Global Ad Rates and Publishing Trends in 2020

Pandemic crushes economy and global ad rates

When the pandemic first made itself apparent in the Americas and Europe back in mid-March, the world began shutting down—people were advised to not leave their homes and schools and businesses closed. This directly translated into how businesses spent their money.

Advertising is one of the first things companies will pull when times are tough. This is because ads are one of the most flexible spend categories, especially online spending, as commitments do not tend to be long and pulling campaigns is as simple as a few clicks.

It’s always a safe assumption that in a declining economy you also see a deceleration in ad spending.” 

– Brian Wieser, Global President of Business Intelligence at GroupM.

Looking back at March and April, according to the Ad Revenue Index, the response to this global shutdown was an average of a 26% reduction in ad rates in the US. This greatly affected marketing budgets, especially for digital and mobile, which had positive growth prior to April.

Going back to the beginning

During this time, internet use at the end of March was up 71%, which was even before the United Kingdom or India initiated lockdowns. The increased usage wasn’t enough to counterbalance the reduction in ad spend. The reduction in ad spend and increase in traffic put many publishers in an unfortunate situation, where there was a large audience but plenty of ad space to fill with very little supply coming in.

In a report published in late March, the IAB announced that digital ad spend was down 33% and that it was expected that ad spend in display advertising was to decrease by 41% overall for March and April.

While many publishers felt the fluctuations in early-mid March, all publishers were largely seeing lower CPMs and revenue per visitor from advertising by the start of April. This signaled not only the start of a new month in the pandemic, but also the end of Q1, a time when ad rates will naturally slide due to campaign budgets ending.

These sites about theater and events, retail sales and couponing, travel, food, and history all saw major decreases in revenue at the same time, and are only now recovering. Many alike verticals suffered similarly.

In some cases, publishers lost both revenue and traffic. Educational sites, travel, entertainment, sports, events, and workplace references saw some of the steepest declines in overall pageviews.

For example, this site is a rodeo event site. As rodeos around the country cancelled their events, this site experienced massive decreases in both traffic and revenue. Comparing this rodeo site’s revenue during the first five months on Ezoic to the past five months, revenue has dropped 57%.

In the same time period, its traffic decreased by 46%. Part of this sites’ tumultuousness is that many states that host rodeos, like Texas, continue to have some of the highest coronavirus rates. Rodeos and other large events are not likely to make a comeback any time soon.

Bad ad rates were especially compounded by many companies’ keyword blocking. Many brands did not, and still do not, want their brands associated with the pandemic and so have kept their advertisements from showing up next to content with pandemic-like words, even though it is the most prevalent topic right now.

Pandemic crushes economy and global ad rates

Not only this, but Amazon cut affiliate rates right in the middle of the worst part of the pandemic. Publishers that were relying on other sources of revenue, like affiliate, were hit once more.

Many rates were cut over by more than half and publishers who already may have suffered from lower ad rates were hit once more.

This [Amazon Associates] program helped them build their dominance, but they just don’t need to pay out anymore. It will have zero revenue repercussions for their business and the savings will drop straight to the bottom line.” 

– Greg Mason, the former CEO of Purch.

Respondents in a survey of publishers using Ezoic signaled that April was the worst month for ad rates, followed closely by March and May. Many were also affected by affiliate rate cuts.

In the same survey, most publishers reported their programmatic revenue was down by 25-50%, though 17% of respondents reported that their revenue had decreased by 75-100% in 2020.

The Google Core Update in May was also a major disruption to publishers. The categories that saw the highest rank volatility were travel, retail, finance, health, family and community, beauty and personal care, internet and telecom, vehicles, and law enforcement.

Many publishers are still trying to recover from this core update.

“The update was geared towards boosting university, government, and scientific sites above independent publishers, pushing many out of their rankings and decreasing traffic and revenue,” said John Cole, CCO of Ezoic.

The update seemed to be in direct response to how greatly coronavirus was affecting SERPs.

“It’s likely that searcher behaviors have been changing so rapidly due to the pandemic. To adapt, we’ve seen Google testing a wide array of search results. Much more than what we typically see.”

 – Allen Longstreet, Content Marketing Manager at Ezoic.

This was especially true for local news and accurate coronavirus information. A minor update in April 2020 was geared towards local news rankings, which were more likely to be buried underneath larger news sites during the pandemic. Additionally, Facebook invested $100 million in the news industry in April, in addition to the $100 million it pledged to 30,000 small businesses across the world that were negatively impacted by the pandemic.

Search behavior is perhaps one of the most interesting aspects of online activity during coronavirus. Topics around social distancing, working from home, video conferencing, staycations, and at-home activities like exercise and cooking saw major increases in search.

Despite all of the rapid changes, publishers began to see ad rate improvement throughout May and June, as ad rates slowly began to recover as many countries and states within the U.S. lifted lockdown restrictions and businesses began to reopen. Ad spend in categories that had previously suffered began seeing increases once more, including Travel, Shopping, and Health & Fitness.

