Everything In Its Right Place – Marketplace Pulse: October 29

Everything In Its Right Place

When we started this newsletter at the height of the first wave of the pandemic, I didn’t think I would still be writing them in Q4. At the time, it seemed unlikely that this would last longer than a couple of months. However, their purpose then, and now, is the same: create a scalable way to get important information about Ad Spend trends to our partners. There was so much fear and uncertainty, and we wanted to bring a transparent and human voice to speak to the trends. Hopefully we added some levity and humor to some bleak times. And they were bleak. But that is the operative word, insofar as Ad Spend is concerned. They “were.” The rare two word poem which in this case refers to a past from which we have moved.

From a purely business standpoint, we have crossed the chasm. I am running out of ways to say “recovered”. Ad Spend is growing, and outside of a few verticals we have started hitting new highs again.

As a practical matter, this is the perfect time for me to wind down the newsletter in its current form.

In just a few days, my wife and I will be having our first child. So in one sense I exchange one baby for another (BTW – nothing like a global pandemic and looming parenthood to really get a sense of your own mortality). It turns out being pregnant during COVID has been a huge plus. No traveling or commuting – we just got to slow everything down. It was a whole vibe. For us, it was certainly one of the unexpected fringe benefits of the pandemic. As I take some time off, everything feels like it’s in its right place.

What We Are Hearing 

Before we get into any data, I wanted to give a quick brief on what Buyers are telling us as we head into two distinct but intertwined events: A virtual holiday shopping season and a polarized US election.

There is concern a second wave of COVID cases will put a damper on what is shaping up to be a strong quarter. Believe it or not, I don’t think COVID will negatively impact Ad Spend this time around – even with second wave effects. What is happening is not exactly unexpected, and Marketers have planned accordingly. This is very different from the first wave where it took the entire industry by surprise.

The US election could throw a wrench into the whole enterprise but only if it results in massive civil unrest. Marketers are prepared for a negative news cycle. However, if that goes beyond headlines and there is conflict in the streets, many will pull back. These budgets won’t just vanish – they will get postponed until calm is restored. It’s almost impossible to predict what will happen in a couple of weeks. I do think this is the least likely scenario, but I caution everyone to plan accordingly.

Let’s Go To The Charts

 top categories of industries by ad spend in Q4 YTD 10/22

The official workhorse of 2020 is Retail, but Political Spend is stealing the headlines. This is hardly a surprise in an election year.

It’s interesting to note that the shift to e-commerce has been brought forward by an estimated five years as a result of the pandemic.

CPG is strong and steady. Take in mind this is usually a category that goes soft in Q4, but Digital Spend remains constant.

Travel is still down YoY but continues to flare up from time to time.

Overall, Digital continues to fair much better than other advertising sectors:

Article from the Visual Capitalist: The COVID-19 Impact On Advertising Spend
Source: Source: Visual Capitalist, Katie Jones (Writer and Strategist)

Auto Zoom

 auto category ad spend for FY2020

We have been waiting for this moment for some time. Auto – at long last – is finally above pre-COVID levels. A late season push might still be in the cards. Buckle up.

Prime Time 

retail category - prime day for ad spend

Prime Day only had a moderate impact on Ad Spend on the two days of Prime Day observed. However, we did see an explosion in the Luxury category immediately following — high-end brands like Burberry and Ferragamo did make a nice impact. I wouldn’t make too much of this as there is a lot of noise in the data – specifically in this category.

Soft Clothes

Retail Clothing Ad Spend vs. Total Ad Spend YTD 10-18-2020

Apparel and Footwear are outpacing all other forms of Retail. Now this could be a result of my own behavior, but there is a noticeable shift to comfort in the fashion sector. If you can make any type of clothing out of the same material as sweatpants and workout clothes, it should be done. I saw a pair of sweatpants overalls the other day. I now own a pair of sweatpants overalls.

Some Of The Things I Didn’t End Up Writing 

Since March, I’ve kept a list of potential topics, headlines, and ideas – basically anything that could be turned into a paragraph or two – for the newsletter. These are the worst ideas I came up with. They are terrible. Undeveloped for good reason:
  • What the Tech? (Not sure what I thought this would be. Pun game is tough)
  • Tenacious DSP (Self-explanatory) 
  • The Shia LaBeouf of Programmatic (This wasn’t going to be a slam either – I love Shia. The Kanye of acting) 
  • Amazom-nom-nom (LOL, I think this was about Fresh Direct or Whole Foods delivery?) 
  • The Last Great American Monopoly (I had an idea to do a T. Swift inspired newsletter and slightly change lyrics and song titles to be Ad Tech. I am not talented enough to pull this off. Also, It would be insufferable. New record is fire, tho) 
  • When I dip, you dip, we dip (Oof – probably from April)
  • The Supply Edit (Anyone else get into The Home Edit during quarantine?) 

Thank You

While I enjoy some time away from the Ad Tech game to welcome home my family’s newest addition, I want to thank you all for letting me into your inboxes for much longer than any of us thought when this all started. I had a blast doing it. I will make a few guest appearances from time to time and perhaps do a year’s end recap. Until then…

Hope you are Staying Safe, Healthy, and Happy.

Will Doherty
Chief of Marketplace Development
Index Exchange

See here for all of Q4’s insights and trends.