ll retain their ad revenue and come out of this crisis in as strong a position as ever.
Click here for the next instalment in our article series aimed at helping publishers monetise through the COVID-19 crisis: Affiliate Revenue