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.
When surveyed, over 77% of respondents said they want to see advertisements that explain how the brand is providing value and being helpful during this challenging time.These consumers are looking for solutions and are willing to give brands an opportunity to earn their trust.
2. Focus on serving first and selling later
If your marketing was converting a few weeks ago and is now falling flat, the problem isn’t your strategy–it’s your messaging. Given the current climate, prospective customers are not focused primarily on accomplishing goals, relationships, prestige, or social class. Many people are afraid amidst the current uncertainty and are looking to address their basic psychological needs of food, water, warmth, safety, and rest. This is the framework of the basic human needs that was introduced by Maslow in the “Theory of Human Motivation,” published in 1943.
Focus on fine-tuning your marketing message to speak to prospective customers where they are right now. Address their current state and find ways to help them meet their most urgent needs.As you provide immense value and become a resource your customer can trust and depend on, the life cycle of the customer journey begins. Over time, you can introduce products and services that will facilitate a move up the hierarchy, but only after you’ve addressed and assisted in sustaining the essentials.
3. Add and nurture new leads via email to remarket in the future
If your business is service-based, local or online, then it is likely that you send emails to engage your customers. As businesses have been forced to slow down operations or shut down due to the pandemic, the time has never been better to shift your email marketing strategy from sales-focused to value-based communication that targets nurturing both old and new subscribers.
Email marketing has been shown to have an ROI of $44 for every dollar spent on advertising. Leveraging lower advertising costs, you can create an email list building campaign to attract interest in your brand and increase subscriber sign-ups to your customer database. By building a new target audience, you will have the opportunity to remarket to them in the future, which has been reported to increase conversion up to 51%.
An example of this strategy would be companies that sell physical products. Are there any tips you can share that will help customers achieve similar outcomes that your product would yield even if they cannot currently afford to buy from you? Focus on helping people in this time by providing solutions. In the future you can offer your product as an ancillary add-on that helps achieve the goal when you are further along the customer journey.
Fitness clubs have also implemented this strategy by emailing their subscribers workout routines that can be done from the comfort of home while still achieving results; the end goal is to ensure that customers return to the gym at a future date, yet the strategy is to provide value that meets the current need.
4. Be patient with running ads that are performing well
Starting in March 2020, Facebook announced that due to staffing changes, advertisers were to expect errors and delays as the company began relying more on automated advertising review systems. With a strong belief that many other major players in advertising may follow suit, to avoid delays that might cost you revenue in the long term, it is best to extend the delivery period of your best performing ad sets.
So instead of starting a new campaign when making tweaks to your ad, choose to edit your currently running ad as new campaigns are subject to staff review and can be delayed when going live.
5. Create brand awareness by capitalizing on the presence of your online audience
In March, the number of consumers online had been increasing by 20% week over week during the shutdown. We know this means there is an opportunity for advertisers to cost-effectively gain the attention of a larger audience. As we’ve discussed earlier, this is basic supply and demand. Certain companies have seen a 12.7% decrease in CPM from the beginning of the year to March.
Instead of focusing on sales and short-term conversions, advertisers should be providing content that adds value and creates awareness around their brand. These elements can include:
- Solutions in the form of content and/or tools that solve current problems
- Discounts on essential services to alleviate the effects of economic strain
- Free challenges that improve the lives of consumers
- Campaigns to build positive online reviews
This is especially important for local and small businesses who rely on consumer loyalty.
While our current crisis has generated fear and a sense of uncertainty for many advertisers, it has also created an incredible opportunity to build a foundation of consumers who possibly will become loyal to your brand. These are the same customers that will one day need and seek out your product or service, even if they don’t necessarily see a need for it at the present time.
RELATED: Marketing Your Business in a Coronavirus-Affected World
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