Coronavirus and digital media industry trends: 4/10/20

In the second quarter’s first full week, we’re seeing RPMs flattening, changes in advertiser spending by category and new weekly traffic trends.

What we’re seeing with ad spending and traffic trends

Overall advertising trends

Like we discussed last week, the beginning of Q2 always drops off from the end of Q1, but as we expected, this year’s drop was even more pronounced. Because the Coronavirus pandemic has introduced so much uncertainty into the industry, we knew we would see substantial drops in the first week of April and were preparing for two scenarios from there: continued drops throughout the month or a relatively flat trend. 

Now that we have over a full week of data for Q2, we’re able to get a bit more insight into what the future might look like. At an overall level, we’re seeing RPMs flatten out from week to week (instead of continued drops), while revenue is starting to tick up. 

Week-over-week growth in RPM

Most site verticals see similar traffic trends and composition based on day of the week (more on that below), so it’s best to compare RPMs for the same day of the week, like from one Monday to the next. 

We now have several days of week-over-week data during the start of Q2 and have seen small RPM growth, which is a positive sign.

What we expect for the rest of Q2

Based on this, we are forecasting that we’ll see continued growth, albeit slow, through the quarter. The most risk-averse advertisers have already stopped buying, and some advertisers who had to reconfigure their ad campaigns are coming back into the market. This could change, however, if the lockdowns continue and other advertisers cut their budgets due to reduced demand.

And there are other risks ahead. The Coronavirus pandemic will almost certainly set off a large economic downturn in most parts of the world. That will cause more headwinds against advertising growth. If that recession continues for an extended period of time, it will continue to dissuade advertisers from increasing budgets. 

Additionally, we’re anticipating that the significant traffic growth that many publishers have seen due to more people being homebound could decline as people adapt more to their new routines. And as lockdowns are lifted (even partially), that will likely cause reduced traffic. Lately, traffic increases have counterbalanced declining RPMs for many publishers. It’s too early to tell how the mix of potentially-recovering RPM in tandem with reduced traffic will impact total earnings, but overall revenue could decrease in some cases as a result.  

Advertiser Category Trends

As Q2 always sees an initial decline in advertiser spending, most of the numbers we’re observing are negative — but some of the negatives are likely early signs of positivity.

Based on Q1-to-Q2 transition trends we’ve seen in prior years, we believe anything to the left of the vertical line in the graph above are positive signs, even though the trend might be currently negative. Drops of that magnitude are normal as advertisers reset their budgets at the beginning of a quarter and then start turning on campaigns.

Retail (almost exclusively e-commerce) continues to strengthen as more and more people shop online. 

Quick-serve restaurants (like Panera, Chipotle, etc.) are beginning to grow again as they set up campaigns promoting their pick-up and delivery services. 

The other categories to the left of the vertical line should show growth in the coming weeks as they are all services that consumers are still using during the pandemic.  

Consumer packaged goods spending is declining significantly due to supply issues (you’re lucky if you can find toilet paper, paper towels, and dishwasher detergent right now!). Since consumers can’t find the products, the advertisers are pulling spending — but as products get back into stores, we expect this category to be a positive.

Many of the categories that have completely shut off (primarily Travel, Live entertainment, and Fitness) are not showing any signs of coming back, and that likely won’t change for a while.  

We also expect Auto spending to continue to decline significantly as more and more dealerships around the country close for quarantine.

Two bright spots are significant spend from the US government around the US Census and, for publishers that have significant corporate readership, we are seeing continued strength in business-to-business advertising.  

Weekdays are the new weekend

It’s an entirely new era of content consumption. You might find yourself not quite sure which day it is, as everything starts to blend together — and your readers’ online habits have changed a lot over the last few weeks too.

Before the US saw major changes due to Coronavirus, traffic for tons of different verticals tended to follow a similar pattern — falling throughout the week and peaking on the weekend when everyone had more free time on their hands. Now, we’re seeing content consumption staying stronger throughout the week.

One fun outlier: Family/Parenting content tends to see stronger dips by the end of the week as exhausted parents just need a break!

Changing trends can create an opportunity for publishers – particularly as user home and work life patterns evolve. Leveraging traffic data and content analytics can lead to insights that reveal new reader interests and even potential opportunities for service journalism. And sites experiencing surges in traffic can additionally benefit by capturing emails and growing their subscriber base. 

We hope things continue to improve and will continue to post updates on a weekly basis, or any time we have valuable information to share.