The global pandemic attack, as witnessed sometime in the middle of March, has abruptly de-accelerated the economic growth status all across the globe. While the effects of it are still looming around in the air, the recent earnings report states that we have gone through the worst phase and have now emerged out of the darkest days. The same is being communicated via media buyers.
Earlier Facebook officials had stated that they have observed a decline in the demand for advertising and a related drop in the pricing of their ads. Google says in the month of March, they underwent a significant slowdown in revenues from ads. Twitter had projected a steady start to the quarter but then had widespread economic disruption due to COVID-19 in March.
The statements were all released by the formal press representatives for the period ending March 31, 2020. As is evident, for the final weeks of the given quarter, the figures show the immediate consequence of the COVID-19 attack on the advertisement businesses. There has been a steady downfall in the trends as compared to the healthy growth that was witnessed earlier at the start of the current year.
Direct Response Revenue
Amidst the dramatic nature of this disaster, several firms observed an increase in the demand and those that still persisted in getting a return on their investments made from the performance campaigns increased their fundings on advertisements on certain channels. Facebook, Google, and Snap cited the accurate impact of direct response revenue at the end of the quarter.
David Wehner, who is the CFO of Facebook, said that those performance advertisers who managed to get the results that they were hoping for kept on spending while others have driven back.
Another firm YouTube was found to be making in-roads in direct response, but it has long been courting brand advertisers and their TV budgets. In the previous quarter, it was the campaigns on performances that held steady when the corporations pulled back on their branding campaigns.
Ruth Porat, who is the CFO of Google and Alphabet, said in the context of YouTube that there has been a substantial year-on-year growth noticed throughout the entire quarter in direct response. He also made it clear that the growth of brand advertising quickened in the first two months of the given quarter, but then began to deteriorate in mid-March. This even had a drastic impact on YouTube’s year-on-year ad revenue growth.
Sundar Pichai, who is the current CEO of the firm, mentioned that app installations and gaming were the areas where YouTube has managed to gain traction in direct response.
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The Great Abyss
Since such a pandemic attack has never been witnessed before ever since the arrival of the digital advertising techniques, several firms have declined to provide any financial guidelines for the second quarter of the year 2020. Nevertheless, based on several reports and data received, one can pretty much expect April to be identical to March; that is to say, things may not be improving much, but there is still a silver lining.
In the first few weeks of April, Ruth Porat of Google said that Search had not witnessed any further decline in year-over-year revenue from the end of March. He also mentioned that YouTube’s direct response ad revenue remained stable. But she also said that there has been a continued decline in brand advertising.
Similarly, the authorities at Facebook said they have noticed during the first three weeks of April several signs of stability in the market. The company also said that the revenue from advertisements has been flat as compared to the same time last year and down from the 17% year-over-year growth, as witnessed in the first quarter of 2020. The April trends indicate weakness across all of the different geographical regions since most of the major countries have had some sort of guidelines in effect.
Next in line, Microsoft said that they expect a significantly lower level of advertisement spending as seen in March to continue even in the current quarter and that this will impact Search and LinkedIn services.
The IAB, in its most recent conducted survey on media buyers, inquired about advertising spending plans for March through June. There was, however, a small improvement in digital expense’s expectations as compared to the last survey done in March.
In the IAB’s March survey, buyers stated that they anticipated digital ad budgets to be cut by 33% on average in the second quarter, on the other hand, the survey conducted in April revealed a slight bump to an average cut of 29%. The traditional media expense projections for the second quarter dropped from proposed cuts of 39% on average in March to 44% in April.
From a rebound point of view, Search, and social appear to be in the best position. These funds are still below plan, but the planned cuts for the quarter have shortened considerably in the period between the two surveys.
Between March and April, there was a decline in interest for demographic and audience targeting buyers. This, however, could be a consequence of the sudden shift in consumer interest that has rendered the existing customers less effective.
Concluding on the growth of Digital World amidst COVID-19
Irrespective of the spending changes, about 73% of advertisers have said that they are bent on transforming or developing new creative assets. About 58% of them even said that they are planning on mentioning coronavirus, COVID-19, or in some way or the other bring in the pandemic in their advertisements. All in all, we see that though going through a turmoil, the digital advertising industry is headstrong about making a speedy recovery and that the darkest hour of the night has passed now.