AdOps Recession 2022: A Wild Ride Ahead

Ad Optimization
August 5, 2022 | by aleesha
ADOPS-recession

Introduction

Since Q1 of 2022, the adtech industry has been facing a number of challenges that will make it difficult for publishers to grow as planned.

These challenges include the rise of ad-blocking software, declining session RPMs (revenue per mille), and a highly competitive market that requires more sophisticated products than traditional banner ads.

In the upcoming months, publishers will have to find ways to overcome these challenges in order to continue growing even during recession. Let’s dig deeper into the ongoing challenges.

The global ad spending slowdown is real as publishers brace for a downturn

Ad spending has been on the decline for years, and it’s only going to get worse over time. But why? Well, there are a few reasons. One of them is because of the global economy slowing down. When economies around the world slow down, everyone spends less money—including big brands who are responsible for much of your advertising revenue as a publisher.

Another reason is that consumers have become more aware that they don’t want to see as many ads online (or at all). This can be either because they’re sick of ads altogether or just sick and tired of seeing low-quality ones on their phones, tablets, and laptops all day long! Either way: bad news for publishers who rely on advertising dollars for survival!

As the economy slumps, cutbacks aren’t just a problem for publishers

Publishers are feeling the pinch. And so are adtech vendors. The CPM rates for publishers and broadcasters have been steadily declining since Q2, and this trend doesn’t seem to be slowing down anytime soon.

Advertisers too are feeling the heat from this slowdown; they’ve seen CPMs plummet by as much as 50 percent since March 2022, according to AdExchanger research reported in Digiday. This means that if advertisers slow down their bidding for ad inventory, publishers will not be able to scale their ad revenue as planned.

Publishers are feeling the pinch as well

adtech-recession

If you’re a publisher or broadcaster without enough capital at your disposal then you’re going to go under very quickly indeed! But perhaps even more worrying than these numbers is what happens when we look at things from an hourly basis: advertising salespeople can’t afford to work anymore!

That’s right—for most people who work in adtech right now it is impossible (or close) because these companies don’t have any money coming in through clients’ accounts so they can’t pay their staff–and let’s face it: it’s unlikely they’ll find another job quickly either because there aren’t enough openings out there right now given how many companies are laying off tonnes of employees due to the ongoing recession.

There was a slowdown in revenue growth in the second quarter due to less inventory demand

While ad revenue didn’t scale as planned throughout the second quarter, Q2 didn’t turn out to be as profitable for publishers as expected.

Other than that, ad inventory demand softened throughout the second quarter as well, meaning that publishers are likely going to experience lower revenues from their existing products and services than they did in 2021.

Q2 is not necessarily going to be a predictor of what is going to happen in Q3 & Q4.

Q2 is a small sample size and it’s not necessarily going to be a predictor of what is going to happen for the rest of the year. So you know if you look at historical data as examples, Q4 generates the most amount of revenue as advertisers bid the most during the holiday season.

There are lots of factors that could be involved here such as seasonality, & more events where advertisers tend to spend more money to get their ads served.

Calculate the estimated amount of ad revenue you can make in Q4.

Ad spend returns to publishers

recession-martech

One of the most important things to understand about the adtech recession is that it’s not all doom and gloom.

While ad network spend has taken a dip over the last two quarters, publishers are still expected to see an increase in ad revenue by Q4.

How do you make sure your business is ready for this?

Takeaways

The AdTech recession is real. The ad spend slowdown is affecting publishers, but the good news is that each quarter will have its own independent outcomes, so there’s still hope.

You can use this guide to help you navigate the current climate and plan for future success by focusing on:

  • Using data to fuel your decision-making process
  • Reinventing your business model (whether you’re an agency or publisher)
  • Split test demand partners to ensure you have advertisers that are bidding the most for your inventory.

What to do now?

The latest Luma report shows that the overall programmatic landscape is underperforming. The adtech slowdown has been a challenging time for the industry, but it’s important not to panic. Do not be worried about the current situation happening in the programmatic marketplace in general. If you’re partnered with an AdOps company, you need to understand that the impact is coming from the advertiser’s side.

While it’s tempting to focus on short-term performance and revenue, publishers should keep an eye on long-term trends and opportunities instead of cutting back too much at this critical juncture.

The best we can do is wait till Q4 when the situation can return to normal. Ultimately, the key is being flexible enough so that you can pivot when necessary while keeping an eye on how emerging technologies will affect your business model.

MonetizeMore offers their publishers split testing of demand partners to make sure you have the highest paying advertisers.

This is important because it helps you make sure you are getting the highest spending advertisers. The majority of popular adtech companies don’t offer this kind of split testing, and publishers often don’t even know which ad network is paying them the most. When publishers have a clear understanding of what each demand partner is capable of paying for their inventory, they can make informed decisions about which ones to prioritize.

Recession hurting your ad revenue? We can help you solve these issues and more! Get started here.

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