Coronavirus and digital media industry trends: 4/3/20

Two days into Q2, here’s the latest on ad spend, digital media trends, traffic and overall revenue – and what CafeMedia is focusing on right now.

What we’re seeing on the ad front

The first two days of Q2 hold a small silver lining

The second quarter of the year started on Wednesday, and as usual that means that advertiser budgets reset and ad revenue declines. Last week, we mentioned that we expected that this year’s decline would be significantly more than normal due to the coronavirus pandemic and economic downturn. That was true, although so far (with two days of Q2 data), CafeMedia’s network performance hasn’t been as bad as we feared it might be.  

It’s a small silver lining, since many publishers saw big declines in their revenue from 3/31 to 4/1, but it’s a slight positive sign for the future.  “Less bad than expected” is the best we can hope for right now, and our network RPMs increased slightly on April 2 compared to April 1.

What happens in the US over the next few weeks will dictate ad spend

With numerous external factors impacting ad spend, it’s extremely hard to forecast how this quarter will trend. For publishers with heavy US traffic, revenue trends will continue to be heavily influenced by how the US responds to coronavirus. 

If infections are under control within a few weeks or a month, things might start (slowly) heading in the right direction. If infections continue to grow, new viral hot spots form, and most of the country is still under “stay at home” guidelines, ad revenue may flatline or even continue to decline. 

Advertisers are notoriously risk averse. They don’t want to spend money unless they are certain that they can make a return on ad spend. In a volatile and unpredictable market like this one, advertisers will generally cut budgets. The longer the world is in upheaval, the longer it will take for advertising to see a recovery in spend.  

Conversations with our industry partners

The IAB recently released a study showing that while digital advertising is taking a hit from coronavirus, the impact is smaller than other forms of advertising and digital advertising will likely recover faster. 

Side note: It’s worth mentioning that in March, we saw better advertising spending on CafeMedia publishers’ sites than the IAB noted on average. We believe this is an encouraging testament to the quality of our publishers’ content and audiences.

Our team spoke with a number of other industry leaders including major advertisers, advertising technology firms, and financial services firms this week. There was heavy agreement that programmatic advertising will be among the least affected channels for some of the reasons we laid out a few weeks ago. Because programmatic advertising is efficient, targetable and measurable, it is more likely to be used by advertisers over time. 

Safari’s latest anti-tracking updates aren’t helping ad revenue

On March 24, 2020, Safari released an enhancement to its Intelligent Tracking Prevention (ITP) feature. Safari had been blocking the majority of third-party cookies already, but this latest release blocked cookies for cross-site resources across the board by default. 

Cookies are currently used in advertising to give advertisers information about users so they can match their ad campaigns with their target audience. When cookie information isn’t available, advertisers bid less — at the best of times. In difficult times advertisers are even less likely to advertise in cookie-free environments.

This is reflected in lower CPMs for Safari traffic. 

Notes:

• This graph shows the differential of Chrome vs Safari Smartphone CPMs
• It pegs the ratio between Chrome and Safari CPMs to 1 in the first week. Safari CPMs are usually 40%+ lower than Chrome to begin with
• In the two weeks most heavily affected by advertiser cutbacks amid the crisis, Safari CPMs drop significantly more than Chrome
• The negative impact on CPMs due to the coronavirus global pandemic amplified what is already a challenge in Safari due to 3rd-party cookie blocking (ITP)

As a result surges in Safari/iOS traffic (for example from a viral Facebook post leading to high mobile click-throughs), tend to drive lower RPMs.

This is just one more reason we’re working hard on testing replacements for third-party cookies and leaning into Marmalade data (our in-house artificial intelligence platform) to help advertisers understand the value of our publisher partners’ audiences.

Traffic continues to spike, outpacing demand, but protecting overall revenue in some cases

Speaking very generally, traffic continues to climb across a wide range of verticals and content topics. Pageviews are up as people around the world adapt to new ways of life centered around increased internet-usage.

Across the CafeMedia network, historic traffic surges are helping to offset falling advertiser spending for many publisher sites. Despite the impact to RPMs, the increase in impressions has stabilized – and in some cases has even increased – overall revenue. However, this also means there’s more ad inventory available and at times, not enough advertisers who want those specific ad placements for specific readers, which can further reduce RPMs.

Additional factors heavily influencing RPMs and total revenues include:

• Lower advertising spending: brings RPMs down
• Higher time spent on site (time on page or pageviews per session): brings RPMs down as later ad impressions in a session are less valuable, but drives overall revenue upwards
• Higher pageviews in general: brings RPMs down as this increases supply of ad impressions for advertisers as budgets are declining, but drives overall revenue upwards
• More spikes in traffic from social media: brings RPM down as these users are less valuable, but drives overall revenue upwards

What we’re doing

Working to help our advertising partners pivot and spend with confidence

CafeMedia continues to work very closely with advertisers to help them restart campaigns that were paused or to modify their ad campaigns to work in today’s environment – and are beginning to see some advertisers return to the market. 

For example, our private marketplace ad spend declined less at the start of Q2 than average ad spend overall; a positive sign given PMP advertisers are among the highest-paying, and a factor in the not-as-bad-as-expected drop that we saw on April 1. 

Bringing in new demand and making improvements

We’re releasing lots of new features and adding new demand partners to our ad code. Additional tools and analytics more effectively understand their performance, and increased demands can help buoy declines in revenue.  

Working to help publishers understand available financial resources

CafeMedia has compiled this summary of financial resources and government assistance programs available during the COVID-19 crisis. We’re also working with banks and accountants to gather information and additional resources that may benefit publishers and small businesses.

We realize this is a strange and uncertain time. And while we don’t anticipate things dramatically improving anytime soon, we do believe our team, technology, industry relationships and partners put our publisher community and CafeMedia in the best place possible to weather this storm together.