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Coronavirus disrupts search, digital ad budgets

  • March 10, 2020
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Analysts expect Google and Facebook will experience ad revenue declines in travel and other industries most affected by global efforts to slow the spread of coronavirus. On the ground, marketers and media buyers have been re-evaluating their near-term advertising strategies.

Loop Capital Markets analyst Rob Sanderson expects Google will see a 15% year-over-year decline in travel ad revenue in the first quarter and a 20% drop in the second quarter due to the coronavirus outbreak.

Last week, Needham analysts Laura Martin and Dan Medina said there is evidence of lower spending in travel, retail, consumer packaged goods and entertainment, which together, they estimate, represent 30% to 45% of Facebook’s total revenue.

Media buyers we heard from Wednesday shared a range of scenarios, with some not seeing any changes yet, to others making dramatic adjustments to near-term budgets. Some are even raising digital budgets.

Supply chain and demand concerns

Supply chain impact on inventory is starting to be felt in advertising spend. Scott Wright, senior PPC consultant at London-based e-commerce consultancy and agency Vervaunt, said a client with production in China began to grow concerned about inventory in February but expected to run ads for a couple of more months based on current stock. “As the situation hasn’t improved in regards to their supply chain,” said Wright, it’s expected “that this month some key products will go out of stock, so [Google Search and Shopping budgets] have been cut by 40% in the UK and Europe this month in anticipation.”

A luxury international travel business has cut budgets by more than 50% from previous months across all digital channels, said Michelle Morgan, director of client services at Louisville-based digital agency Clix Marketing. Morgan says the agency still has the flexibility to allocate the remaining budget to the channels and campaigns that are most effective, there’s just less to work with for now.

Some businesses have put a full stop on their digital ad budgets. “We’ve had two clients pause spending due to coronavirus,” said Tom Shurville, managing director of UK-based digital agency Distinctly. The clients — in hospitality and events industries — expect to keep advertising turned off until the coronavirus no longer affects gatherings.

Feeling Jittery

The uncertainty of it all has businesses of all types on edge.

Another Vervaunt client, a luggage retailer, hasn’t seen demand drop, but “the trends coming out of Italy has them cautious,” said Wright. The agency manages Search, Shopping, Amazon and Social for the client. Last week, Amazon revenue was down, but Wright said it isn’t clear yet if that is a trend. They expect to be pulling back on most of the client’s prospecting campaigns through this week, though the amount isn’t confirmed yet. Budgets will be managed daily on an ad hoc basis depending on how things look.

Alabama-based paid search consultant Josh Yates said his clients haven’t changed course yet, but that many are feeling nervous. Even those in sectors that would appear to be unaffected. One, an e-commerce brand with manufacturing in the U.S. and no expected inventory challenges, called to say, “Be ready to pull back spend.”

Bucking the trend

Not everyone sees budget-cutting as the answer.

As the tradeshow circuit dwindles, some exhibitors are looking for other ways to fill their sales pipelines. “[I] just talked with one client who is seeing several tradeshows get canceled, and wants to put more into digital to make up for the lost leads they usually pick up at events,” said Tim Jensen, PPC campaign manager at Clix Marketing.

Amalia Fowler, director of marketing at Vancouver-based Snaptech Marketing, said one of her clients, an upstart food tour business, is raising rather than pulling digital budgets. With aggressive growth goals for the year, including a new tour to promote, the company increasing search budgets in the face of a downturn. “It is giving them an edge on the big travel companies,” said Fowler, “so it may end up working.”

WARC still projects an annual increase of 7.1% in global media spend this year. That’s based on an expectation that marketers will simply shift budgets to the second half of the year, which will drive up competition and prices for media. That means advertisers may continue to feel a squeeze long after coronavirus fades.

The post Coronavirus disrupts search, digital ad budgets appeared first on Search Engine Land.


Source: IAB

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