The State of Digital Advertising: Is It Smart to Advertise During a Global Health Crisis?

Many business leaders and marketers are considering whether it’s the right time to invest in digital advertising. Our clients and peer networks have asked us questions, like:

• Is advertising in poor taste right now? Will it hurt my brand?
• If I need to drive revenue, are digital ads the best way to make that happen during a stay-at-home order?
• I have a product that can help deal with the crisis, can I use digital advertising to make sure people know about our solution?
• Since all of our events got canceled, should we reallocate those dollars to digital advertising and drive leads?
• Our budgets are slashed and our business’s future is uncertain. Should we really be investing money in marketing right now?

These are valid questions, and each brings to light many of the concerns that business leaders and marketers are evaluating during this health crisis. Unfortunately, there’s no hard rule or guideline that works across every business and in every scenario. Each unique situation must be assessed individually to determine the best approach for that organization.

In an effort to help you decide how your business should proceed, we’ve outlined the current state of digital advertising and why brands have decided to start or stall their campaigns so that you can determine the best path forward for your brand or business. If you have questions related to digital advertising that aren’t answered here, reach out to us. We will help you get the information you need. 

The State of Digital Advertising

A study by GlobalWebIndex found that global consumers are spending 95% more time on in-home media consumption and 45% more time on social media. However, analysts predict that the two giants in the space (Facebook and Google) could lose over $44 billion in ad revenue in 2020 due to the coronavirus. 

While some categories have halted ad spend entirely, others have ramped up their spend to capitalize on low-cost impressions from attentive, engaged audiences. 

Why Brands Aren’t Investing in Digital Advertising Right Now

Avoiding negative perception. 

Many companies that have suspended their ads have done so for concern about being perceived as tone deaf or opportunistic in the current environment. No brand wants to feel the backlash of poorly-planned or timed campaigns, like KFC’s “Finger Lickin’ Good” or Geico’s “Perfect High Five.” Either campaign may have been fine a few months ago, but they aren’t well-received nowadays—they come off as insensitive and unaware.

Budget uncertainty.

In addition, SearchEngine Journal tells us that “as the Coronavirus pandemic stretches on, uncertainty about when and how it will end has driven nervous commitments to ad budgets.”

In early March, The Drum reported that 47% of businesses said their sales had already been significantly or severely impacted by the outbreak of the coronavirus but only 7% said they had stopped spending on advertising completely. However, as of April 13, ad spend in the U.S. had already dropped by at least $80 billion. In a survey by IAB, 70% of executives who responded reported that they’ve halted or adjusted their ad spend (24% pulled their ad budgets entirely).

Shift in business priorities.

Amazon has significantly reduced it’s ad spend on platforms like Google, where it typically promotes and retargets its products. The company has shifted its business and is prioritizing movement of essential items, even suspending shipments of non-essential items to distribution centers; thus there is no need to promote those products at this time. 

Severe business impact.

Marriott, and much of the hospitality industry, has been hit hard by the pandemic—closing hotels, furloughing workers and experiencing a 75% drop in revenues across its global locations. CEO Arne Sorenson announced in his address to associates on Twitter that the COVID-19 global health crisis has had a more severe and sudden impact on its business than 9/11 and the 2008 financial crisis combined. He announced that the company would be “going dark” on all brand, marketing and advertising during this period.  

The media planning decisions made today will define the success of brands of the future, and using empathy and authenticity to drive those decisions (even if that means not advertising right now) will help brands set themselves apart from competitors and earn trust and loyalty from their consumers.

Why Brands Are Investing in Digital Advertising Right Now

Looking ahead.

Neil Patel, a bestselling author, top 100 entrepreneur and marketing industry influencer, shares charts on his blog that demonstrate the drop in website traffic and conversions across most industries. However, he says it’s not the time to shy away from marketing, “when you see your competitors closing down or slowing down on their marketing, the goal is to double down. You may not see the biggest return right away, but in the long term, you will.” 

Back in 2010, following the Great Recession, Harvard Business Review launched a year-long study to understand the strategies that can help companies survive a recession, get ahead during a slow-growth recovery, and be ready to win when good times return. The study found that “Firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability—21%—pulling ahead of the competition when times get better. Businesses that boldly invest more than their rivals during a recession don’t always fare well either. They enjoy only a 26% chance of becoming leaders after a downturn.” 

According to Harvard Business Review’s research, companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession.

Increased demand.

An article published by AdAge detailed examples from seven brands that have increased their social media ad spend during the health crisis (UberEats, Amazon Prime, Dial Soap, Instacart, Quibi, Southwest Airlines and HBO Now). The article states, “Those in categories like cleaning, TV streaming, food delivery services and virtual video conferencing have seen upticks in sales and their stock rise. That demand is translating into boosted ad spend.”

Lower ad pricing.

Brands and businesses that have opted to continue or start advertising now are experiencing higher impressions and lower pricing across platforms. The Wall Street Journal reports that prices on Facebook’s ad auctions plummeted between February and March by 15 to 20%, though some advertisers say they’ve seen an even greater drop month-over-month. Similarly, cost per impression has dropped on other platforms like Instagram (22%) and YouTube (15 to 20%).

Reinforce Brand Positioning.

While ads are inexpensive and the audience is more present, brands have a great opportunity to build awareness and reinforce positioning. Many brands have used digital ads to demonstrate that they’re living out their values and living up to their established employer brands. Target used a moving video campaign to share how they’re responding and keeping their frontline team members safe. IBM is also reinforcing their brand position in its recent TV ads that are also being shared on social.

So, should your brand invest in digital ads right now?

Every business and every industry has been impacted in some way by this pandemic, but each business’s response depends on their unique mission, vision and values. It really is a choice that must be made on a case-by-case basis. 

If you need help assessing your business’s situation and determining whether or not digital advertising would help or hurt your brand in the current environment, contact ClearEdge. We can help you consider all angles and develop a strategy that will help you use digital advertising to poise your business for growth now or in the future. We’re #InThisTogether.