How are marketers in Australia coping with reduced ad budgets during Covid-19?

How are marketers in Australia spending their money?

In times of immense pressure and reduced budgets, there is a natural human reaction to revert to what you know and trust. The same can be said for ad spend but as lockdown measures ease, marketers could find new channels to invest in.

This is reflected in online advertising growth in Australia slowing in the first quarter of 2020, delivering overall year-on-year growth of 3.8%, due to the impact of the post-holiday season, bushfires and Covid-19.

General display, search and directories in Australia declined from the preceding December quarter by 12% and 4% respectively, while classifieds grew 2%, according to the IAB Australia’s Online Advertising Expenditure Report released last month.

Display has suffered from many brands not being able to clearly understand its ROI within their marketing ecosystem, which could explain its significant decline, believes Michael Titshall, vice president and managing director at R/GA Australia.

“Classifieds, however, are tried and tested over decades and make sense in a period where many people have more time to read,” he explains.

“However, the growth in classifieds is not necessarily driven by the brands responsible for the decline in other channels but could be due to increased spending from other sectors of the market that have different needs."

Paul Sigaloff, managing director for Australia and New Zealand at Verizon Media notes that digital ad-spend in Australia is somewhat seasonal and generally does decline from the December quarter to March quarter.

However, the report found that ad expenditure experienced healthy growth year on year across search and directories and display, by 6.0% and 2.9% respectively, in the first quarter of 2020, compared to the first quarter of 2019. Classifieds meanwhile, were flat year on year at .02%.

“We are seeing the impact of Covid-19 and the scaling back of digital investment from the market starting to show at the end of March as there is a much steeper quarter on quarter decline this year (-8.6%) in comparison to the same quarter on quarter period in 2019 (-4%),” explains Sigaloff.

“There is some light at the end of the tunnel as recent research from the IAB shows that approximately 50% of advertisers who had previously pulled spending are now back in market investing, though at mostly at a reduced level.”

Video and programmatic advertising continues to grow

Video advertising continued to grow, according to the report, increasing to a 53% share of display advertising, an 18% growth in the same quarter last year.

This comes as no surprise to Stella Berry, the regional business director at Adludio, as she points out videos are a great way to reach the consumer and engage with them.

As much effort and investment is injected into the creation of video assets, she fully believes marketers will continue to use videos as a vehicle to communicate their brand’s message.

“Videos enable marketers to be as creative as possible - the sky is the limit when it comes to the imagination that goes into some creative concepts. However, the days of static banners are well and truly over,” explains Berry.

“With the emergence of the ‘zombie scroller’ consumer, marketers do not have many options to engage with their audience. On a channel like mobile for example, and considering that the average adult attention span is eight seconds, brands need to effectively capture the attention of their audience efficiently without being intrusive. There’s a lot for marketers to take into consideration in resolving a rather complex equation.”

In addition, Sigaloff says the Covid-19 lockdown period created the ideal environment for video consumption and attracting advertising investment as a result.

“In short, we are seeing healthy demand in our video inventory in line with the rest of the industry. We expect video advertising to continue growing as we enter a seasonal period in the year where we find audiences are spending more time indoors and anticipate some residual effect from the lockdown,” he explains.

When it comes to media buying, some 43% of all advertising was bought programmatically, compared with 38% being bought from agencies using insertion orders.

The percentage of inventory bought directly from advertisers increased to 19%, while 56% of content publisher’s video inventory was bought programmatically.

While Covid-19 has fast-tracked the adoption of e-commerce in Australia, Sigaloff believes programmatic is also well-placed for continual growth because the programmatic offering for advertisers continues to evolve.

“The flywheel of growth in programmatic continues as healthy returns empower brands and agencies to seek out more knowledge and education which in turn drives further ad investment,” says Sigaloff.

“As the country and economy continue down the road to recovery, every advertising dollar invested counts and programmatic offers brands and publishers the ability to drive scale and efficiency coupled with intelligent audience segmentation to drive effectiveness.”

In addition, Titshall points out almost every brand is focused on winning in customer experience, and connecting it across owned and paid brand touchpoints is crucial.

“So programmatic will continue to grow given its ability to help deliver personalisation at scale, especially as digital channels grow in prominence across the purchase journey. That is of course if transparency continues to improve,” he adds.

Where are marketers in Australia spending their money?

The immense pressure on businesses during this pandemic is forcing marketers to reassess their approach to change with a sense of urgency.

Titshall says he is seeing two areas of focus. Firstly, marketers are doubling down on their core business and brand experience. Secondly, their growth investment strategies are moving from many incremental changes to fewer more significant changes, like e-commerce.

With Covid-19 lockdown regulations starting to relax, out-of-home is likely to make a resurgence in advertising investment, Sigaloff reiterates. The channel experienced the biggest year-on-year decline of 61% in investment for April 2020 and that is due to the government restrictions imposed on the population.

“We are anticipating demand for a broad reach and high impact DOOH formats to grow as we see community mobility returning to pre-COVID-19 levels and brands wanting to keep the same level of consolidated budget management, transparency and ROI from the omnichannel programmatic execution.”

As post-Covid-19 does not look like it will be a moment in time, there will be gradual changes to the way people live their lives over a number of years. The economic recovery and easing of restrictions will be driving factors for individual category spend, but so will the enduring changes to people’s behaviours and attitudes.

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