By Wesley Cherisien
Many advertisers are experiencing sharp declines in revenue due to the worldwide economic downturn caused by COVID-19, and while 70% of the global population is spending more time on their mobile devices due to mandatory lockdowns, ad revenue in the United States has dropped by 17.2%.
Interactive Advertising Bureau, an online ad industry trade group, conducted a poll surveying 400 cross-industry ad buyers to measure the pandemic’s effect on advertising plans. Nearly 25% of the polled respondents stated that their advertising budgets for the second quarter of 2020 had been paused. Another 46% admitted to reducing their ad spend with total digital spend for the period March–June projected to decrease by 33%. Total global ad spend is down $20 billion from the beginning of the year, reflecting measures to drastically adjust budgets or slash them completely.
Industries experiencing advertising downturns
While the story is not the same for every company, there are industries that are more affected than others. When it comes to the global hospitality industry, airlines, cruise lines, hoteliers, car rental companies, and casino promoters have come to a complete standstill. In 2020, global travel was estimated to contribute $711,944 million in GDP; however, that has been adjusted to $568,583 million, which is less than the 2019 total of $685,065.
Additionally, according to marketing expert Neil Patel, conversion rates for industries such as agriculture, construction, e-commerce, education, energy, finance, insurance, manufacturing, real estate, retail, software/technology, telecom, and transportation have all suffered declines since the pandemic. Due to this, many small and mid-size businesses that have traditionally leveraged digital advertising to attract new customers are drastically reducing their ad spending as they struggle through lower conversions driven by customer fear amidst economic uncertainty.
Analyzing advertising costs before and during COVID-19
As fewer advertisers compete for advertising space, advertising costs across industries have steadily decreased. Global CPM (cost per 1000 impressions), when measured across 18 industries in Q1 2020 was $0.81 when compared to Q4 of 2019 ($1.88).
Advertisers targeting customers specifically on Facebook have also experienced significantly lower ad costs. In March of 2020, advertisers paid $0.09 on average per click, compared to the beginning of the year when the cost was $0.11, representing nearly a 20% reduction in the first quarter alone.
While advertising costs are indeed becoming cheaper, capitalizing on declining ad costs will require a strategic marketing effort with a message that speaks to your target audience in a way that meets their needs during the present time.
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How to manage a successful advertising campaign during the COVID-19 Crisis
Given the current climate, businesses will need to adjust their advertising campaigns to reflect solutions that meet the immediate needs of consumers. The following are a few strategies that companies can implement to leverage the new advertising landscape:
1. Understand that consumers want to hear from you during this time
While many advertisers may believe consumers do not want to be bothered during a time of crisis, the opposite is true. Consumers do not think that brands should stop marketing during the COVID-19 pandemic and actually want to hear from their favorite brands.
Originally published at All Business