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How have digital ads performed in quarantine?

We have been working closely with clients for the past several weeks to better understand the business impact of the novel coronavirus. We are monitoring spending, reviewing trends, and game-planning to help safeguard client accounts against poor ad performance due to the abrupt change in consumer spending.

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IF YOU ADVERTISE ONLINE, YOU MAY HAVE ASKED ONE OF THE FOLLOWING QUESTIONS ABOUT ADS RECENTLY:
  • Is ad performance decreasing?
  • What are the ad trends?
  • What should I expect for my own ad performance?

We have been working closely with clients for the past several weeks to better understand the business impact of the novel coronavirus.  We are monitoring spending, reviewing trends, and game-planning to help safeguard client accounts against poor ad performance due to the abrupt change in consumer spending. Many brands and advertisers are decreasing ad budgets in an expense-cutting frenzy and as a result are shrinking their online presence and risk losing return on investment. To combat these valid concerns, we wanted to do what many other advertising companies aren’t, by showing you our data and explaining the trends we are seeing within our own accounts.

SYNOPSIS:

The following data shows changes over time from January 2020 to the end of March 2020 (current peak of coronavirus pandemic), using 2-week averages. Additionally, the data covers 15 select and diverse ad accounts in various sectors and industries including technology, fashion and apparel, and food services and delivery. The data also shows base level KPI’s (key performing indicators) with the following metrics represented: ROAS (return on ad spend), Purchases, Ad Spend, Clicks, and CPC (cost per clicks).  

CLICKS:

Traditional advertising channels are being disrupted, and online engagement has picked up the slack.  This is supported by the significant rising percentage in users on online platforms; on average we saw a rise in 18.68% increase in clicks from January.  

This data shows that more consumers and users are not only online more frequently, but are engaging with advertisements at a higher rate.

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CPC (COST PER CLICK):

As click rates have increased, cost per click has decreased. This trend can highlight two different points: first, consumers are more willing to engage with advertising and spend more online as they are unable to spend in retail, storefront, and showroom.  Secondly, and more importantly, advertisers are decreasing ad budgets due to fear and expense cutting - this increase in advertising empty-space has actually made it cheaper to advertise on Google and Facebook.  Brands can, for the time being, reach more people and see more engagement for a lower cost.

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AVERAGE AD SPEND:

As stated, ad budgets are down.  This data demonstrates, on average, about a 20% decrease in ad spend at a daily level on average. Most businesses are scaling back budgets in an attempt to control expenses, at the cost of generating revenues.

While some brands have pulled back, we have seen other brands take advantage of this emptier advertising space and hit digital platforms in full force - increasing daily spend by 10-25% and seeing revenue respond!

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ROAS (RETURN ON AD SPEND):

As ad spend decreases, ROAS almost always follows suit. However, even with the abrupt changes in consumer spending, the negative change in average ROAS has been relatively very low. On average, some of our top performing accounts are still seeing roughly 8-9x ROAS on ad spend with Google and Facebook advertising.

As government stimulus packages begin to impact spending and as the novel coronavirus begins to be controlled, we foresee a rapid return to normal ROAS figures for companies who are still engaged with their audiences.

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NUMBER OF ORDERS:

Interestingly enough, although ad spend has been decreasing slowly, the number of average orders through ads has been steadily rising at about 12%.

This trend supports what other eCommerce and online retailers have experienced during the recent crisis. Brands focused on delivering value and fulfilling consumer needs are better positioned than ever before.

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AVERAGE REVENUE:

Revenues for brands has stayed consistent with a very unnoticeable difference. This trend in combination with the decrease in ad spend makes me believe that there are CONTINUED opportunities for most online businesses.  Brands need new online channels to connect with home-bound consumers in order to continue generating revenue.

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CONCLUSION:

As traditional advertising and methods of connecting with audiences have been severely disrupted by this global pandemic, the online advertising space has never been more important.  If you are advertising online, or have interest in advertising, I believe that now is the best time to push your brand through digital platforms. Constructing a well positioned campaign with specific objectives, and realistic KPI’s produce the perfect recipe for growth, even through this crisis and its resulting market impact. Our data shows that brands and products for online companies are still fulfilling needs and that there are still great opportunities to explore.

Our team here at Swello is here and available to answer your questions and help direct in making appropriate brand decisions.  

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