These increases and confidence in the overall market began to show in the U.S.’s Ad Revenue Index throughout June, when ad rates finally resembled 2019’s, even surpassing at points.

July has proven to be more promising, with ad rates reaching levels even greater than last year; according to eMarketer, overall ad spending is now increasing despite the pandemic. However, at 2.4%, there has never been growth in the single digits and it is the lowest rate of growth on record. At $332.84 billion, ad spending is $36.11 billion below its original, pre-pandemic forecasts.

 Additionally, looking towards the future with too much optimism based on June and July could leave many publishers unprepared for slower times again or disappointment. There may be an upcoming drop in the economy once more when government-funded unemployment benefits expire.

“I don’t think we can look at June and July and say it’s a forward-looking trend,” said Ray Jenkin, North American CEO of Hybrid Theory. “I don’t think we’re going to see a return to full-blown pause, but we will see some cautiousness.”

International effects of the pandemic on global ad revenue

In Italy, Spain, France, Germany, and the United Kingdom in H1, total ad spending was down 46.2% when compared to H1 of 2019. As for many countries, this was especially bad in April, when advertisers pulled major portions of their advertising.

If we look more closely at specific countries’ responses to COVID-19, the success of their markets, and ad rates, we can see there is a direct correlation between the three.

“How well COVID-19 is being suppressed in any one market or country is the key to knowing if your own geographic location will have ad rates and ad competition bounce back.” 

– John Cole

Additionally, most ad rates follow the market.

Looking at the U.S. Ad Revenue Index and comparing it to the NASDAQ, you can see both have the same pattern. The NASDAQ is the most tech-heavy it has ever been, with stocks like Facebook, Apple, Microsoft, Amazon, and Tesla rallying, which is likely why the Ad Revenue Index looks similar.

Companies’ investments and advertising have mostly followed Coronavirus trends and how well it is contained. This is why in April, when Coronavirus rates were hitting a high and businesses were required to shut down, ad rates also dropped.

“Major companies correlate with confidence in the future, not in the reality of how well the companies are doing,” said Cole. “It’s the same with ad rates. Advertisers who think no one will spend any money aren’t going to advertise online. If they are confident that they’ll get ROI, those same advertisers will invest. The Ad Revenue Index is akin to our own confidence levels in our economies, split by geography.”

This is especially evident in India right now, as ad rates have still not fully recovered. India’s coronavirus rates have been steadily increasing since March, though did not experience the major increase of cases in April like much of the rest of the world. India is only now seeing a steep increase in cases, which is affecting businesses and thus ad rates.

India is already a lower eCPM environment and with uncertainty about whether the pandemic can be held in check is holding rates back, ad rates have remained low.

France locked down around March 8th and the economy quickly followed. As seen below, France’s ad rates follow the CAC40. Once the economy began plummeting, so did its ad rates.

Since then, France has reopened parts of the economy and stopped the severe lockdown, and both the CAC40 and ad rates have risen. Rates in France are still slowly recovering to pre-pandemic levels, though ad rates were, on average, down 12% for the first 21 days of July in 2020 when compared to 2019.

“Ad rates are a bit lower in France because the market is behind, as we have a smaller segment of industry that knows about programmatic, and because our GDP is less influential,” – Kevin Le Fol, Ezoic’s French team lead.

Though France fared worse than Germany through April and May, they both follow the same trends and began seeing more recovery around the same time at the beginning of June. This is, in part, to a major economic deal between France and Germany reached only earlier this month.

“The negotiation is targeted at the second wave financial crisis in the EU that will likely follow through the end of the year. France and Germany will bring €500 billion that will be injected into the EU in order to sustain some countries and help growth,” said Le Fol.

Though Germany has seen the same struggles as France, it did not experience quite the same fluctuation. This is likely due to their shorter lockdown period and low death rates. Below, you can see how German ad rates follow the DAX and that ad rates have seen greater growth than France.

What’s more, German news publishers, many of which were still seeing much higher print circulation than most other countries, were able to pivot alongside these trends to capitalize in many cases as ad rates recovered. This means an increase in demand that may actually end up driving more digital budgets into these new opportunities.

“Publishing houses unanimously told us that projects — especially digital ones — that had been under consideration for months or even years were suddenly successfully implemented within a few weeks.”

 – Anja Pasquay, Press Officer at Germany’s BDZV

Trends affected by coronavirus

More than two thirds of the United States’ digital ad spending will be allocated to mobile in 2020, though the increase is only projected to be 4.8%, whereas it was 23% last year and was originally forecasted to be 20.7% in 2020.

The majority of mobile ad spending’s success is due to social media, gaming, and streaming video apps, whereas location-based advertising has not held up.

Time spent on smartphones has increased globally and is especially driven by younger generations. The greatest amounts of time were originally, back in March, spent on WhatsApp, Facebook/Facebook Messenger, and Instagram increases.