8 ms·

The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry

The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry that put all their eggs in the "personalized targeting" bucket, but performance is exceptionally bad now. It kind of makes sense. There are ads for products you can't buy at stores that are closed, for cars you won't need to commute with, insurance you're already not using, other goods that won't ship for a month, and small gadgets that are totally out of stock; and that's assuming the person viewing the ad isn't avoiding spending due to financial risks. If ads aren't converting viewers into customers, it doesn't matter if there are 2x or 20x more viewers than there were before, the ad placements are just worth less.

vsskanth 7y ago
What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ?
- ProAm 7y ago
  Why would you advertise if no one is buying? Unless your maintaining brand recognition you're just wasting money.
- bpodgursky 7y ago
  Maaaybe there's a longer window for brand awareness advertising, but for advertising directed at clickthroughs (most retargeting), advertising that doesn't end in a sale is a wasted ad.
- jldugger 7y ago
  > What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? Not when you're paying per impression? The way to think of this is good old supply and demand. There is a lot more supply of ad slots, and a general decrease in demand. Both of these directly mean lower ad rates.
- ecpottinger 7y ago
  No, once people have time to really look around they discover many of the channels they were subscribing to are not that great. They them move their viewing to more and other channels. Also I noticed a number of the youtube channels I use to watch because they have useful information and I was learning from them have now reached the end of their knowledge. Thy are now posting fluff to try and get me to keep coming back, but I don't want to waste my time watching a 30 minute video to get 5 minutes of useful information. One channel I watch use to only post about 1 hour long videos, now they have cut back and often only post a 5-7 minute video so I keep coming back. One the other hand another channel used to and still posts 1-2 hour long video, I don't bother going there anymore. The host is smart, but he takes too long to get to the point of the video, I have other uses of my time.
  - kombucha111 7y ago
    What channels are you drifting away from?
- adrianmonk 7y ago
  Nobody really knows for sure where the economy is headed when we enter the sorta-normal-again phase. Anything is possible. It might be another Great Depression that takes years to recover from. Or maybe once this external force (quarantine) is removed, things will mostly bounce back. So those advertising dollars might have a good ROI or they might not. At a time when revenue is down (even if just temporarily) and some companies are laying off employees, it doesn't make a lot of sense to spend money on something that might or might not be worthwhile.
  - user5994461 7y ago
    Well, we now know it's not going to get to normal for a while. France has just announced extending the lockdown one full month. UK has just announced they won't end the lockdown in the coming weeks, with no dates formally given (it was expiring today).
    - adrianmonk 7y ago
      I agree we aren't ready to even start the process of getting back to quasi-normal. But the question was about a long-term advertising strategy for "when people eventually spend". I'm saying that "when" isn't a given; instead, it's an "if". Companies (whose cash flow just tried up) don't want to spend on "if".
- tanilama 7y ago
  > wouldn't that lead to a higher ROI when people eventually spend That will depend on whether people will have that money to spend economy bounces back. I am not optimistic, restaurants or hospitality industry are going to suffer for a long time. And Youtube ads are sold upon delivery, I don't think they will be retrospective revenue share, which is impossible (the conversion is intractable).
- gundmc 7y ago
  > In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ? TV as deals are often worked out O(months) in advance. I expect they've seen drops in bookings, but you won't see as agile of a reaction to the pandemic in Television.
