The caution is understandable, given that the economic outlook is bleak for the rest of the year and most companies will want to save some cash in reserve for when they can start operating again. Yet, my experience, with some of our clients that have continued to run campaigns throughout the lockdown, shows that this is not necessarily the right time to cut spending.
Let’s start with the size and engagement of the audience. Besides essential services workers, many of us are locked in our homes for most of the day, allowed out only to shop for food or to get medical care. The number of hours that people are spending on digital platforms has climbed through the roof in most countries under lockdown, including South Africa.
Platforms such as YouTube, Facebook, Netflix, WhatsApp and gaming services are all reporting dramatic spikes in their traffic over this time. YouTube, for example, has seen a 75% jump in news views in recent weeks, and content on the platform such as Andrea Bocelli's Easter Sunday live performance has drawn in millions of viewers.
At the same time, many advertisers have pulled back from spending during lockdown. Because programmatic platforms work on an auction basis – the more competition for a platform’s inventory or audience, the higher it can charge – the result is that there are some compelling opportunities on offer at relatively low cost.
It’s simple economics: with more people online there are more ad impressions available and the supply of ad inventory spikes. At the same time, many advertisers have cut back on ad spending reducing demand. Given that we buy inventory via a real-time auction (much like a stock market), an increase in supply and decrease in demand has resulted in prices for ad impressions to drop radically.
As many traders on the stock exchange know, markets can sometimes overcorrect, creating opportunities for bargain hunters to buy a share for way below its intrinsic value. We’ve arrived at this point on many digital platforms: there are some high-quality audiences on offer for a fraction of what it would usually cost to reach them.
There is also the added bonus that those brands that advertise in this environment don’t need to compete with the usual levels of noise and clutter. It’s not often that one can both reach a selected audience at a low cost and do so without needing to outbid competitors on the major programmatic platforms. On some platforms, you can get a page takeover for half the usual cost, for instance.
That said, it is true that people are not spending money on discretionary items right now because many goods may not be sold under lockdown regulations and because they are fearful about the economic future. Any campaigns would need to be tailored to address the different behaviour and psychology of people during the lockdown. So, this can be a good time to start a brand-building campaign, with a view to rolling out more aggressive customer acquisition campaigns as the lockdown eases.
Despite the lower cost of ad impressions, I have noticed a decline in conversion rates—the percentage of sales versus site visitors has dropped off. This indicates that people are not buying right now. This doesn’t mean that marketers should pull their spending. Many consumers are in the discovery and research phases of the customer journey. This is an opportune time to bring them into the funnel for later conversion.
Marketers can adjust tactics while it’s cheaper to reach people to accommodate this shift in consumer behaviour. People are still browsing and click rates are up, so brands can increase site traffic at a much lower cost than usual. Once consumers have visited the site and browsed selected pages, one can create custom audience segments for future re-marketing with a more aggressive sales strategy when the economy restarts.
As always, the key to succeeding in this environment is to look beyond the traditional marketing funnel towards understanding the personal customer journey at a more granular level. Brands that use programmatic platforms and the data they offer to create personalised engagements can use this time to position themselves strongly for the bounce back when the lockdown eases.