When a major economic recession hits, one of the first things on business’ chopping blocks is their advertising budget. With anticipated decreases in consumer spending, it makes sense for many businesses to cut advertising costs as it’s a discretionary expense – businesses can still make and sell their products while profits are in decline.
However, this is more than just a recession, it’s a pandemic. With the majority of consumers stuck at home with nothing better to do than have their eyes glued to their screens, this presents a tremendous opportunity for businesses to make more revenue through online channels than before.
Many businesses are already behaving as we described. They’re closing their doors, slashing their ad budgets, and hoping for things to blow over. At the same time, more users are using social media, meaning there is more ad inventory than ever before.
Digital ad networks work on an auctioning system. You have a certain number of advertisers looking to target a specific audience and there’s only a specific number of users in that audience to advertise to. It’s standard supply and demand! If there are more advertisers, but the number of users stays the same, costs increase. If the number of advertisers decreases and the number of users increases, costs decrease substantially.
To support our point, Statista compiled Facebook ads CPM (cost per thousand impressions) data for the United States, comparing the months of November 2019 and March 2020. The average CPM in November was $1.88 and decreased to $0.81 in March. That’s a 57% decrease!
As for Google Ads, we’re seeing an average 35% decrease in CPCs (cost per click) for our legal clients, indicating that many law firms are abandoning their ad campaigns.
Now is a perfect time to advertise for just these reasons! Costs are lower than they’ve been in a long time.
Consumers can’t go to the store, yet are still consuming…
Since consumers can no longer visit their favourite retailers, they have no choice but to shop online. Since ad networks like Facebook & Google are collecting purchase history data on many of these users, it’s becoming even easier to target consumers who are actively looking for your product or service. Even more bang for your buck!
COVID-19 has been an awful wake-up call for our society, and not all businesses are able to come out of this as unscathed as they rely on people to visit their stores or events. If your business is lucky enough to be able to transition sales to online channels, however, then this is a giant sea of opportunity waiting to be conquered.