  - lotsofpulp 7y ago
    Even though the deals were worked out, unless the money has already changed hands, I'm betting all the terms are up for renegotiation in exigent circumstances like these. I doubt it's in the interest of the broadcasters to stick it to their customers in these times, if they want their customers to stay alive.
    - anticsapp 7y ago
      That's not how sales reps think.
- pheug 7y ago
  > What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? That would lead to lower ROI as operating costs are increased to serve those extra users. Sure, with more users they'll serve more ads, but as total spend by advertisers is shrinking those ads will go off at bargain prices, it's simple math.
- bdcravens 7y ago
  > wouldn't that lead to a higher ROI when people eventually spend ? There is an opportunity now to invest and come out ahead in the long run. Most companies are conserving and cutting back right now, given the uncertainty.
  - Jommi 7y ago
    Yep, many strong companies in competitive niches have become new leaders of the pack when they have combined a financially privileged position with marketing spend in times when others are cutting back.
- jakub_g 7y ago
  From the article: > ...channel traffic, increasing by 15% > ...one in four media buyers and brands have paused all advertising for the first half of 2020, and a further 46% have adjusted their spending downwards > Digital ad spending is down by a third, according to the IAB — a slightly less painful drop than the traditional media’s 39% cut Traffic is up but ad spending is down more than the traffic increase.
  - wolco 7y ago
    Which makes it a great time to advertise if you are brand building.
    - chii 7y ago
      if no one is shopping because they're all cutting back on non-essential spending, brand advertising is useless. You'd want to do the brand advertising right at the cusp of recovery so that your brand is on the minds of shoppers when they finally get back to work and have money to spend.
- code4tee 7y ago
  Most executives are very short term thinkers and thus while your logic makes sense it’s generally not how most people think. They need cash now so they cut first and think later. You’re right that some smart execs will run into the fire as everyone is fleeing, buying up cheap adverts for a long term investment. There are some signs of this with a few companies seemingly increasing spend to take advantage of the cheap prices. Purely anecdotally I noticed a lot more adverts from Scott’s on lawn care products. Their pitch is basically “hey so the lawn care guy is on lockdown... go to our site and we’ll ship you fertilizer and tell you how to apply it.”
  - gruez 7y ago
    off topic: why should they be on lockdown? There shouldn't be any infection risk from a guy working solo outdoors.
    - bryanrasmussen 7y ago
      well there might be risk for the guy traveling from his house to yours. Also there may be other reasons why they think people can't have the lawn guy come by but they think it might not be nice to say, like people laid off still want to keep their lawn looking good but don't want to pay for a guy to come do it.
    - myself248 7y ago
      Because it's apparently hard for the people writing the lockdown orders to differentiate between a solo lawn guy or gardener, and a four-dudes-in-one-pickup lawn crew.
      - bluGill 7y ago
        The same 4 guys in the truck are low risk so long as they never mix crews.
    - kaitai 7y ago
      Some states are looking at easing restrictions on lawncare/landscaping/etc. To all the folks saying "4 guys in a truck is low-risk" that's only true if they're the same 4 guys every time and they're not all living with other people... for instance if one lives with a nurse and another with a nursing-home health aide, then, well, not so great, huh.
raverbashing 7y ago
I think this is visible even as a consumer. Lately I've been seeing a lot of (allegedly) dropshipping advertisements for "home gym" equipment, from "brands"/"stores" with no recognition. Sure I'll buy this from you. Especially something that's heavy and from an ad teaming with jpeg artifacts and a non-local currency. I'm sure I won't pay an arm and a leg for shipping and I'll have no issues with a brand that has 3 posts on instagram.
