How COVID-19 Impacts Advertisers on Amazon, Google, & Facebook
COVID-19 has rapidly changed the way we live, forcing billions of people to take refuge at home in order to help contain the spread of the virus. For advertisers, this has caused different shakeups as brands look to understand how users are now spending their time and consuming media for the foreseeable future.
Additionally, advertising networks have shifted from norms in order to adapt. Here’s a look at how three of the largest digital platforms, Amazon, Google, and Facebook, have been impacted by COVID-19 and how that affects advertisers.
Amazon’s Free Two-Day delivery revolutionized the world of e-commerce, setting the standard for speed and convenience for when it comes to delivery. One study found that 9/10 consumers saw free shipping as the #1 incentive to shop online. Experts like to deem this the “Amazon Effect” as consumers see this as expected for all their online purchases. When the world stays home, however, those standards are being tested.
So much demand has come in that the company has reported to be looking to hire 100,000 more warehouse and delivery workers in order to keep up. Reports show that customers are seeing delays in receiving certain items in addition to utilizing its faster delivery services like Amazon Fresh.
On March 30, Instacart and Amazon workers were walking off the job with plans for Whole Foods to stage a “sickout” the following day. As the disease progresses, there may be delays in service as workers participate in strikes and walkouts to bargain for better working conditions based on concerns of the COVID 19 virus being in warehouses.
Similarly, Amazon has virtually cut search advertising on Google Ads since March 11 across a wide range of categories based on a report by tinuiti. We at Chief Media can also confirm seeing this dynamic as well across our clients’ search campaigns. To give up on search ads right now means that Amazon does not want to increase demand for products on its platform anymore. What does this mean for everyone else? It will make serving text ads cheaper for advertisers as there will be less competition from the likes of Amazon.
For brands that utilize Amazon to sell and distribute their product, it will be important to keep an eye on these disruptions as the reliability of Amazon’s delivery is for the first-time seeing system-wide problems.
Analysts predict that Google could see revenue drop $28 billion dollars because of COVID-19. As we mentioned earlier, Amazon has virtually cut its search advertising, but they are far from the only company to do so. Travel and hospitality are historically big spenders on search ads (historically spending close to $10 billion on search ads annually) but have had their campaigns pull up significantly as countries enact restrictions and consumers stay at home. Google is dealing with having its workforce moving outside the office so there have been reports about delays in getting ad copy approved, slowing changes to campaigns.
The question for brands will be whether has it become a time for deals on media buying by competitors dropping out or has demand evaporated too much to advertise? The answer will vary based on industry, but there are some good opportunities on Google.
Since the COVID crisis began, internet usage is up 50% overall, but for Google the biggest gains have come from display network (up 13%) and YouTube traffic (up 21%). This aligns with changing consumer behavior as more Americans are spending time browsing the web at home and streaming on YouTube. In terms of getting out brand messaging, rich media content seems to be one of the best plays available right now.
Google like many companies is upping their philanthropy during this time period, especially for businesses that are being affected. Google has reportedly set aside $800 million in aid during the crisis, which includes $340 million in ad credits for businesses. Those brands who have been active users since 2019 should expect to see some extra money in their ad accounts over the next couple of months.
Facebook is expected to see a drop in revenue to the tune of $16 billion because of COVID. Like Google, Facebook is entrenched across a wide variety of industries which are hurting because of wide-spread shelter at home orders. In addition staff are working remote so there are already delays in getting ads approvals through.
That all being said, there have been some positive developments that advertisers should be aware of. With decreases in ad spend there have been decreases in CPMs and CPCs making it easier to reach more people and get engagements. Alongside this there has been an explosion of users utilizing Facebook’s messaging and live video features. It is a great opportunity to get front and center for consumers as inventory has not only opened up more, but is not being bid on as frequently.
Likewise philanthropy is also something Facebook is looking towards offering $100 million in grants to help 30,000 SMB’s that are struggling. Lower cost inventory and potential free money from ad networks mean that unless businesses are prevented from operating due to the shutdown, this may be a good opportunity to be able to buy low.
If you are interested in seeing how your company can make strategic advertising decisions during this time, contact us for a media plan recommendation.