Agencies and publishers will face a paradigm shift in the months to come as marketing priorities realign in light of the novel coronavirus (COVID-19) outbreak. Advertisers will demand their media partners, moving forward, drive value at the bottom of the purchase funnel.
The speed at which marketing plans will change could catch many companies off guard in the months to come. Many agencies and publishers have already been managing cuts to advertising budgets due to efforts to slow the spread of COVID-19, such as sports seasons being canceled or the Olympics being postponed. But the economic fallout from social distancing measures and living restrictions will likely alter marketers’ focus for the foreseeable future
And when marketers choose to cut advertising budgets in recessionary periods, there are consequences. A recent article published by Nielsen notes that, by maintaining ad budgets at pre-recession levels, an advertiser’s share of voice actually increases when economic headwinds are more challenging.
But with many businesses feeling the pinch, they will increasingly look for their agencies and vendors to prove value at the bottom of the purchase funnel. A similar shift took place during the Great Recession when new ad tech platforms provided front- and back-end metrics. This enabled marketers to claim their ad budgets were better targeted to reach relevant consumers.
Vendors that provided these kinds of solutions either launched during the Great Recession or their targeting capabilities captured the interest of marketers in light of the need to stretch smaller ad budgets. Consider the evolution of several niche offerings that went mainstream during this era:
Data targeting: Emerging from the Great Recession, companies specializing in third-party targeting became staples in the business by the early 2010s. These companies leveraged third-party data to identify consumers who marketers considered more relevant (such as through in-market, psychographics, etc.) and sold their data through multiple platforms and networks. This capability garnered significant traction in display media, which combined efficient banner inventory with smarter targeting strategies.
Programmatic advertising: As companies like Google invested big money in ad servers toward the end of the 2000s, it set off a stampede of start-ups to service the demand for ad serving. And some of the companies that launched during this time went on to become key players on the display side of the business. Programmatic display grew from $10 billion to $27 billion between 2014 and 2017, respectively.
Nielsen research has found that short-term cuts to ad spend could have long-term consequences, as on average 50% of the impact of marketing is realized after one year. Nevertheless, the impacts of COVID-19 may force marketers to work with smaller ad budgets in the months ahead. If this proves to be the case, they will again look to companies who can provide immediate solutions at the bottom of the funnel. But unlike the Great Recession, there are tools and metrics available today that can be leveraged immediately.
Agencies and publishers who adapt quickly will be better prepared in the short term when opportunities present themselves. Here are five strategies managers can execute to better position their companies:
Look for third parties who can validate ROI metrics: Working with independent companies who are credible and can track consumer location (at the store level), or can measure sales in any capacity, is worth consideration. Providing marketers with the means to measure bottom-funnel metrics can provide leverage during negotiations.
Empower marketers to leverage first-party data: Providing marketers with the ability to reach identifiable first-party customers (i.e., those who have bought from or visited the client’s website) represents an advantage during economic downturns. The ability to deliver reach, in tandem with connecting marketers to consumers who already purchase their products, represents a powerful one-two punch.
Backend metrics to gauge consumer sentiment: Providing the means to measure the impact of an ad campaign, on the backend, will soon represent a priority. Being able to do so can insulate an agency/publisher from budget cuts. Even at the top of the purchase funnel, publishers who cannot provide any backend measurement will be challenged to maintain existing budgets in a post COVID-19 world.
Real-time analytics—connecting the dots between exposure and sales: The ideal solution connects the dots between ad exposure and real-world sales. This is available in several vertical industries but not all. Getting ahead and investigating this capability will provide agency teams with the means to offer smarter business solutions to their marketing clients.
Identify areas on a client’s website that deliver results: Advanced KPIs (ROAS/ROI) play a bigger role today compared to the Great Recession era. When it comes to website visits, do you know what part of the client’s website is driving the highest return on investment? Working with vendors that can identify the most valuable real estate on a client’s website can position your agency as a forward-thinking organization. And, if your company can offer competitive intelligence on the sales side of the equation, that will resonate even more so with marketers.
As was the case during past downturns, consumer spending will bounce back and stabilize the economy. Marketing budgets, however, will lag behind as they always do given the caution companies espouse during and following recessionary periods. Agencies and publishers who provide solutions at the bottom of the purchase funnel today will insulate themselves and position their companies to thrive when the economy returns to full strength.