jimbob45 7y ago
Side question: are the car insurance paybacks not a canary that they’re hitting their max possible profit? Aren’t they doing extremely well?
- vsskanth 7y ago
  Apparently car insurance companies are regulated in the sense that they can only charge based on the risk they are taking. since accidents are down, they might be charging too much and have to refund. So I guess profit margins are more or less constant. That doesn't however stop you from acquiring more customers and increasing absolute profit.
  - jakub_g 7y ago
    It's already happening in US: https://www.npr.org/sections/coronavirus-live-updates/2020/04/06/828187071/some-auto-insurers-are-sending-refunds-to-customers-as-crash-rate-falls https://www.npr.org/sections/coronavirus-live-updates/2020/0... Also in France one big insurer started paying people back, with government asking the other companies to do the same. https://www.lemonde.fr/economie/article/2020/04/02/coronavirus-les-accidents-de-la-route-sont-en-forte-baisse-la-maif-rend-100-millions-d-euros-a-ses-assures_6035337_3234.html https://www.lemonde.fr/economie/article/2020/04/02/coronavir...
  - SubparUser 7y ago
    This pretty of close, but a little off. You are correct that they are heavily regulated because auto insurance is mandated by law, but mainly pertains to what they are allowed to charge for. In the US, each state has a DOI that checks over models that car insurance companies use to charge people. There are a lot of rules about what can and can not be rated on. T̶h̶e̶r̶e̶ i̶s̶n̶t̶ r̶e̶a̶l̶l̶y̶ a̶ l̶e̶v̶e̶r̶ f̶o̶r̶ 'I̶ w̶a̶n̶t̶ t̶h̶i̶s̶ m̶u̶c̶h̶ p̶r̶o̶f̶i̶t̶' o̶t̶h̶e̶r̶ t̶h̶a̶n̶ t̶h̶e̶ b̶a̶s̶e̶ r̶a̶t̶e̶ t̶h̶e̶y̶ c̶h̶a̶r̶g̶e̶. Edit: (The comment below me is correct. I was getting a little hand-wavy. In general every part of a insurance plan will be scrutinized and has to be well supported. Insurance companies need to justify why there is a surcharge for some characteristic of a policy, this is what stops companies from just raking in money) They have to make an argument to the DOIs for why their base rate is what it is, so they cant really increase it for no reason. The other comment in response about loss ratio is correct
baybal2 7y ago
> The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry that put all their eggs in the "personalized targeting" bucket, but performance is exceptionally bad now. You couldn't have said it better
dredmorbius 7y ago
Newspapers are being hammered. Local big-city paper ran several days with virtually no ads. Sport and Entertainment sections still carry none, though a few are appearing in the news and. business pages. And of course, obituaries -- or as they're called in the biz, "former subscriber appreciations". Even the Sunday edition inserts were reduced to a single druggist's circular. Even with increased eyeballs, ad buys are likely down and both business and people are avoiding all possible expenditure.
cecja 7y ago
There is a difference between shitty seo and online marketing and advertising.
ozim 7y ago
I see it as an opportunity for smaller businesses to be noticed. People will check stuff online and might notice your brand... Though yeah you would have to stand out to be remembered.
- drdeadringer 7y ago
  It doesn't even have to be advertising in newspapers. I live a block away from a shopping complex; the "anchor store" is a chain grocery but there are other businesses ranging from restaurants, drycleaners, a smoke shop, an alcohol store, and so forth. There is a local movie theater in this complex. It is obviously shuttered due to COVID19; no audience means no movies means no popcorn, &c. So their marquee "should" be blank or say "Closed". Instead, they are using their road-side marquee to advertise who in the complex is opened for take-out. I don't know if this is out of "solidarity" or if they're getting a trickle of money for an otherwise unused resource, but I'm fine about it either way.
dillondoyle 7y ago
AND it's an amplifying effect. Lower ad spend + more impressions available = double amplified lower CPMs

