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Digital Ad Prices Hurt By COVID-19 Pandemic

(Image credit: IAB)

Digital ad revenue rose 12% to $31.4 billion in the first quarter, with revenue starting to decline in March because of the Coronavirus outbreak, according to the Internet Advertising Bureau.

With businesses closed and demand down by the pandemic, publishers are getting lower digital ad prices with the biggest impact coming in display advertising, which is down 30% on a cost-per-thousand viewers (CPM) basis, the IAB said based on a survey of digital ad sales executives.

Ads on connected TV devices are holding up in terms of pricing. CTV CPMs are down 6%, compared to desktop video ads down 27%, smartphones down 28% and tablets down 29%.

“The decrease of CPMs is not a major surprise. But, with so much uncertainty in the market we need to rely on facts and hard data – even when it simply confirms our instincts – rather than assumptions,” said IAB president David Cohen

“For the foreseeable future we will be operating in a unique marketplace, testing the boundaries of supply and demand in a way we haven’t seen before,” Cohen said.

The first-quarter growth followed a strong year in 2019, with 16% revenue growth to $124.4, according to the IAB’s Internet Advertising Revenue Report, which is conducted by PwC.

The gains in 2019 were powered by a 33.5% increase in digital video advertising to $21.7 billion. Audio revenues grew 21.2% to $2.72 billion.

“US actions to curb the coronavirus outbreak started to take place in March of Q1, which is why Q1 performed as well as it did,” said Sue Hogan, senior VP, Research and Analytics at the IAB. “However we know from our discussions and polling from the sell- and buy-side that the rest of the year will be down, as nearly 70% of advertisers paused or cancelled campaigns in the wake of the outbreak. Media that provides flexibility in targeting and creative execution -- like audio and search -- is better positioned in the near term to meet buyers’ needs as they continue to make changes to adapt during the pandemic”.