A Tale Of Two Madison Avenues: Ad Execs Signal Bifurcated Performance Vs. Brand Rebound

It was the best of quarters, it was the worst of quarters. That is the preliminary assessment of the ad industry’s second-quarter results by the equity research team at Pivotal Research Group, indicating that the ad industry is split along two distinct economic paths: a performance-based marketplace that has essentially rebounded and a brand-based one that continues to languish amid the pandemic and macroeconomic downturn.

“Second quarter 2020 and the current state of business continues to be about two different advertising cohorts: direct response and brand,” Pivotal analyst Michael Levine writes in a report sent to investors this morning.

Levine notes that a panel of ad executives it uses to track advertising demand “skews heavily towards brand vs. direct response, so we would keep that in mind.”



Even so, the equity researcher’s tracking shows a pronounced improvement in ad demand throughout the second quarter, with net ad spending changes (the difference between those decreasing vs. increasing their ad budgets) going from negative 53% in April, to negative 51% in May and negative 12% in June (see chart).

Levine adds that Pivotal’s analysis of direct response-based advertisers shows “that prices have rebounded in the majority of cases to pre-Covid levels, and spend remains robust with eCommerce and gaming advertisers, the pressure on ROAS is increasing.

“This is a scrappy cohort, heavily metrics-driven and are nimble in capturing pricing dislocations. They often don’t use agencies, so qualitative is the only way we can get color.”

While Levine doesn’t indicate the same level of visibility for demand from brand advertisers, he notes “the linearity of the quarter is encouraging,” but points out red flags related to the social media advertising boycotts and the impact of “protests/civil unrest.”

Looking forward to the third quarter, Levine noted that Pivotal’s “brand-centric” tracking shows “43% of respondents indicating that they are pausing, with 41% of the total indicating a pause beyond August.

“We found it surprising that 62% of respondents indicated that they could formulate a media plan that ‘buys around’ Facebook. There was no subsequent “pile-on” that happened following the July 4th holiday, so perhaps this will become less of an issue than feared.”

2 comments about "A Tale Of Two Madison Avenues: Ad Execs Signal Bifurcated Performance Vs. Brand Rebound".
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  1. Ed Papazian from Media Dynamics Inc, July 7, 2020 at 12:49 p.m.

    Joe, anyone can organize a "panel"---otherwise unidentified---and produce "findings" but at a certain point, one has to ask some questions about the composition of the panel---though, obviously, not the names of those participating. One question I would ask is what percent of total brand ad spend do the companies involved in this panel account for? And I would also ask about job titles---how many are CMOs or brand managers, how many are client media directors, etc.? I think that these are fair questions that help us to evaluate the information provided----I wonder if such breakdowns can be provided.

  2. John Grono from GAP Research, July 7, 2020 at 7:26 p.m.

    Hoe, you ask whether anyone can organise a panel to produce sucj findings.

    Well, I'd give it a crack.

    I'd leverage my very first university statistics lecture from Prof. Eddie Oliver who gave us a five-minute assignment to prove the improveable - that every man was a wife-basher.   We were horrified.   But Eddie DID come up with a questionnaire that provided the "proof" that it was indeed true (even for unmarried men).   It was probably the best lesson in questionnaire design I've ever had.

    So, if you give me the answer and results you want, then I think I could create a questionnaire, a sampling frame, a panel, and a processing regime  that could produce said results.   Of course I would have to revoke my QPR status and resign my membership of The Research Society.

    P.S.  The answer was to ask "Do you still bash your wife? (Yes/No)" - and excluded the non-responders.

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