Richard Marques

Audiences are up, advertising is down. How publishers can survive the coronavirus paradox. With the vast majority of people living under “stay at home” / “shelter in place” orders, digital publishers are experiencing huge spikes in their audiences. But those audiences are becoming increasingly difficult to monetize due to an unprecedented and broad-based retreat from brand advertising. As a result, digital publishers face a strange and terrifying paradox. Here’s how those publishers can survive the present paradox and continue to put out content that keeps people informed, entertained, and connected. What’s happening to the advertising market Last year, advertisers around the globe spent more than $300 billion on digital advertising, according to eMarketer. But while digital spending has outpaced other channels in recent years (a remarkable tipping point for an industry only two decades old), the fact of the matter is that what happens online is inextricably linked to what happens offline. The effect of canceling live sports, televisions shows, and other events that brands use to anchor their advertising spends has had a ripple effect up and down the demand-side. Here’s how The New York Times recently described the economic fallout in the advertising industry. “Companies that spent big to get the word out about their products before the pandemic have hit the brakes. Facebook has described its advertising business as ‘weakening.’ Amazon has reduced its Google Shopping ads. Coca-Cola, Kohl’s and Zillow Group have stopped or limited their marketing. Marriott’s advertising, in the words of the company’s chief executive, has ‘gone dark.’” While advertising—and by extension—publishing have always been sensitive to economic downturns, this moment represents a unique crisis for both industries. In past economic downturns, some sectors thrived as other struggled. In 2008, for example, many of the brands that competed for disposable income or were heavily tied to housing did slash their budgets, or even take a brief pause from advertising. But those brands that catered to budget-conscious shoppers or sold essential goods and services saw an opportunity—and as a result, their advertising spends helped stabilize the overall market for digital inventory, even if the overall industry had a rough few years. But this time around, with nearly everyone staying home, no sector looks particularly strong. A recent eMarketer article chronicled some of the damage. The article cited an IAB survey of brand advertisers that found that nearly half of the respondents (44 percent) believed that the coronavirus would have a “substantially more negative impact” on advertising than the 2008 economic downturn. Meanwhile, the eMarketer analysis also cited an Advertiser Perceptions survey that found that almost nine in 10 advertisers said they had taken some type of action. Those actions that were most common included holding back a campaign that was set to launch later in the year (49 percent), changing media or shifting budgets among media (48 percent), and stopping a campaign mid flight (45 percent). What does this mean for publishers? As some of the largest brand advertisers pull back their budgets, the demand for display inventory has cratered. Publishers are feeling the pain of low programmatic revenue and low fill rates. In a nutshell, publishers are reaching unprecedented numbers of people at this moment, but they’re struggling more than they ever have to turn those audiences into revenue because the inventory is either going for far less than it did before the crisis began, or it's going unsold. In the short-run, this is a huge challenge for publishers who must normally contend with a low-margin business. But as time goes on, the collapse of the advertising market is going to become a broader concern for the viability of those publishers. Eventually, if the bleeding goes unchecked, many digital publishers may be unable to continue doing the vital work of keeping audiences informed and entertained as we all grapple with the challenges of social distancing. Why is performance thriving right now? In many ways, we’ve become a digital-first society almost overnight. Many of those who are fortunate to still be employed are working from home via video-conferencing apps and other remote working solutions. For all of us, the internet has become our conduit to entertainment, news, social interactions, food, shopping, and even medical care. We still need goods and services, but what we need and how we make our purchases has changed dramatically in recent weeks. So, as we become dependent on e-commerce, advertisers that are meeting changing consumer demands are doing so by turning to performance-driven strategies. Why is this? For advertisers that have goods and services to sell in this changing business environment, performance-driven campaigns that leverage CPA make a lot sense in the face of so much uncertainty. Yes, low CPMs give advertisers the chance to reach large audiences at a deep discount, but there’s no telling whether or not those audiences will convert. On the other hand, advertisers can find certainty by focusing on CPA campaigns, where they only pay for what works. What kinds of advertisers are we talking about? While there’s widespread economic hardship right now, one way to look for bright spots is to think about companies that sell products and services that have a strong social distancing component built into their products. There are some obvious bright spots like food and meal delivery services as well as digital entertainment, and products that power distributed workforces. But more broadly, direct-to-consumer brands as well as a variety of essential local businesses are finding that direct response is a reliable method for developing leads. How publishers can meet the demand for performance-driven marketing Advertisers who leverage a direct response model can be a life-line for publishers in this moment. At the very least, publishers that are struggling should take the opportunity to plug a CPA ad unit into their existing supply-side stack. In many instances, publishers may even want to increase the visibility of those CPA units, depending on performance, of course. That can be accomplished rather easily by moving the CPA ad unit higher up on the page, increasing its overall dimensions, or even adding more units. The key, however, is that just like their advertising partners, publishers must quickly shift their businesses to put a laser-focus on what’s working in the present moment. Uncertainty will be with us for the foreseeable future. Stay flexible. Nobody knows how long this unprecedented health crisis will last, how much human and economic pain it will inflict, or how it will change society in the long-run. At best, we can only make projections, but in all likelihood those projections probably won’t prove to be all that accurate since the timeline is uncertain and the problems we’re facing are so dynamic. As a result, coronavirus and the need for social distancing make it nearly impossible for companies to plan for the rest of 2020, let alone beyond. That uncertainty is further compounded by the regionalism of this fight. As of this writing, some Americans are entering their fourth week of stay at home orders, while others are just beginning the process. Around the globe, a similar story is playing out, with some nations in the throws of crisis, others looking ahead at a very rough couple of weeks, and still others experiencing what is hopefully the downward slope of the curve. How should publishers confront such widespread uncertainty? Like any other business, publishers that remain flexible stand a better chance of weathering an uncertain storm. Shifting focus to serve the growing demand of direct response advertisers is a good start, but publishers need to meet that demand with maximum flexibility. Instead of working with ad tech partners that insist on long-term contracts, publishers should embrace plug-and-play solutions that don’t lock them into unsustainable or uncertain business models. It’s possible that some brand advertising will return sooner than we think, but it’s also possible that social distancing will transform society by accelerating a trend toward remote work. Neither one of these possibilities, however, is something a publisher can afford to place a big bet on at the moment. Instead, publishers should focus on the present, and as they make the necessary changes to their business, they should do so with one eye on performance and the other eye on flexibility.

Richard Marques

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