Programmatic Advertising Trends during COVID-19

The rise of COVID-19 has led to a shift in the core dynamics of the programmatic advertising marketplace. As consumer behavior continues to change, brands must be agile and adjust their media strategies to the ever-changing landscape.

As the COVID-19 Curve Flattens, Programmatic Win Rates Do Too

Programmatic-win rates, the percent of impressions bid on divided by the impressions won, increased drastically in mid-February as brands pulled back their ad spend. This was accompanied by an estimated 15% drop in CPM as competition declined. As the curve of COVID-19 cases began to flatten in mid-April, so did win rates. According to data from the Goodway Group, on April 7, win rates peaked at 76.8%, but as of late April, they have fallen to 54.8%. Additionally, after reduced competition and CPM decreases over the course of March, early indications suggest that these trends may be leveling off as well. This leveling off suggests that the programmatic marketplace demand may have found a temporary bottom as marketers begin to slowly re-enter the market and increase programmatic spending.

However, performance within these auction-based systems is contingent on the status of the everchanging COVID-19 crisis, so it’s likely that programmatic win rates will spike again if COVID-19 cases spike again too. Many programmatic vendors are offering incentives to lock in better campaign rates over the next few months and to extend existing campaigns, so now is a great time to heavy-up advertising investments in order to capitalize on these ad-serving efficiencies.

Investing in Times of Economic Downturn Increases Market Share

Brands advertising with a long-term approach during times of economic downturn will reap the benefits both now and in years to come as they put themselves in a more advantageous position than those who focus on short-term savings. Research from Ebiquity found that “brands that increase spending during a recession achieve market share gains averaging 1.6 percentage points during the first two years of recovery.” This indicates that brands who invest in programmatic ads now, while others who typically compete for the same audiences or with the same products are absent from the auction, will be ahead when the economic downturn is over.

Unfortunately, not all brands have the luxury of being able to increase their ad spend at this time. Brands reducing their ad spend must identify what marketing tactics will yield the most success for their business. For many, this has meant a shift from brand awareness efforts to lower-funnel conversion and lead-driving tactics that focus on sales and customer acquisition. This is especially true as overall online sales continue to increase across industries (see below for the graph of total online sales trends across all verticals).

If the funds are available, now is also a perfect time to invest in higher funnel branding efforts as well. With lowered competition in the auction, brands that are constantly within sight of consumers during these times can become top-of-mind for their product or category. Additionally, with many in-store only brands currently unavailable to consumers, those consumers are more open to alternative brands than ever before. This creates the opportunity to engage new customers who are developing new habits that will maintain far after the pandemic passes.

Connected TV Viewership On The Rise

As CTV viewership increases due to people sheltering in place, now is an opportunistic time to advertise. Nielsen is forecasting a 60% increase in the amount of video content watched in U.S. homes. This has resulted in a spike in available ad inventory and lower eCPMs. Programmatic buying allows marketers to take advantage of real-time shifts like we’re experiencing right now, rather than locking into contracts at a set CPM. Additionally, programmatic CTV campaigns have greatly improved in the crucial areas of transparency, visibility, targeting, performance, and attribution in response to challenges associated with walled gardens and brand safety. As improvements in programmatic buying makes it easier to activate and show value in campaigns like these, we expect to see continual growth in programmatic spending moving forward.

Blocklists and Contextual Blacklisting Increases

Many brands are bolstering their brand safety efforts across programmatic advertising by attempting to prevent their ads from appearing within the context of news stories about the current pandemic. According to Integral Ad Science data, “coronavirus” was the second-most common word on blocklists for news publishers and was the third-most common blocklist entry across the open web. One of programmatic’s advantages is the ability to apply contextual blacklisting, through which campaigns can avoid appearing alongside upsetting news content by constructing custom-curated inventory. However, research by Lumen shows that readers pay more attention to advertising placed alongside news since people look at ads in proportion to how much they engage with the editorial. According to a Newsworks and Neuro-Insight study, the average ad dwell time is 1.4 times higher in a hard news environment (45 seconds vs. 32 seconds) so there’s a higher likelihood of key messages and the ads surrounding them being encoded into the consumer’s memory.

In this ever-changing landscape, it’s important to have a dynamic marketing strategy that allows for flexibility and leans on algorithmic learning to guide performance. If this is the type of digital marketing strategy your brand is looking for, please contact AVX Digital today!