The coronavirus has undoubtedly made the first quarter of 2020 the single most disruptive start to a new year in living memory. Billions of people across the world are now adjusting to a new normal, with phrases like “work from home”, “social distancing”, and “flattening the curve” entering daily usage.
People across the globe are now more indoors than at any other time throughout history. As a result, global online behavior has been drastically affected - including behaviors related to social advertising.
It’s a confusing time right now, but don’t worry - we’ve been analyzing the data, following the trends, and listing our observations. Here’s what you need to know.
Q2 and Q3 expected to be tough - but there are some signs of recovery
Globally, social CPM and CPC are at historic lows right now, with the US, in particular, seeing massive and rapid shifts in these metrics. CPM prices are currently around a third lower than normal, with CPC down by as much as half during March in some sectors.
Yet APAC is already showing signs of bouncing back with slight increases in both CPC and CPM, and verticals like online entertainment, education, technology, gaming and home delivery are generally holding steady with a slight shift in demand to the positive. There’s a sense of getting back to business as usual in the region.
Retail is rapidly reallocating spend from bricks and mortar-focused campaigns to online traffic generation, whereas Ecom is being affected in different ways. Ad spend is increasing for Ecom businesses with robust supply chains, with creatives positioned in a respectful and supportive way.
On the other hand, Ecom players and digital disruptors like food delivery and streaming services have scaled back ad spend, as a huge surge in organic traffic has seen them struggle to meet demand in some cases.
We have also observed some companies leverage the downturn by investing in future capability and rapid ramp-up, focusing on technical implementations, planning upcoming campaigns and tests, and revising internal processes and creative capabilities.
Consumer behavior has changed - and will continue to evolve over time
Consumer demands have continued to shift as the coronavirus situation has developed. The initial surge in panic buying items like toilet paper and tuna cans has started to taper off as people begin to realize this situation is set to last for an extended period of time.
Purchases like home fitness equipment, online learning services and home entertainment are currently increasing as families find new ways to maintain quality of life and wellbeing for all members. In addition to newfound demand in certain product groups, a whole batch of first-time shoppers has now moved online that will need help navigating through the online shopping experience.
It’s important to state once again that consumer behavior will continue to change over the course of this situation, so caution should be advised when optimizing ads and creative for the present climate. Ability to react quickly is key in this environment.
Relevant creative can help you reach record-high numbers of social users
Some advertisers are seeing CPM and CPC costs at a 5-year low average, but these figures are highly vertical-specific and can change rapidly. The efficiency in pricing is driven by high social media use and engagement, with 63% of consumers expecting their usage of Facebook to increase.
Consumers are also planning to do more online shopping. 92% of consumers state they plan to buy groceries online, with 79% planning to buy home improvement items and 76% planning to order food delivery.
When it comes to creative, 86% of consumers are ok with brands addressing the coronavirus situation in their ads, and some brands have already adapted their creatives to “Staying at home” messaging. Early metrics suggest this may be working, with for example some retailers already bouncing back from two weeks of decline in some markets.
Brands that aren't necessarily top of mind to consumers right now are experiencing lower CTRs, but CPM costs are also low. Their strategy right now should be building more long-term relationships and focus on future strategies: test and adjust so you can capitalize this low CPM when demand rises in the future.
Above all, keep calm and carry on…
Entire industries have come to a standstill overnight, while others rapidly pivot over a matter of days instead of years. We're living in an extremely fluid situation with many moving parts, so it is hard to make definitive statements about what the future of social advertising looks like. We don’t believe in crystal balls - data is better!
The best way forward is together, and we’ll continue to monitor the situation closely and share everything relevant and useful we learn with you.