Online advertising market: Smarketer analyzes impact of war in Ukraine

In addition to its political and social components, the war in Ukraine is also changing much in the area of business - in supply chains that are already under pressure, through interrupted business activity in Russia, and not least through the financial uncertainty of a large proportion of consumers, who are vacillating between hoarding purchases and reluctance to buy. This critical economic situation with slowed growth has created new challenges for many marketers.

Smarketer, the largest pure-play Google Ads agency in the DACH region, has now used figures from its own clients to analyze the changes currently facing companies and how these may affect their advertising activities in general and performance campaigns in particular. "The decisive factor here," explains Eric Hinzpeter, content marketing expert at Smarketer, "is how strongly companies will be affected by supply chain problems at present and in the future, and what stocks they can rely on in the process. However, retailers should keep an eye on the inflation rate and individual inventory costs. However, there is no patent remedy here."

Those who combine online and offline win

Particularly in view of the ending Corona measures, it is to be expected that the pendulum will swing back somewhat more in favor of face-to-face commerce and that more spending will again be made on services (gastronomy, culture). "Advertisers should therefore adjust their advertising spend accordingly, invest more in performance channels and adapt advertising campaigns to the new situation," advises Hinzpeter. "Those who can optimally dovetail online and offline channels in marketing and customer loyalty will profit in the current situation."

The crisis is also clearly noticeable in the context of performance marketing, as internal evaluations by Smarketer analysts show, based on the more than one thousand advertising accounts of Smarketer customers. While 3.2 percent fewer impressions were measured, the analysts determined 24.4 percent higher cost-per-click values (CPCs). The first 60 days since the start of the war on February 24 were considered in comparison to the identical period of the previous year (YoY comparison).

No consistent picture for impressions and CPCs

However, the current situation varies depending on the industry: In the hobby & leisure segments, there were 20.6 percent more impressions, but 27.2 percent higher CPCs compared to the previous year, while 50.4 percent more impressions were measured in tourism & gastronomy, with 7.4 percent higher CPCs. Finance, Insurance & Real Estate, on the other hand, saw 51.1 percent fewer impressions and 18.7 percent higher CPCs (probably due to a reduced propensity to invest and growing uncertainty).

Smarketer therefore advises its own advertising customers to adjust their SEA strategies during the crisis and to react agilely to the situation by careful daily monitoring. "Companies should increase their budgets in the event of rising conversion rates and/or falling impression shares in order to ensure optimal positioning vis-à-vis competitors," advises Eric Hinzpeter. When inventory levels are sufficient, he adds, dynamic remarketing in particular can be used to boost product sales opportunities. When inventory levels are low, retailers should focus primarily on Google Shopping and Search.

Communicate inventory to the customer

However, it is also important to optimize communication. "As was the case at the beginning of the pandemic, availability is coming to the fore for many potential buyers. Tell your customers on the website and in your ads whether products are on stock or when they can be expected - and notify them as soon as goods are available again."

In addition to slower economic growth, rising inflation could be a problem in this context. The consequences of inflation, scarcity of resources and disrupted supply chains will probably be felt in all retail segments, albeit to very different degrees. "Companies should therefore thoroughly analyze their own situation now and take appropriate measures to spend advertising budgets wisely, especially in the coming months, and not to unnecessarily reduce the conversion rate," advises Hinzpeter.

The 30-page Smarketer Guide on "Impact of the Ukraine Conflict: How to Assess and Mitigate the Economic Impact on Your Business" can be downloaded here for free be

Founded in 2011, Smarketer says it is now the largest pure Google Ads agency in the DACH region and, with 200 employees, supports around 900 customers from various industries in their digital growth. Smarketer is one of the most important partners of Google and Microsoft in Europe and maintains a close exchange with both companies. Its customers include brands such as PIN AG, Walbusch, Schuhe24 and Audible.