vsskanth 7y ago

What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ?

ProAm 7y ago
Why would you advertise if no one is buying? Unless your maintaining brand recognition you're just wasting money.
bpodgursky 7y ago
Maaaybe there's a longer window for brand awareness advertising, but for advertising directed at clickthroughs (most retargeting), advertising that doesn't end in a sale is a wasted ad.
jldugger 7y ago
> What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? Not when you're paying per impression? The way to think of this is good old supply and demand. There is a lot more supply of ad slots, and a general decrease in demand. Both of these directly mean lower ad rates.
ecpottinger 7y ago
No, once people have time to really look around they discover many of the channels they were subscribing to are not that great. They them move their viewing to more and other channels. Also I noticed a number of the youtube channels I use to watch because they have useful information and I was learning from them have now reached the end of their knowledge. Thy are now posting fluff to try and get me to keep coming back, but I don't want to waste my time watching a 30 minute video to get 5 minutes of useful information. One channel I watch use to only post about 1 hour long videos, now they have cut back and often only post a 5-7 minute video so I keep coming back. One the other hand another channel used to and still posts 1-2 hour long video, I don't bother going there anymore. The host is smart, but he takes too long to get to the point of the video, I have other uses of my time.
- kombucha111 7y ago
  What channels are you drifting away from?
adrianmonk 7y ago
Nobody really knows for sure where the economy is headed when we enter the sorta-normal-again phase. Anything is possible. It might be another Great Depression that takes years to recover from. Or maybe once this external force (quarantine) is removed, things will mostly bounce back. So those advertising dollars might have a good ROI or they might not. At a time when revenue is down (even if just temporarily) and some companies are laying off employees, it doesn't make a lot of sense to spend money on something that might or might not be worthwhile.
- user5994461 7y ago
  Well, we now know it's not going to get to normal for a while. France has just announced extending the lockdown one full month. UK has just announced they won't end the lockdown in the coming weeks, with no dates formally given (it was expiring today).
  - adrianmonk 7y ago
    I agree we aren't ready to even start the process of getting back to quasi-normal. But the question was about a long-term advertising strategy for "when people eventually spend". I'm saying that "when" isn't a given; instead, it's an "if". Companies (whose cash flow just tried up) don't want to spend on "if".
tanilama 7y ago
> wouldn't that lead to a higher ROI when people eventually spend That will depend on whether people will have that money to spend economy bounces back. I am not optimistic, restaurants or hospitality industry are going to suffer for a long time. And Youtube ads are sold upon delivery, I don't think they will be retrospective revenue share, which is impossible (the conversion is intractable).
gundmc 7y ago
> In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ? TV as deals are often worked out O(months) in advance. I expect they've seen drops in bookings, but you won't see as agile of a reaction to the pandemic in Television.
- lotsofpulp 7y ago
  Even though the deals were worked out, unless the money has already changed hands, I'm betting all the terms are up for renegotiation in exigent circumstances like these. I doubt it's in the interest of the broadcasters to stick it to their customers in these times, if they want their customers to stay alive.
  - anticsapp 7y ago
    That's not how sales reps think.
pheug 7y ago
> What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ? That would lead to lower ROI as operating costs are increased to serve those extra users. Sure, with more users they'll serve more ads, but as total spend by advertisers is shrinking those ads will go off at bargain prices, it's simple math.
bdcravens 7y ago
> wouldn't that lead to a higher ROI when people eventually spend ? There is an opportunity now to invest and come out ahead in the long run. Most companies are conserving and cutting back right now, given the uncertainty.
- Jommi 7y ago
  Yep, many strong companies in competitive niches have become new leaders of the pack when they have combined a financially privileged position with marketing spend in times when others are cutting back.
jakub_g 7y ago
From the article: > ...channel traffic, increasing by 15% > ...one in four media buyers and brands have paused all advertising for the first half of 2020, and a further 46% have adjusted their spending downwards > Digital ad spending is down by a third, according to the IAB — a slightly less painful drop than the traditional media’s 39% cut Traffic is up but ad spending is down more than the traffic increase.
- wolco 7y ago
  Which makes it a great time to advertise if you are brand building.
  - chii 7y ago
    if no one is shopping because they're all cutting back on non-essential spending, brand advertising is useless. You'd want to do the brand advertising right at the cusp of recovery so that your brand is on the minds of shoppers when they finally get back to work and have money to spend.
code4tee 7y ago
Most executives are very short term thinkers and thus while your logic makes sense it’s generally not how most people think. They need cash now so they cut first and think later. You’re right that some smart execs will run into the fire as everyone is fleeing, buying up cheap adverts for a long term investment. There are some signs of this with a few companies seemingly increasing spend to take advantage of the cheap prices. Purely anecdotally I noticed a lot more adverts from Scott’s on lawn care products. Their pitch is basically “hey so the lawn care guy is on lockdown... go to our site and we’ll ship you fertilizer and tell you how to apply it.”
- gruez 7y ago
  off topic: why should they be on lockdown? There shouldn't be any infection risk from a guy working solo outdoors.
  - bryanrasmussen 7y ago
    well there might be risk for the guy traveling from his house to yours. Also there may be other reasons why they think people can't have the lawn guy come by but they think it might not be nice to say, like people laid off still want to keep their lawn looking good but don't want to pay for a guy to come do it.
  - myself248 7y ago
    Because it's apparently hard for the people writing the lockdown orders to differentiate between a solo lawn guy or gardener, and a four-dudes-in-one-pickup lawn crew.
    - bluGill 7y ago
      The same 4 guys in the truck are low risk so long as they never mix crews.
  - kaitai 7y ago
    Some states are looking at easing restrictions on lawncare/landscaping/etc. To all the folks saying "4 guys in a truck is low-risk" that's only true if they're the same 4 guys every time and they're not all living with other people... for instance if one lives with a nurse and another with a nursing-home health aide, then, well, not so great, huh.

