The always volatile digital advertising market seems to be on an upswing as large publishers are seeing dollars return after a dreadful 2020. But with sweeping changes to ad targeting only months away, publisher and marketers’ direct sales conversations have added urgency.
The beginning of the pandemic saw massive drops in ad revenue as cautious advertisers pulled out of an uncertain market. Plus, rampant block-listing of news related to Covid-19, which marketers deemed unsafe for their brands, meant publishers weren’t fully monetizing their highly-trafficked content.
Slowly, but surely, the tide has turned.
“Business is strong,” said Marla Newman, evp of digital sales at Meredith Corporation, whose properties include People and All Recipes. “It’s kind of exceeded what we thought the comeback would be.”
Overall, digital advertising had been trending upward since the end of last year, with revenue in Q3 and Q4 of 2020 up 11.7% and 28.7% year-over-year, respectively, according to an April report by ad trade body the Interactive Advertising Bureau.
Audio, video and private marketplaces make the hottest comebacks
Programmatic spend was the first to turn back on after a rocky summer, given that it allowed advertisers to easily come in and out of the market, targeting homebound people on their digital devices just as screen times soared.
Kurt Donnell, president and CEO of Freestar, an ad management platform that relies mostly on programmatic advertising, said March CPMS were up nearly 100% year-over-year. Compared to the first half of last March, before the ad industry collapsed, CPMs are up 20% this year, he said.
Audio, video and premium programmatic offerings (like private marketplaces) are the hottest channels during this upswing, according to publishers.
“I don’t think there can ever be enough video supply,” said Donnell, who added that the company is on pace to grow 50% year-over-year.
Longer sales cycles on the horizon
Publishers are also seeing an uptick in direct deals. Speaking on background, a Vox Media executive told Adweek that the company is seeing direct sales rebound as once-skittish advertisers are now more willing to strike longer-term sponsorship deals, which is “certainly a shift away from the short-term planning” of last year.
While there’s a cautious optimism in the air, publishers are dealing with the new normal of shorter sales cycles. Advertisers have been demanding flexibility throughout the pandemic, and that hasn’t gone away. Both the Vox executive and Meredith’s Newman said planning cycles in many cases have shrunk down to a week or two, when they’re typically made monthly or quarterly.
“It makes projecting sometimes challenging, but I think it really requires having operations that can be really fluid,” said Newman, who added that Meredith’s ad business is performing better than it did in both 2020 and 2019.
Certainly in the first half of 2022 is when we’ll see the actual … buying trends shift, so it’s a little bit more brands getting ready, publishers getting ready.
Vox executive
Last year, publishers also saw the decimation of their events business, which can bring in serious cash from both sponsors and ticket sales. Many have pivoted to online events, though in-person shows are coming back before the end of the year.
Meredith is hosting its annual Food and Wine festival, which has been running virtually, in Aspen, Colo. this September. Vox is also planning on kicking off in-person events around that time period, as is Condé Nast.
Still, publishers don’t seem to be ditching virtual events once live shows are back, as the online forum allows them to reach more people, gather more email addresses via sign-ups and develop more leads.
Virtual events similarly allow brands to reach more people, with Newman saying event sponsorships are “a great way to round out advertisers’ overall plan.”
Bracing for a dent to publishers’ revenue
This welcome return of ad revenue might come to a head. Pandemic aside, major privacy and tracking changes from Google and Apple will fundamentally disrupt the way online advertising works, possibly hurting publishers’ bottom lines.
Larger publishers are in the best position to weather the storm, as long as they have a robust and developed first-party data offering. The changes from Google and Apple are likely to force marketers and publishers to work more closely, so the publishers with knowledge of their readers should fare well.
But right now, it’s mostly conversations. Some publishers are adopting third-party cookie alternatives, while some advertisers are testing out different IDs, but right now the two sides aren’t yet fully transacting the way they will have to in the near future.
“Certainly in the first half of 2022 is when we’ll see the actual … buying trends shift, so it’s a little bit more brands getting ready, publishers getting ready,” said the Vox executive. “But you’re starting to see the signs of it.”
