Marketing News and Trends
Amazon cut marketing by a third due to pandemic-driven-demand — but the pullback won't last
Amazon cut down on marketing expenses by roughly a third in Q2 2020 as it attempted to better manage a surge in demand caused by the coronavirus pandemic, CFO Brian Olsavsky said on a call discussing the results with investors Thursday afternoon. While the e-commerce giant had to pull back on marketing in recent months, operations have since stabilized, and Amazon plans to return to higher levels of activity in Q3, Olsavsky said. The news came as part of blockbuster results that saw Amazon revenue up 40% to $88.9 billion. The company's "other" category, which mostly consists of advertising sales, grew 41% to $4.22 billion.
Kraft answers the question “What’s for breakfast?”
Kraft Mac & Cheese is running a campaign to position its classic blue box dinner as a breakfast item during quarantine, including a new 30-second video ad and limited-edition packaging, the company revealed via press release. The campaign targets busy parents, 56% of which serve their kids Mac & Cheese for breakfast more often during pandemic lockdowns than previous months, per a Kraft study of 1,000 parents conducted this quarter.
Brands continue to lean heavily on programmatic advertising, IAB says
Almost one-fifth of U.S. brands had moved programmatic buying completely in-house in 2019, while more than half had transitioned to doing so partially — up 4% from the previous year — according to a new IAB report. The in-housing of programmatic is particularly strong in Europe, where 74% of organizations had moved programmatic in-house in 2019, either completely or partially. In Latin America, executing programmatic buying via a direct contract with a DSP is more popular than in-housing, with the former strategy having been embraced by 59% of organizations.
Google's ad revenue falls 8% for 1st decline in 26-year history
Google's total advertising revenue fell 8% to $29.9 billion in Q2 from a year earlier as the pandemic's economic fallout weighed on marketers' media spending, according to a quarterly report by parent company Alphabet. It was first time in the search giant's 26-year history that its ad revenue had declined from the prior year according to the Wall Street Journal reported. YouTube eked out a 5.8% gain to $3.8 billion in ad revenue, a significant slowdown from the 33% lift the video-sharing site saw in Q1, and the 36% growth for all of 2019. Alphabet in February disclosed YouTube's ad revenue for the first time, indicating how the site had become a key source of the overall company's ad revenue growth. Alphabet's total revenue slipped 1.7% to $38.9 billion, but its growing cloud computing business helped to offset bigger declines in ad sales. Traffic acquisitions costs (TAC), which the company pays other companies to drive traffic to its sites, dropped 7.5% to $6.7 billion.
McDonald's boosts marketing budget $200M to drive recovery
McDonald's plans to boost its marketing spend for the remainder of the year by $200 million, equaling one month of its typical spending, as the burger chain plots a recovery from pandemic lockdowns. The increase comes after the company slashed marketing spend by 70% in Q2, giving it a "sizable marketing war chest" for Q3 and Q4, Chris Kempczinski, president and CEO of McDonald's, said this week in the quarterly earnings call. McDonald's marketing will focus on affordability and value amid consumer anxiety about an economic recession, he said. The chain will shift from a "defensive posture" that characterized its promotional efforts in Q2 that included a "Thank You Meal" program for first responders on the front lines of the coronavirus pandemic, AdExchanger reported. McDonald's spent more than $200 million in the first half to help franchisees advertise as the pandemic negatively affected sales. Global same-store sales fell 24% in Q2 from a year earlier, while total revenue plunged 30% to $3.76 billion, per its earnings report.
The Pandemic Is Accelerating Time Spent with Mobile Video and Gaming
As Americans hunkered down under stay-at-home orders for much of March and April, they unsurprisingly consumed more mobile media. The added mobile time, however, wasn’t distributed equally. Some long-term trends, such as greater consumer interest in mobile video and gaming, accelerated as people sought diversion. Other longer-term trends, including digital audio, stagnated as commuting time fell precipitously. This year, time spent with mobile video apps will gain 10 minutes, second only to social media. Overall, mobile video will gain 5 minutes, since video watched via mobile web has decreased as people continue to shift such viewing to apps or other devices. The growth in mobile video is part of a bigger trend toward digital video.
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