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OPINION
Not surprisingly, the huge drop in global economic activity during the Covid-19 pandemic is poised to make way for an unprecedented crisis. Businesses across all sectors, including media, today must future-proof their business models in order to survive. A new global context that places the focus firmly on local economies.
In mid-March, the start of lock-down in Europe led to a sharp drop in revenue for businesses across the advertising value chain (agencies, trading desks, SSPs, DSPs, advertising networks and publishers). Faced with an unprecedented health crisis, advertisers preferred to suspend their campaigns amidst concerns of how to communicate during a crisis and preserve their budgets in the face of ongoing uncertainty.
A reasonable reaction, perhaps, but a heavy blow for the publishers who strongly depend on advertising investment from these brands. According to a French study by Mind News’s Adomik barometer, publishers lost an average of 45% of their revenue in just the first month of confinement. Ironically, at the same time, their sites recorded up to twice as much traffic as before the lockdown. It is too soon to estimate the full loss on publisher revenues, but early numbers clearly suggest that they will need a strong recovery in order to survive this crisis.
While online advertising professionals are planning to ramp up activity at the earliest in September, many publishers have put in place short-time working schemes to adjust their costs and resources. However, these measures alone are not sufficient to reduce the economic and organizational consequences of the Covid-19 crisis, or to future proof publishers for future crises. Many publishers are at risk of disappearing.
This is particularly the case for independent local media already powerless against large groups and global platforms. A situation that puts back in focus the dominance of the digital giants over advertising investments. By capturing €5.2 billion in 2019, Google and Facebook represent 75.8% of the French advertising market and eMarketer’s forecasts indicate that this proportion is supposed to increase to 76.7% in 2021. This same trend is global, with the Duopoly accounting for 60% of digital ad spend in the U.S. too.
After such an unprecedented health crisis and in the face of a serious inevitable economic crisis, the advertising industry must make every effort not to fall back into its old habits. The effects of the recovery will depend on our efforts to promote local media, whatever their size, and to raise awareness among brands. Like consumers who have adopted more conscious and responsible consumption during this crisis, private and public advertisers must understand more than ever the impact of their choices on the sector and more generally on the local economy.
By committing to localize their investments with local publishers (rather than enriching platforms who are already big winners in the health crisis), they could play a major role in the sustainability of the publishing ecosystem. The ball is now well and truly in the court of the brands.
Julien Mosse
Managing Director Southern Europe, Benelux and LATAM at Outbrain
About: Outbrain is the world’s leading discovery and native advertising feed for the open web. A third of the world’s Internet-connected population explore and discover information through its feed technology, which is trusted by emerging to established brands and integrated into thousands of media companies’ tech stacks to manage and monetize their publishing operations. Outbrain operates in 55 countries and is headquartered in New York City with offices in 18 cities worldwide.
