The unprecedented corona pandemic changes the online world and for publishers it creates new challenges for programmatic ad revenue with rising traffic and prices downfall. The Adnimation team explains what publishers should do during these turbulent times.
Health is clearly the main concern for people around the globe during the corona pandemic and the uncertainty sends us all to protect our families, worried about the near future. In addition to the health tole, the financial markets suffer significant loss and businesses are facing new and developing challenges daily. For online publishers, who struggle to keep the websites up and running and the creation of original content continuous, the biggest threat is loss of ad revenue, alongside issues of blank banners and trashy ads.
Higher Supply, Lower Demand
With so many people limited to their homes, seeking information and lacking social alternatives, the online traffic rises rapidly. Many websites report a significant increase of visitors, and not only health related websites. Anyone who provides high quality content sees this. And with traffic, the number of available ad impressions roses as well. The entire online industry sees a surge of ad space supply.
On the other hand, online advertising demand is shrinking fast. Clearly, all campaigns related to the travel industry were stopped, with most flights canceled and hotels closed. But campaigns in many other categories were suspended as well, with car manufactories shut down, restaurants closed, and most services put on hold. This means that while supply is up, the demand for online ads is down.
To support this with data, this table here below is based on actual advertising campaigns across categories and countries, accumulating data from over 350 websites whose programmatic ads are managed and sold by Adnimation. The average cost of ad impressions has decrease in January and February of 2020 by about 28% when compared to the same period in 2019. This trend continued in March and during the first three weeks the prices dropped by 50%, compared to the previous year. During the time of writing, there’s no evidence of prices going back up again (end of March 2020).
The immediate results of higher supply of online ad space and lower demand is blank banners. Ad placements across devices appear with no creative to fill the space. Publishers who notice blank banners on their websites know the impact, it’s money left on the table. The users visit, enjoy the content, the hosting costs of course, but the publisher is not getting paid.
After noticing a blank banner, publisher should also analyze data more thoroughly to check if this phenomenon is a one-time issue or is it a wider problem. It’s advised to measure unfilled ad inventory in specific devices and countries as well, since the changes in both supply and demand are not necessarily spread evenly across platforms and countries.
It’s interesting to note that trash ads appear now in most advertising categories. When comparing actual ad revenue from campaigns in over 350 websites, for which Adnimation manages ad sales, the drop is quite apparent (see table here below). While the categories of apparel and electronics suffered less, with brands shifting budgets to try and sell online, most categories had seen a significant decrease. Naturally, the travel and tourism suffered the most with a 90% decrease in revenues.
The second result of high volume of online traffic and lower demand from campaigns is the overall decrease of prices. With lower competition over the rising number of ad impressions, advertisers pay lower prices. This low price market is a heaven for the dark side of the advertising world. Malware, dodgy offers, ugly creatives, device hijacks and other trash ads campaign normally try to buy almost anyone, as long as the price is very low.
And so, in a low-price environment, websites are prone to trash ad campaigns win and appear in their ad placements. Publishers may wait until a first complaint arrives, when a user took a screenshot of an adult oriented banner or worse. It would be smarter however to take precaution steps to prevent trash ads appearing and risking their brand and users. Minimum pricing strategies together with close monitoring of the creatives and campaigns are highly recommended.
Lower Ad Revenue
For online publishers, not including the health risks of course, the worst result of the corona pandemic is lower ad revenue. Direct campaigns are on hold clearly, but also the programmatic ad revenue is strongly affected. In the first few days it seemed as if ad revenue is higher. The increase in traffic yielded more ad impressions and many online campaigns were still active.
With the suspension of many campaigns and the drop in demand however, even the higher numbers of ad impressions couldn’t cover for the overall decrease of prices. From initial analysis, the average CPM has lost over 40% of the seasonal prices and in some niches the loss is even higher. Such lower bottom line of ad revenue can be devastating to any publishers, especially if it lasts for more than a couple of weeks, which seems to be a reasonable assessment.
What should publishers do?
Brace for impact! Just like any other business during these turbulent times, publishers should expect lower revenues for at least a few months. This means it’s a great time to lower expenses and plan wisely. In addition, there are several important steps that can improve the programmatic ad sales process to maximize the potential revenue.
Competition and Demand
While always important, in such days it ranks even higher in the priorities for publishers – competition. Publishers want advertisers to compete over their ad inventory, to push prices up. Blank banners show us that there’s no competition, lower prices even more so. Moreover, publishers need more demand sources, like top ad exchanges, to improve the chances that the right demand will meet their users.
Connecting several top demand sources and leveraging the competition into higher prices for online ad inventory is best handled through a combination of header bidding, Google Ad Manager tools, open bidding and good balance of tools – display, video, content recommendation and other specific tools relevant for each website.
Another idea to improve demand is to consider adding content recommendation widgets in new locations. While the price for impressions decreases, as well as the price per click, users spend longer time on the web and search for more traffic. Eye catching links like the premium content recommendations from Outbrain, Taboola or RevContent turn more users into paid-for clicks and add more revenue.
In addition to more demand and competition, publishers are advised to use dynamic pricing methodologies. The online advertising industry was built around advertisers, aiming to get advertisers the best impressions for the lowest price. From the publisher’s perspective, this means lower income.
To increase ad revenue, publishers need to continuously analyze the bids received for their ad space and find the opportunities to set minimum prices. This includes minimum pricing rules per device, content category, type of bidding, advertiser and many more parameters. And then, minimum prices should always find the balance between fill-rate and revenue, going up and down according to demand.
Attention and Monitoring
Lastly, to safely sell through the turbulent days of the corona pandemic, publishers need to give even more attention to their programmatic ad sales data and results. Just as we all follow the health news momentarily, with health facts and governmental instructions changing all the time, publishers need to monitor their ad sales data and results closely.
Everything online changes rapidly, but the speed and volume of changes that the programmatic ads world had seen during this health crisis had surpassed anything we’ve known in the past decade. Even the recommendations in this article are written with caution, as until they meet the world, things may change once more.
Maor Davidovich and Tomer Treves founded Adnimation in 2015 to help publishers earn more from the ads on their websites. As a licensed Google provider and working with all top ad exchanges and networks, Adnimation partners with publishers to manage their ad sales process. Taking the publishers’ corner, Adnimation provides full transparency and offers publishers the Adnimation dashboard, top rates platform and above all – human experts to work closely with publishers. Several hundred of publishers in the USA, Europe and Israel attest to their excellent results.