How to Survive the COVID-19 Crisis in the Online Ad Industry

Sergey Belov

May 21, 2020

New rules and limitations that were imposed in order to fight the proliferation of COVID-19 have disrupted the sustainability of numerous offline businesses. However, the coronavirus crisis’s impact on the retail and e-commerce industries is rather mixed.

Some retailers – such as Amazon – have benefited from the outbreak’s short-term effects, reporting increased sales figures as consumer trends are shifting from offline to online purchases.

However, despite the growth of e-commerce purchases in some areas, the absolute number of sales did not increase. In fact, according to the US Department of Commerce’s report, retail sales decreased from January to February 2020 by 0.5% due to coronavirus-related concerns.

Also, according to Adv.Cake’s data, e-commerce sales have decreased by 30-40% in Brazil, Poland and Germany compared to the same period last year.

On the other hand, as an increasing number of consumers are avoiding or limiting physical store visits, shopping malls and brick stores that lack e-commerce activities will experience significant revenue losses.

Furthermore, the virus and related government measures have negatively impacted many businesses as well as the global ad industry.

All these factors require businesses to carefully analyze the changing dynamics of the online advertising industry and adjust their Marketing strategies accordingly.

What Will Happen to the Online Ad Industry?

Although it might be a counterintuitive idea, statistics show that online advertising rates are going to slow down during the COVID-19 period. This brings a lot of companies to the idea of the ad budget redistribution.

Last month, eMarketer projected that the global media ad spending would reach $691.7 billion in 2020, representing an increase of 7% from 2019.

While the firm’s predictions still count with an increase – which is only 0.4% down from the organization’s previous forecast of $712.02 billion –, recent events impacting the ad industry give us the opposite impression.

With this year’s Olympics postponed to 2021 as well as the travel industry’s projected ad revenue cuts to 10%, businesses will likely relocate their budgets in 2020 if the current outbreak persists.

The state of the online ad industry today remains extremely volatile. Unpredictable consumer behavior presents market players with a necessity to adapt their business and digital advertising strategies to rapid changes.

What Can You Do to Survive the Crisis?

Many entrepreneurs and marketing leaders choose to reduce the budget for advertising in an attempt to minimize the effects of the crisis. While it’s a common practice among organizations in times of recession, cutting your advertising budget will only provide temporary, short-term benefits in terms of overall business performance.

Doing so will hurt your business in the long term as you will have to spend an increased amount of funds to get back on track, to restore brand recognition, and reclaim your lost market share.

Since many of your competitors will cut their ad spending, the noise level in a brand’s product category could decrease, which makes it easier for your business to attract new customers and strengthen your niche position.

As a result of decreased competition, you will be able to broaden your customer reach and make connection with your audience much stronger. More people will see your ads, and you will gain credibility among your clients since a part of them will remember that your business remained active even in times of crisis. In the next section of the article, we will describe 5 specific steps you can undertake in order to utilize your online marketing in current turbulent times.

Diversify Your Ad Budget With a Focus on Performance-Based Channels

Traditional advertising, such as placing context ads, working with Facebook or using other channels can demonstrate extremely unpredictable results. User demand is unstable while competitors can behave irrationally or even chaotically, raising advertising rates despite having negative revenues. In the current situation, a rapid increase in SEO will simply not work as well.

Digital Advertising is going through a rough patch right now. In this context, I recommend diversifying your business’ budget into more predictable, performance-based advertising channels. In current market conditions, affiliate marketing is the optimal vector for redistribution of the advertising budget since you pay only for real orders which allows you to decrease company’s expenses.

Affiliate Marketing or CPA is pay-per-action advertising. For e-commerce, this concept will mean that an order is issued and purchased by the user. In the financial sector, an example will be an issued loan. Fortunately, CPA channels do not lose their economic efficiency even during a crisis, because a payment is made only for real attracted sales. This also allows you to easily track performance of the advertising channels.

However, you have to do affiliate marketing right to get ahead of your competitors as an increased number of businesses will realize the potential of this channel during times of crisis.

Below, you can find five handy tips you can implement to optimize the performance of your CPA networks and achieve the above-mentioned goal.

Competitive Analysis

You need to clearly understand the strategies of your competitors, know which tools they use and find out how much they pay to the webmasters. Doing so will help you formulate a competitive offer for your business partners so that they would prefer to work on your project.

Order Status Automatization

When you work with affiliate networks, it’s essential to transmit the information status to the webmasters in order to ensure that they will receive their money on time. You need to do this as quickly as possible to attract webmasters to your project. The best option here is to set an order status auto check.

Formulation of Detailed Statistics for Webmasters

Only you know which product categories are the most profitable, where the average check is higher and what increases your conversion rates. To improve communication and minimize errors, I recommend informing your webmasters on the above-mentioned subjects.

Webmaster Analysis

I recommend collecting all the statistics from each network in one place and finding out which webmasters are working with you and which of them are the most effective. This process will help you understand how to maximize the benefits from a specific channel and how to find a way to increase your sales.

Fraud Control

There is a risk to encounter fraudulent activities such as cookies stuffing or substitution of retargeting codes. This is a standard situation in CPA networks which is not dangerous if you use the right tools to protect yourself.

Using brand monitoring allows you to avoid webmasters who try to hijack your ads and take advantage of your reputation. Continuous monitoring of brand contextual advertising will both protect you and help to save 20-30% of the ad budget.

Improving Your Brand’s Position Is the Key to Surviving a Crisis

Contrary to early projections, global ad spending will likely decrease in 2020 as businesses are trying to cope with the negative impacts of the coronavirus pandemic.

However, the key to surviving a crisis like this one is to diversify your budget in performance-based advertising channels.

Indeed, the current market situation can be described as turbulent and unpredictable. Given the high cost and dubious effectiveness of traditional advertising channels, CPA networks are becoming a powerful tool for promoting your company. Affiliate marketing allows you to make a payment only once a purchase is made which becomes a good option in helping your business manage the budget efficiently in times of crisis. This way, you can maintain your market share, reach more people, and improve your brand position, while your competitors are spending less on ads.

Using specific strategies – such as competitive analysis, order status automatization, formulating statistics for webmasters, webmaster analysis and brand protection will ensure that you stay ahead of your competitors who are also leveraging affiliate marketing to survive. You can either manage your affiliate marketing campaigns in-house or consider hiring an agency that specializes in CPA networks.