What impact did the events of 2020 have on third-party digital advertising for broadcasters? We’re answering that question in our 2020 Digital Benchmark Report blog series. We looked at industry verticals by digital advertising revenue and analyzed sales rep activity, comparing 2020 and 2019 data to understand how the pandemic influenced media organizations and advertisers alike.
In today’s final installment, we will get even more granular. Let’s examine how orders, proposals and CPM were affected in 2020.
Data point #1: Average order size remains steady, showing advertisers’ confidence in digital
This is what we found when we analyzed our customer order data for 2020 versus 2019:
The number of orders placed in 2020 decreased by 23% compared to 2019. This is what we would expect, given fewer active sales reps and less advertiser investment during the early months of the pandemic in particular.
The average order size, however, dropped just 1% in 2020. Interestingly, the size of advertisers’ orders remained remarkably stable. Why? Advertisers understand the power and ROI of digital advertising. After the initial pullback in March and April, most began to reinvest or even double down on digital channels. They realized that they still needed to communicate with their customers — some more now than ever — and that digital advertising was the most effective way to reach them where they were: online.
This emphasis on digital is consistent with the recent RAB-Borrell Annual Benchmarking Report. The Digital Advertising Boom of 2020, a blog summarizing the findings, reveals that digital sales across the industry were actually up 11.8% versus 2019, as well as:
- 23% of radio buyers paused their radio spend in 2020, with 43% of that group blaming the pandemic and 33% saying it was too expensive. 24% said they “moved the money somewhere else,” presumably to digital.
- Radio buyers now spend roughly the same or more on individual digital products as they do on radio advertising.
- Nine out of the top 10 marketing tactics used by radio buyers are digital, led by 96% of radio advertisers also buying social media.
The conversion rate of proposals to orders went up 1%. In another positive data point, sales reps were actually 1% more successful in 2020 in converting proposals to orders. This too, we believe, speaks to advertisers’ interest and confidence in digital advertising. In addition, it demonstrates that sales teams for broadcast organizations continue to improve. It seems they are rising to the occasion of becoming trusted marketing experts for their advertisers (and likely embracing this key to successful digital sales.)
Data point #2: CPM increases significantly in spite of pandemic downturn
Our final data point firmly supports the findings in the RAB-Borrell report: In five out of six categories of digital advertising products, CPM increased in 2020 compared to 2019.
These numbers inspire confidence for several reasons. They demonstrate that while the number of orders decreased in 2020, media organizations were able to charge more for their digital products, offsetting those losses. Further, they suggest that the real and perceived value of digital advertising is going up. Advertisers are willing to pay for more digital campaigns because they have already seen the return or feel positive about the potential ROI.
When advertisers pay more, media organizations achieve better margins. This is important for digital advertising sales. Because the margins for digital ads are lower than traditional broadcast spots, it can be challenging to engage sales teams in selling the new products. Better margins certainly help smooth those bumps.
The growth in CPM for digital products is particularly noteworthy for occurring in 2020, as other channels saw significant downturns. It proves conclusively that digital is here to stay and, more importantly, that it can become a significant revenue source for media companies. Digital enables organizations to show their advertisers precisely how their investment paid off. By proving their impact, media sales teams can build stronger relationships, demand higher prices, and continue to expand their offerings — and their opportunities.
While the pandemic had a marked effect on broadcast and media in 2020, the long-term trend of digital being a valued advertising outlet is clear. With the right products, training and pricing, media sales reps will be poised to drive their digital advertising growth in 2021 and beyond.
Thanks for joining us in our analysis of 2020 versus 2019 customer data. You can revisit Parts 1 and 2 of this series below, download the full Marketron 2020 Digital Benchmark Report E-Booklet, or request a demo to see how Marketron can accelerate your digital advertising initiative in 2021 and beyond.