The past few weeks have been an adjustment for your teams, our industry and the world as a whole. We know there is much uncertainty at every turn, and we at Index hope to be a guidepost for you during this time. That’s why we’re introducing “IX Marketplace Pulse” – a weekly update where we’ll share exchange data, insights from buyers, and my own take on what you need to know to get you through the next few weeks.
We are witnessing many changes in the programmatic marketplace on a weekly, and sometimes, daily basis. We will aim to provide you the most up-to-date information, but please know shifts may happen soon after our newsletter is distributed. The commentary below skews to the U.S. market, but we will be covering regional-specific insights over the coming weeks.
While we hope to bring you takeaways that you can bring back to your teams, clients and partners, we also want to make sure we’re focusing on subjects most interesting to you. If you have any feedback, please email MarketplacePulse@indexexchange.com, and we’ll take your comments into consideration for our next newsletter.
Breathe, think, and stay healthy. I hope those in communities affected see a return to normal before long, and I hope you and your families are safe and well.
EVP, Global Marketplace Development
Ad Categories where we have seen the most movement include:
- Cruises, luxury, and air have come to a screeching halt. Hardly a shock.
- Travel was a midsize player in terms of category spend. But its demise, while smaller on a relative basis, is having an impact.
- Sporting Events and Sports Gambling are down significantly. Restaurants and bars have mostly stopped advertising.
- While entertainment is down,we are seeing more spend from streaming platforms. Significantly so, in some cases.
- Much of the drop in Auto are rental companies pulling back. If folks aren’t traveling, then they won’t need a car to take them around on their trip.
- Tier 2 Auto is also pulling budget back as test drives are no longer a viable call to action.
- Auto services/parts are also down, which is expected with declines in commuting.
- This category has been sluggish most of the quarter. We have seen smaller players exit the market, but larger retailers are filling some of their void.
- While largely resilient up until more recently, it’s now been impacted.
- There are some slight headwinds, but from what I can see today, it’s down as certain lines of business have stopped advertising. Like toilet paper. Understandably not where you need additional promotion in these trying times.
- Personal Care lines are increasing.
- An otherwise bright spot amidst a market with a lot of headwinds. B2B services and productivity tools are needed now more than ever as folks switch to WFH environments. More growth is expected here.
This is what I learned in my conversations with buyers. Buyers have quickly fallen into three categories:
- Status Quo: Creative is already booked, and budgets are loaded. These buyers are just going to see it through for the moment. No major changes.
- Full Stop: Advertisers are pausing campaigns until their businesses are able to re-open, or stopping advertising entirely until the epidemic is over (ie. travel, hospitality, etc). The latter are betting this is a short term interruption. I disagree. But alas.
- Retool and Restrategize: These are advertisers who want to focus on different products, or shift messaging due to sensitivities. This is the most important kind of buyer. They haven’t left but need time to get their strategy and creative in order. It’s no longer socially appropriate to run creative with groups of people, or families on picnics – a lot of 180’s in messaging are underway. This will take some time, but here are a few successful examples:
Which brings me to a really important point: Buyers need time to reset
- We’re all trying to figure out our new normal. Buyers need time to strategize with their team before creating, and executing, on a new plan. Think about it: agencies, along with nearly every marketer and brand, are adjusting to a rapid change in how they work. Many of these folks have never had to contemplate a full work-from-home schedule, and the success of the transition has varied widely.
- For many, last week was spent just trying to feel the ground underneath them. By giving buyers a bit of breathing room, you are giving them time to adjust. Do your best to figure out how you can help once they are ready to re-engage, and leverage your closest partnerships for information.
- For now, practice a bit of “buyer distancing.” It is not the time to overwhelm the inboxes of your buyers.
- With Sports and Entertainment postponed or cancelled for the foreseeable future (NCAA, NBA, NHL, MLB and now the Olympics), many marketers have significant demand with no home. Simply moving this into TV is not an option as TV is largely sold out. Digital video could be the new home, and CTV is in a great position to benefit.
- DOOH is on pause until people can actually – well – be out of home.
- The industry is starting to look at how keyword blocks are hurting the journalism we desperately need right now. As brands re-tool, they would be wise to examine how they can help live alongside this content in ways that don’t seem to bother many of the same buyers in linear and print. Neither of those channels will prop up journalism on its own. Digital is not the future – it is the present.
- Some smart buyers will figure out how to take advantage of the lower price and premium environment to drive brand success. And hopefully the rest will follow.
This is what I think based on all of it:
Disclaimer: This is the part where I tell you what I think about all the data. I don’t see into the future. I can also very well change my mind. This is just how I am processing and thinking about all the changes this past week.
CPG and Retail (eCommerce)
They have always, and still do, represent the biggest categories of demand on the exchange. They also stand to be the most successful in the new normal as they are experienced digital professionals. Many CPG marketing leaders know how the pipes work, but the lives of their customers are fundamentally different today than just ten days ago. As an example, working from home hasn’t made me less reliant on the essentials. I need soap, and razors, and ramen, and mac n’ cheese more than ever. More importantly – I need a place to buy it. These problems are new, but the infrastructure in place is well positioned to embrace necessary changes.
Traditional CPG v. DTC
Traditional CPG brands can’t afford to let DTC brands interrupt brand loyalty from customers, especially in a new work-from-home environment. Their customer base is in some ways less fragmented than they were a week ago. We are all literally a captive audience at home, and they need to leverage programmatic to reinforce their position. However, they must be careful to not miss the mark with messaging. Many of these companies fall into the “Retool and Restrategize” category, and I believe many will come back stronger than before once they, and their creative partners, settle into the new environment.
Many retailers still spent a significant portion of their marketing budget driving in-store sales and promotions. That’s gone for now. There is no reason to put efforts behind driving folks to stores. eCommerce is no longer just a revenue channel – it is their entire lifeline. All retailers need to become capital “E” ecommerce companies overnight. Like CPG, they have to retool and restrategize. They need to make adjustments quickly and shift marketing dollars into shipping programs and online offers. COVID-19 accelerated a consumer shift that was already happening to warp speed – smart retailers will make the adjustment, but they need time. The only problem is they don’t have much of it. It’s really only been one week for many to realize the world is different, and even when it goes back to normal, normal might look very different than before.
The Short- and Long-Term Playbook
In the short-term, buyers need to continue to foster their relationship with customers and drive as much sales as possible via eCommerce. Sitting on the sidelines seems attractive and safe, but it’s incredibly short-sighted. If you leave now, will your customers remember you when the world boots back up?
There is a long established axiom in marketing and sales that consumers are more likely to switch brands, or make big decisions during impactful life events like getting married, having kids, buying a home, etc. The theory is that during these times, folks’ preferences soften, and they’re open to new products and services. Guess what? The entire world is going through a life changing event at the same exact time. There is no playbook for this. Everything you do here will be new. You, like the rest of us, are going to have to make this up as you go along. There is no precedent for this moment. We are living inside of history. Scary and liberating all the same.