Coronavirus and digital media industry trends: 5/1/20

This week in the industry, we’re seeing more layoffs and deferred payment trends in ad tech companies as the economy continues to feel the effects of the Coronavirus pandemic. In the face of this risk, CafeMedia is the first ad management company to guarantee full payments to publishers.

Encouragingly, we’re also seeing some spending increases in our major advertiser categories and positive RPM growth for CafeMedia publishers, and new content trends as certain regions reopen for business.

What we’re seeing across the ad industry and here at CafeMedia

Ad companies face layoffs and deferred payments — but CafeMedia publishers won’t pay the price

Many ad tech companies are struggling with the economic downturn and are having to lay off employees or cut salaries. And those who are able to avoid layoffs are working to conserve finances in other areas, which means many companies are deferring payments. 

This results in a chain of late payments where the final link in the chain — publishers — takes the brunt of the risk. And if a company is ultimately unable to pay, publishers may never see the funds they are owed.

The Coronavirus pandemic has been going on for less than 2 months in the US, but its pressure is already starting to take its toll on a number of advertising-funded companies. Big publishers like Vox, Conde Nast, Meredith, Buzzfeed, and many others have had layoffs, furloughs, or pay cuts already. Advertising technology firms and ad networks like OpenX, TripleLift, GumGum, and others are doing the same.  

At CafeMedia, we won’t let these payment risk issues trickle down to our publishers. We are guaranteeing full payments for publishers, even when an advertiser doesn’t pay or claws back earnings.

• On the same net-45 payment schedule as always. 
• With no clawbacks or holdouts. Ever. 
• Even if advertisers hold back millions of dollars.

Positive signs for CafeMedia publisher RPMs

Despite all the doom and gloom in the industry, here at CafeMedia, things are showing positive signs. The final week of April has actually seen some continued, if muted, growth in advertiser spending and RPMs for CafeMedia publishers. 

Usually the last day or two of a month flatten out or are lower as advertisers often set budgets on a monthly basis and if they’ve reached their budget for the month, they’ll stop spending. This year, April 29 and 30 did not see that typical “end of month” drop, which is another slight positive sign.

It’s hard to say what May will bring. Parts of the US and world are reopening to some degree. Some stores are already open, but many advertisers are still taking a “wait and see” approach. 

WIll stores remain open? Will consumers spend money? Will some jobs be recreated as economies open up?

Once there is more clarity around all of the open questions, advertisers will determine how they want to spend money and if they want to increase their budgets.

There’s also the real possibility that, even as economies open up, we are headed into a full-blown recession due to the Coronavirus pandemic, and this will have its own impact on ad spend. We’ll leave that forecasting to the experts, but we’re keeping a close eye on those trends as the economy determines how long this downturn in ad spend will last. 

An update on what we’re seeing with advertiser spending by category

The ten categories in the graph above are some of the major advertiser categories across our network. Since early March, many of these categories have been negative, showing reduced advertiser spending.

Now, these categories are all flat or positive, showing that things may be starting to turn around. Some brands that are spending significantly more week-over-week include:

• Samsung: Advertising Mother’s Day deals. We’ll see a lot more campaigns like this over the next 1.5 weeks as Mother’s Day approaches here in the US.
• Fitbit: Leaning in to acquire more customers as people are spending more time locally and at home — and walking more, where Fitbit is a great product fit.
• Wayfair: Advertising a new 2-day shipping promise. There have been lots of consumers purchasing new furniture for home offices, or just looking to replace things as they’ve been spending so much more time at home with furniture they don’t love!

CafeMedia PMPs are looking strong for Q2

As of the writing of this post, we’re less than 12 hours (EDT) into the new month, but another great signal we are seeing is strength in our exclusive private marketplace deals across banner and video ads. 

Usually these direct-to-advertiser campaigns start the month slowly, as advertisers set them up manually (rather than using fully automated systems like many other ads). 

This early strength is a great sign, as these deals are among the highest-paying. It speaks to the work our ad sales team is doing helping advertisers adjust to a world where they can’t meet face-to-face with us! You can read about what our ad sales team is doing in last week’s article. 

What we’re seeing with content trends

Georgia gives us a potential preview for May

An interesting test case is what is happening in Georgia right now as businesses begin reopening. We don’t (yet) have data on advertiser trends, but content trends may be a predictor of what we’ll see.  

As more people are venturing outside their homes and back into some stores, the content that they are looking at is changing. Comparing this past week to two weeks ago, the content categories that saw the most growth in Georgia, when compared to the rest of the US are:

• Sports +37%
• Weddings +17%
• Local Travel +13%
• Entertainment +10%
• Auto +9%

All things that make sense as people are eager to leave their homes! These content trends could be a great preview of what people will be most interested in as more cities and states reopen in May.

We will continue to bring you weekly updates on industry trends. In the meantime, please visit our previous Coronavirus blog posts.