raverbashing 7y ago

I think this is visible even as a consumer. Lately I've been seeing a lot of (allegedly) dropshipping advertisements for "home gym" equipment, from "brands"/"stores" with no recognition. Sure I'll buy this from you. Especially something that's heavy and from an ad teaming with jpeg artifacts and a non-local currency. I'm sure I won't pay an arm and a leg for shipping and I'll have no issues with a brand that has 3 posts on instagram.

jimbob45 7y ago

Side question: are the car insurance paybacks not a canary that they’re hitting their max possible profit? Aren’t they doing extremely well?

vsskanth 7y ago
Apparently car insurance companies are regulated in the sense that they can only charge based on the risk they are taking. since accidents are down, they might be charging too much and have to refund. So I guess profit margins are more or less constant. That doesn't however stop you from acquiring more customers and increasing absolute profit.
- jakub_g 7y ago
  It's already happening in US: https://www.npr.org/sections/coronavirus-live-updates/2020/04/06/828187071/some-auto-insurers-are-sending-refunds-to-customers-as-crash-rate-falls https://www.npr.org/sections/coronavirus-live-updates/2020/0... Also in France one big insurer started paying people back, with government asking the other companies to do the same. https://www.lemonde.fr/economie/article/2020/04/02/coronavirus-les-accidents-de-la-route-sont-en-forte-baisse-la-maif-rend-100-millions-d-euros-a-ses-assures_6035337_3234.html https://www.lemonde.fr/economie/article/2020/04/02/coronavir...
- SubparUser 7y ago
  This pretty of close, but a little off. You are correct that they are heavily regulated because auto insurance is mandated by law, but mainly pertains to what they are allowed to charge for. In the US, each state has a DOI that checks over models that car insurance companies use to charge people. There are a lot of rules about what can and can not be rated on. T̶h̶e̶r̶e̶ i̶s̶n̶t̶ r̶e̶a̶l̶l̶y̶ a̶ l̶e̶v̶e̶r̶ f̶o̶r̶ 'I̶ w̶a̶n̶t̶ t̶h̶i̶s̶ m̶u̶c̶h̶ p̶r̶o̶f̶i̶t̶' o̶t̶h̶e̶r̶ t̶h̶a̶n̶ t̶h̶e̶ b̶a̶s̶e̶ r̶a̶t̶e̶ t̶h̶e̶y̶ c̶h̶a̶r̶g̶e̶. Edit: (The comment below me is correct. I was getting a little hand-wavy. In general every part of a insurance plan will be scrutinized and has to be well supported. Insurance companies need to justify why there is a surcharge for some characteristic of a policy, this is what stops companies from just raking in money) They have to make an argument to the DOIs for why their base rate is what it is, so they cant really increase it for no reason. The other comment in response about loss ratio is correct

baybal2 7y ago

> The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry that put all their eggs in the "personalized targeting" bucket, but performance is exceptionally bad now. You couldn't have said it better

dredmorbius 7y ago

Newspapers are being hammered. Local big-city paper ran several days with virtually no ads. Sport and Entertainment sections still carry none, though a few are appearing in the news and. business pages. And of course, obituaries -- or as they're called in the biz, "former subscriber appreciations". Even the Sunday edition inserts were reduced to a single druggist's circular. Even with increased eyeballs, ad buys are likely down and both business and people are avoiding all possible expenditure.

cecja 7y ago

There is a difference between shitty seo and online marketing and advertising.

ozim 7y ago

I see it as an opportunity for smaller businesses to be noticed. People will check stuff online and might notice your brand... Though yeah you would have to stand out to be remembered.

drdeadringer 7y ago
It doesn't even have to be advertising in newspapers. I live a block away from a shopping complex; the "anchor store" is a chain grocery but there are other businesses ranging from restaurants, drycleaners, a smoke shop, an alcohol store, and so forth. There is a local movie theater in this complex. It is obviously shuttered due to COVID19; no audience means no movies means no popcorn, &c. So their marquee "should" be blank or say "Closed". Instead, they are using their road-side marquee to advertise who in the complex is opened for take-out. I don't know if this is out of "solidarity" or if they're getting a trickle of money for an otherwise unused resource, but I'm fine about it either way.

dillondoyle 7y ago

AND it's an amplifying effect. Lower ad spend + more impressions available = double amplified lower CPMs