Negative News Cycles Decrease Competition In Exchange-Based Marketplace
The number of advertisers competing in the exchange-based marketplace drops significantly when a negative real world event occurs. During Q2 2013, the "bid density" — or number of bids per impression — was shooting upward. Bids per impression (BPI) rose 41% between the first and second quarters of 2013, with the BPI index reaching just under 90 in early April.
However, that number went into a free fall after the events at the Boston Marathon, with the BPI index eventually bottoming out at just over 50. Once the Boston bombing suspect had been captured, the bids shot back up to their usual BPI index of 80-plus in less than a week.
The data comes from Casale Media's Index Quarterly Report, Q1-Q2 2013, which is expected to be released Monday. Julia Casale, the company's chief marketing officer, shared her thoughts on why negative real world events have such a noticeable impact on the competition for impressions and why it matters.
brands bidding equals lower bid density," Casale explained. "Bid density is an excellent indicator of demand. We’ve found that increases in bid density correlate to more demand and, in
turn, to higher clear prices," she said. Clear price is the price the winning bidder pays for the ad space.
"Since buys can be throttled literally in real-time, it's possible for advertisers to react immediately to environmental conditions," she continued. "In the case of negative news, our data indicates (by way of significantly lowered bid density) that there are brands that simply prefer not to deliver promotional messaging during times of crisis or generally negative mood.
"In addition to association, it's possible that certain types of
advertising don't perform as well during times of widespread negative news, so bidding behavior [could] reflect this," she added.
Andrew Casale, the company's vice president of strategy, also shared his opinion on the trend "We have no way to know for sure [why it happens], but our theory is negative targeting kicking in," he said. "A lot of buyers leverage brand safety vendors that veer away from content deemed negative, so even if there's a headline on a page that is negative they may avoid bidding to minimize risk."
It's not just matters of national security that appear to scare advertisers off, either. When Sopranos actor James Gandolfini was found dead on June 19, the BPI index dipped below 70 for the first time since recovering from the Boston Marathon events.
While not necessarily applicable to the James Gandolfini example, one person in the industry with a background in contextual advertising shared their opinion on why negative news cycles can result in less demand. "If you have a lot of 'hard news' inventory where a less than brand-safe contextual match could occur (the plane crashes and vacation offer example), then a good ad network, exchange or inventory source would shield their clients' ads from being served in a negative context," they said.