Looking Ahead

COVID-19 has completely shifted every aspect of life, from our personal interactions to the way we conduct business. Along with that, the digital marketing industry has changed considerably as companies adapt to new business models and selling processes to account for the pandemic’s changing demands. More companies are working from home, offering new opportunities to promote e-commerce, engage with new audiences, and book services online.

This post will analyze the information provided in our inaugural Q3 2020 Benchmark Report, including the impact COVID-19 had on PPC metrics throughout 2020. We analyzed data from more than 5,000+ marketers in varying industries when gathering information for our report. We specifically studied CPM, CPC, and CTR metrics for Facebook, Instagram, LinkedIn, Twitter, Google, YouTube, Quora, Microsoft, and Pinterest. The results are based on data analysis of customers, clients, and industry partners.

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How did COVID-19 impact marketing budgets in 2020?

CTR, CPM, and CPC:

As much of the world shifted to working and learning from home, 2020 saw a significant increase in individuals spending more time on their mobile phones, tablets, and laptops. As a result, CTR rose for several platforms, as individuals were more inclined to click on an advertisement while scrolling through their newsfeed, watching a YouTube video, or conducting a Google search.

On the flip side, many marketers were forced to reduce their ad spend significantly as COVID-19 spread worldwide. CPM and CPC costs were reduced as a result, which can be seen across several platforms during the first and second quarters of 2020. These metrics rose steadily throughout the third quarter, and it is projected they will continue to grow with the promising potential of a COVID-19 vaccine in 2021.

SEM/PPC:

Little was known about COVID-19 in the United States until the end of the first quarter of 2020. As a result, the first quarter of 2020 saw the highest total channel spend on SEM/PPC, social media, programmatic, and display services. As information regarding the pandemic became more widely available, marketers reduced their ad spend across the board, which led to a significant decrease in spending in Q2. The third quarter of 2020 saw a gradual increase in spending as businesses slowly reopened and information regarding the virus became more widely available.

Additionally, as companies shifted almost entirely online, they recognized the need to educate consumers on their health safety guidelines, social distancing policies, and new digital purchasing processes. As a result, SEM/PPC remained the top channel spend category as marketers sought to generate new business, educate current customers, and increase revenues.

Which industries spent the most on advertising in 2020?

Higher education institutions assisted living services, colleges/universities, fitness centers, and banks/credit unions were among the top advertising spenders in 2020. Both colleges/universities and gyms/fitness centers shifted their models to offer virtual classrooms and remote personal training options, leading to a need to inform their customers of these major changes. 

The elderly population was among the most at-risk for contracting COVID-19, making many families hesitant to send their loved ones to nursing facilities. As a result, assisted living communities were among the top ad spenders in 2020 in an effort to educate consumers on the health parameters they were implementing to keep the elderly community safe. 

Banks and credit unions were also among the top advertising spenders as countless individuals refinanced their mortgages and bought or sold new properties due to job losses/gains and career shifts. 

How was ad spending impacted in 2020?

Facebook

Facebook ads rose considerably in 2020, which could be due to Facebook changing how they gather data for iOS 14. Additionally, in March of 2020, Facebook banned face mask sales to protect against scams, inflated pricing, and medical supply shortages. However, they reversed the ban in June, which may have led to an increase in Facebook advertising in Q2. 

Instagram

According to Instagram, 200 million Instagrammers visit at least one business profile on Instagram per day, and 60% of users discover new products through the platform. For this reason, it comes as no surprise that marketers continued to put funds into Instagram advertising in 2020, albeit at a reduced rate.

Instagram

In June of 2019, Instagram expanded its ad offerings to include paid placement on the Instagram Explore page. This effectively increased the volume of ads they can sell and helped marketers compensate for the decline in organic reach. The vast majority of Instagram users make purchases from ads in their Instagram feed, which was reflected in the rise in CPM, CPC, and CTR throughout 2020. Instagram stories proved to be the more cost-effective option when compared to Instagram feed advertising, which is evident when comparing the median price for CPM and CPC throughout the year.

LinkedIn

LinkedIn launched Objective-Based Advertising in September 2019, allowing advertisers to choose from three campaign goals: awareness, consideration, or conversions. Offering these customizable ad options may have attributed to the spike in CPM and CTR, which rose considerably quarter-over-quarter throughout 2020.

LinkedIn Ads

Twitter

Twitter saw a decline in CPM, CPC, and CTR throughout 2020. Several factors may contribute to these numbers, including Twitter’s shrinking user base over the past year and a half. To help continue to generate advertising opportunities, which is its primary source of revenue, Twitter began experimenting with showing its loyal users more ads in 2019.

Google & YouTube

CPM, CPC, and CTR for ads in Google search rose considerably in 2020. Industries such as food & grocery, health & medical, non-profit, finance, etc., experienced a higher number of click-throughs and impressions due to COVID-19. Other industries such as automotive, education, dining, retail, and beauty & personal care poured funds into Google advertising to educate consumers on new online purchasing processes and safety measures.

CTR increased in 2020, indicating that more users were clicking on the video ads they viewed on YouTube. CPM and CPC dropped in the first and second quarters, making it cheaper for marketers to advertise through the platform.

Google and YouTube Ads

Microsoft

With the holidays around the corner, Microsoft has rolled out segments tied to seasonal events for retail, shopping and advertising. Advertisers will set up targeting and have the same features as other in-market segments such as auto and travel. For this reason, CPM, CPC, and CTR may rise into the fourth quarter of 2020 and throughout 2021, regaining similar numbers seen in 2019. 

Microsoft Teams

Quora

CTR remained strong throughout the year and continued to rise in the third quarter of 2020. This may be due to advertisers’ unique ability to use Quora ads to answer users’ specific questions directly through the platform. Additionally, Quora began offering the option to advertise in 2018, making it a relatively new option that some marketers are not yet aware of. This gives advertisers a unique advantage, as ads are less frequent and have more opportunity to stand out.

Quora

Pinterest

Pinterest saw a significant rise in CTR in 2020, which may be attributed to the ease with which users can click on ads in the platform. Pinterest weaves promoted pins with traditional pins, making it easy for users to click on ads and videos while scrolling through the app or website.

Conclusion

COVID-19 had a significant impact on marketing budgets across the board, forcing most companies to scale their ad spending back significantly. As a result, CPM and CPC decreased for several platforms throughout the first and second quarters of 2020 and rose steadily in Q3, while CTR rose as individuals spent more time on the internet. Marketing spend is expected to increase in 2021 as we look ahead to a post-COVID-19 world and prepare for the promising potential of a vaccine. 

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