High consumption and low competition have curbed the cost of digital acquisition for advertisers. But how long will it last?
From rapid changes in consumer sentiment and buying behavior to maintaining business continuity and pressure to cut back marketing budgets – the pandemic has presented steep challenges for marketing teams.
While it’s difficult to find a silver lining amidst all of this uncertainty, we’ve identified three digital trends that have exposed an opportunity for marketing teams.
1. Digital Consumption is Up.
People are spending more time online and closures have forced consumers to shift from their usual brick-and-mortar shopping toward online commerce.
- Time spent on social media has increased by 29%, from 143 min./day to 184 min./day across all social platforms. Instagram and YouTube saw the biggest increases – 32% and 44% percent, respectively — Influential’s Market Impact Report
- Local News Sites have seen a larger growth in monthly average users than larger media publishers.
2. Advertising Spend is Down.
Major players in the digital advertising space have retreated from paid advertising entirely, leaving a massive surplus in ad inventory.
- Travel, retail, CPG, and entertainment almost entirely retreated digital advertising, which together represents 30% to 45% of Facebook’s total revenue.
- Among US ad buyers who are making short-term changes to ad spending, social ad budgets were expected to decline an average of 28% between March and June 2020.
- 95% of advertisers reported intentions to make moderate to large budget cuts in Q2. Most expect that to continue into Q3.
3. Acquisition is Cheap . . . for Now.
According to data collected by AdWeek, the pandemic and residual economic impact have caused digital advertising prices to drop by 16%. While costs have risen from their March/April lows, low competition and high consumption continue to drive efficient Facebook CPMs across Theorem clients. We created the projection below to highlight the temporary opportunity for marketers to capitalize on cost-efficient digital advertising.
- Based on CPM trends we’ve been tracking across clients, we anticipate advertising costs to slowly increase as the economy reopens before leveling off around pre-COVID levels.
- We’ve seen CPM efficiency gains of up to 26% for some of our active clients.
- Several reach campaigns have resulted in <$2 CPMs.
Things you can do now to take advantage of the lower cost of acquisition:
Reach New Audiences. Audience saturation and competition are lower with the surplus of ad inventory. Capitalize on the lower cost of advertising to extend your reach to new audiences or existing audiences.
Gain Competitive Edge. Are your usual competitors advertising on digital channels? If not, this can be an opportunity for you to gain a competitive share of voice for your brand.
Fill Your Pipeline. This crisis has made prospecting difficult for many sales-driven industries. Now is a good time to consider adopting or digital lead generation strategies to reinforce your customer pipeline.
Test & Learn. Low advertising costs present a great opportunity for testing various tactics and strategies without costing you an arm and a leg. Consider your value propositions, creative approaches, and incentive structures. Media testing can offer an inexpensive vehicle for gathering direct consumer feedback about your brand positioning.
What trends have you seen throughout the crisis? Continue the conversation with us on social.