As digital ad rates crash, agencies see opportunity

Advertising is among the first areas that companies cut back on during an economic downturn. This seems to be true of the downturn from the COVID-19 pandemic, where many companies have reduced or stopped spending on advertising.

This has led to a collapse in prices for almost all digital ads, making digital advertising more economical. Even when the business of most digital advertising companies has come down by 30-40% during the lockdown period, they are seeing low digital costs as an opportunity.

Heeru Dingra, CEO, WATConsult said, “Since a lot of brands have taken a setback in terms of media spends, there is definitely a change in CPMs/CPCs. The unit costs on biddable platforms like YouTube, Facebook and Search have lowered by almost 20%.”

Metrics such as cost per thousand views (CPM), cost per click (CPC) are online advertising revenue models by which advertisers are charged by the publisher.

According to Gautam B. Thakker, CEO, Everymedia Technologies Pvt. Ltd, Facebook advertising becoming cheaper is an extremely good sign for the company.

“This helps us to push more brands on the digital platform at an economical rate. This provides a lot of opportunities for brands to expand their digital presence with lower ad rates,” said Thakker.

With cheaper digital ads, Thinq Advertising CEO Renjith Ramakrishnan sees a huge opportunity in terms of client operations. “Most social channels are reporting 30-70% more time on their platforms. Ad spends are lower as budgets tighten. Brands across all regions have consistently posted fewer pieces of paid content in 2020. This translates to a big increase in available ad inventory.”

He added, “CPM has decreased and is down by 33% compared to the six months before Covid-19. CPC is also lower, making the cost to advertise much lower for nearly every industry. But the click-through rate (CTR) has declined across all industries. As people are engaging more with organic content than paid, the CTR for all Brand accounts has declined by 17.2% since the new year. Overall, we see a 20% less cost in conversions.”

Madhavan Sankara, Founder and CEO of Madarth also mentioned that the company is seeing a steep drop of 30%-50% CPM and CPC prices due to a significant decline in competition.

“But, after a big and broad update of Google May 2020 Core algorithm, organic search results, Search Engine Results Pages (SERP) positions and CTRs have increased between 10%- 14% which means businesses with organic traffics are more to be shown. Meaning, Google is telling us to build a stable brand around our business,” said Sankara.

FMCG, Healthcare and Education are the hot sectors in digital advertising right now.

Sankara said, “Our FMCG clients are busy flowing their supply-chain while we are quickly readying them to become Omni-channel. Most of the CPG brands apportion 90% towards TV spends which will be reconsidered now. Digital spends will have to be marginally increased.”

Industry experts say the advertisers have decided to slow down and play the wait-and-watch game. With limited spends, the focus for marketers has definitely been more on digital.

“There is going to be budget cuts in advertisement spending, hence brand and its partners will have to work it out with shoe-string budgets and yet be more creative,” Said Thakker.

Despite the surge in adoption, said Dingra, it is speculated to register a decline in growth as compared to the CAGR growth of 27.42% projected by Dentsu Aegis Network India.

Suresh Tiwari, Founder and Managing Director, Triverse Advertising believes digital will some way or the other manage, it’s going to be a lot more difficult for non-digital advertisers.

“I’m seeing a definite shift toward digital advertising. The budgets or revenues have not gone up right now, but there has been a surge in people exploring the option,” said Tiwari.