COVID-19 made inventory stand idle. Is dumping the only way out?
Panic has taken its toll. Fear forces us to settle for inherently unfavorable terms to avoid unwanted consequences. While the media fosters anxiety among businesses, they also start doubting their growth in the post-corona world, with some of them even questioning their odds of survival. Similar to how humans stay home and self-isolate, brands turn on saving mode and drastically cut their ad spends.
According to a recent report, in some verticals like tourism or sports, ad spend dropped by up to 65% during the lockdown. And 24% of surveyed advertisers paused their advertising campaigns completely. The majority of brands who haven’t curtailed their advertising completely plan to cut their ad spend even more during June.
For publishers, this doesn’t do any good.
An overall trend for a global decrease in ad spends means that advertisers buy less inventory and avoid costly placements. The first reaction of the sell players is to drop price floors and try to sell again at a lower cost. Average display CPMs are down over 40% across all formats; the supply of ads has increased; mobile web and video have been heavily discounted.
Dumping is indeed the most obvious choice, yet not the most effective strategy a publisher can follow in terms of revenue. Upon closer inspection, we discovered some secret passages to crawl out of the income pothole dug by the coronavirus.
Smart inventory expansion: update ad formats instead of just offering more inventory
Another seemingly attractive strategy is to increase the number of available placements on your website. Even a 5-minute reflection on this idea will make you roll it back. What could be worse than a site with a 60:40 ad-to-content ration or even more?
Smart publishers might want to reconsider the ad formats they’re offering on their pages instead of just setting more generic display slots. Recent research showed that video suffered much less than display, with CPMs on desktop web remaining flat and dropping up to 15-20% on mobile apps and mobile web. As for video demand, around half of consumers report watching more video content during the outbreak than before.
Maybe you don’t have any videos on your website. Not a problem! Instead of adding pre-roll and mid-roll inventory in the video player, utilize outstream video ad formats. These video ads don’t require you to have a video player and can be natively integrated into your content, placed over other page elements, or slide in from beyond the screen without interrupting your display slots. Another plus: they’re easier to set up, as you can use a ready-made template and paste it into your website’s code.
Another ad format to look at is rich media. Despite its higher price, advertisers are increasingly turning to rich media due to its ability to deliver 267% higher CTR than average banners. The tricky part with rich media is that not all publishers support this format: it may cause latency and is harder to implement than display.
The increased revenue from this format is the greatest motivator to buck up and just do it. Rich media is expensive yet in high demand because of its indisputable benefits for advertisers. An average CPM for rich media was 107.66% higher than display placements, as stated in the Adform RTB Trend report.
Diversifying demand and channels
Don’t put all your eggs in one basket. That’s rule #1 of each smart investor. Work on your connections: the more reliable partners you have now, the less likely you’ll get nothing in the end.
If you own multiple websites and apps, find the best-performing ones, and focus on them to mitigate losses from other sources. Your audience spends more time in-app (and they do, 20% more) — fine, manage to find partners that need primarily in-app traffic, and offer more inventory on your app instead of on the website.
If you have a single website or app, try to scale up your partner network or finally connect to a quality pool of advertisers via several SSPs, if you still haven’t done so already. Fifty advertisers bidding on your inventory create more competition than just 10, therefore your revenue per impression increases.
Publishers with large inventory volumes should consider buying a white-label SSP to avoid data exposure and a higher risk of fraud resulting from more SSPs reselling your inventory instead of selling just one. With a white-label SSP, you connect to known partners, eliminating the risks bore by self-serve SSPs and making a fair price for each ad impression instead of paying an extra fee to the ad tech provider.
Ensure that your SSP supports 1st-price auctions. Thus, you’ll always sell your inventory for the best available price instead of the second-best price + $0.01.
Adapting to the surge in programmatic guaranteed and direct deals
Smart brands seek higher-quality inventory rather than just expand their reach. ROI for one premium spot almost always overrides ROI for unknown display slots. Many mid-sized advertisers decreased their overall investment in paid media. But, 32% of them increased their spending on direct and programmatic guaranteed (PG) deals, according to Adomik.
For publishers, it means that you’ll be able to dictate fixed prices for your placements. It might not be extremely lucrative, but you’ll be sure that the inventory is filled by a particular advertiser. In open RTB, you’ll never be sure whether the demand partners meet your price floor.
In oRTB, you dump or die. In PG, you talk to people and live an acceptable scenario.
Aside from adding PG into your media mix, it’s time to get back to our good old direct deals. Those are traditionally associated with premium placements, high CPMs, and great ad campaign results for both sides. Programmatic adepts often picture direct in a bad light, accusing publishers who still haven’t adopted automated media selling in being sluggish and ineffective. This is usually a biased pretense that has nothing to do with reality.
Today’s white-label ad servers, which are not inherently programmatic, offer even more optimization opportunities than white-label SSPs. You can utilize both 3rd-party derived from a DMP and 1st-party data gathered from your app or website (sweet deal, especially after Google announced it would phase out 3rd-party cookies).
Next, it’s possible to integrate the platform with a 3rd-party analytics platform and use pricing models other than just CPM, which is quite relevant for app developers. Advanced servers may also act as an SSP, so you don’t have to be torn between several platforms and keep both direct and programmatic under one roof instead.
Refreshing, right? Now you might want to review your ad tech stack and settle for the most effective solution based on your crisis response strategy.
Surviving in the failing vertical: two scenarios
Some companies had especially rough times during the lockdown. For example, if you own an airline ticket aggregator or sports betting service, your fill rates couldn’t even reach half in the recent days.
In this case, there are two scenarios you should consider. The first one is what we already observed: those who were affected are on the mend, countries are loosening quarantine, and people are eager to get out of their homes and return to activities they missed during the recent months.
Thus, you’ll likely experience a surge in visitors in summer, with advertisers rebalancing their ad spend toward your vertical again. It’s explained by the prevailing consumer intentions: 49% of consumers consider travel as the first thing they’ll spend money on when this is over, and about the same will favor out-of-home entertainment, as reported in Epom’s guide mentioned above.
The worst scenario might be served in the long term. If the pandemic strikes back during the fall, and if the vaccine invented isn’t as effective as we hoped, then countries will likely close borders and restrict business activities again.
Here, publishers need a more thorough revamp in their business and adapt their offerings to the changing market. Or, if their websites are purely informational, produce relevant content that resonates with visitor’s concerns and intentions. It’s a simple truth that’ll help you increase organic traffic and provide more impressions for advertisers. Especially when it’s not a problem since many people are ready to consume more content to find answers to their troublesome questions.
Lastly, expert predictions are on your side. This is not a 2008-2009 recession, which was caused by the fundamental imbalances in the world economy. That one affected every single vertical evenly, while the COVID-19 crisis event triggered the growth of some industries. Thus, a decline has a chance to be V-shaped and followed by a quick recovery projected for the mid-summer period.