As digital advertising trends go, audio advertising has one very important aspect to it – to fill a gap in screenless media and enable more touchpoints with audiences, especially young(er) ones such as the Generation Z and Millenials. Simply put, in a world where we are oversaturated by display ads, there are places where brands can’t penetrate with visual media.
Thanks to advances in programmatic audio and the shift in user behavior, there are now more opportunities than ever before for brands, as well as publishers and content creators, to take advantage of the momentum and engage (and monetize) customers from a new angle. From multiple formats like pre-recorded ad creatives and dynamically inserted native ads to sound branding and personalized in-app ads, there are plenty of options to tailor messaging and deliver it in a way audiences will embrace and enjoy.
Under normal circumstances, this post would largely deal with emerging digital audio advertising trends and logical predictions that marked the year before. However, the COVID-19 pandemic has thrown a wrench in the works, leaving much of the industry scrambling. As someone who is closely following the situation (and has been for the better part of the past 10 years), here are my observations and forecasts, along with color commentary from Dominick Milano, SVP, Sales and Business Development, North America at Targetspot – an advanced digital audio ad platform connecting top national brands and local advertisers to highly engaged Internet and mobile audiences.
Behavioral changes are driving ad spending
It’s no secret that the pandemic is affecting virtually everyone, and businesses across the landscape are dealing the best way they can. Marketing and sales are in considerable decline as people are saving money due to fear of/and unemployment. The advertising industry has been hit hard. As of early March 2020, the advertising industry in the United States is projected to experience losses of $26 billion in revenue, a 10% decline.
However, the fact remains that while there’s a decline in global ad spend which is directly affecting advertising costs, there is a dramatic increase in media consumption. Over 80% of consumers in the US and the UK consume more content since the outbreak. The media sector is the big winner, especially the news category that saw a 52% increase in ad spend as people try to keep up-to-date on the latest coronavirus developments. The effects haven’t been uniform, though.
“People are now living lives in their homes with mobile devices in their hands. They are turning to audio for streaming music to comfort them throughout the day, listening to spoken word content to inform them, watching news reports on TV, and binge-watching commercial-free OTT programs to escape the COVID content on news programs. These are all the behavioral changes that have impacted media consumption.” Says Milano.
In times where most of the brands are holding back, this is a massive opportunity. Some channels and content show more promise than others, and that is where the advertising focus should be – on resilient channels where audiences are congregating right now. Because of its simplicity and personal connection, audio definitely belongs in that group.
“Brands that want to advertise are having to think about behavioral media consumption changes to figure out where and how to connect with consumers,” says Milano. “For example, a significant amount of ad spend would be attributed to the NBA and NHL playoffs, as well as the opening of the baseball season. Beyond the games themselves, all the content created around these events, including across digital channels, is just not there. As a sidebar, audio with its companion-like nature is filling in quite well during these times.”
Audio advertising is the easiest path to brand safety
“Consumption changes are one reason for the decline in spend but not the only one”, Milano continues. “Another reason is the “message”. When people are sick, even dying, and when so many are now unemployed, a brand has to establish the right message. So many campaigns planned for Q2 and even into the remainder of the year need to be reassessed. The situation is changing daily, literally. So there is a constant review of what is appropriate, effective, and necessary to communicate to audiences.”
In that sense, digital audio advertising has an exceptional ability to quickly change a brand’s messaging so it matches the current climate and is not tone-deaf. The fast turnaround to a creative that speaks to the consumer right now is something video as the leading medium of today can’t offer, nor can most other digital media formats. Audio content is far easier and more efficient to change.
Case in point: audio advertising of major U.K. supermarket brands. They focused on refined audio ads to see how they resonated with listeners for attributes such as authenticity, thoughtfulness, relevance, and more, as well as how likely people were to purchase from those brands after listening. The result was 18% more purchase intent than usual.
“Of course, the economics are having the biggest impact,” Milano points out. “Businesses being forced to cut back or close has resulted in staggering unemployment numbers and a global recession.
This relates back to the messaging. For some advertisers, the usual call to action may not be appropriate or generate a ROI. However, branding remains critical and even opportunistic. This indeed is a time to use share of voice to gain share of mind against competitors who might not be spending.”
He then pointed out the Post/Kellogg’s story of the Great Depression. Being one of the two players at the forefront of the packaged cereal market, Post didn’t think it prudent to advertise then. Instead of cutting their advertising budget like their rival, Kellog’s saw it as an opportunity to gain mindshare and by the time the depression ended, the company became the dominant brand in the cereal space and remains a major player to this day.
Identifying the audience’s most receptive moments is a vital part of effective messaging, and audio advertising offers great targeting opportunities to build relevance in some of the more critical moments and hypersensitive environments. The golden rule in digital advertising is placing your users first – something the personal and intimate nature of audio content can easily convey.
The impact will be felt for quite some time but brands that build trust now will be the winners in the long run
It’s difficult to provide any meaningful digital audio advertising forecast as there is a lack of valuable data right now. Milano maintains we need a better understanding of the core issue at hand and we both agree that COVID-19 will change the spending habits of brands as the effects linger on.
“The crisis won’t have an end date. This is eventually going to dissipate, and hopefully then not resurface. As society begins to open up, so too will brands begin to spend again. The question is – at what level? It will depend on the economic impact they have endured.
For those that endure, the ad spend will be much more strategic than ever before, and that is to make sure every dollar is well spent. There will be opportunistic spending even before the crisis ends, as well as into it. If you have a brand that is more prevalent for these times, then we will see certain sectors spend more- imagine the impact of a local business advertising “We have toilet paper!”. New businesses and new products will also take advantage of the opportunity to connect with consumers,” Milano concludes.
The opportunistic spending is perhaps best seen in the example of podcasts, where ad revenue continued to grow, despite the lower number of podcast listeners due to the disappearing commute and many direct response advertisers putting a halt to their campaigns. Nobody is saying there won’t be any disruption to Q2 revenues, probably Q3 too (perhaps even beyond) but unlike other media types, audio advertising is fairly healthy and not experiencing waves of cancellations.
In times of uncertainty, audio advertising offers more certainty than others
Until sense of normalcy returns, it’s vital to understand both the supply and demand side of digital advertising right now, particularly digital audio advertising trends, to successfully adapt and identify opportunities. With more and more data on audience behavior being gathered, now is the right set of circumstances to create a relevant and compelling message. Combined with the one-on-one connection that audio facilitates, brands should be focusing on how to best take advantage of the medium.
In a way, it’s a win-win situation. If the coronavirus gets contained with minor disruptions, any displaced ad budgets can easily be reallocated for H2 2020. If the situation stays the same or gets worse, the advertising industry could be more significantly impacted but it won’t change the fact people will be spending more time at home, which means more time on streaming services, social media, and – more time listening, as the surge in smart speaker usage shows. All of those could mean increased ad investment
For now, we’ll have to wait for the first official H1 lockdown figures in a couple of months to get a more precise sense and ride this thing out.
Make sure you’re following me on Twitter for ongoing updates, tips, and industry takeaways!