The second quarter is expected to bring a wave of closures and layoffs within the ad tech ecosystem, as brands either cancel or scale back ad spend amid the novel coronavirus pandemic.
The belt-tightening is largely the result of significant declines in travel, retail and entertainment, as well as cancelations for major tentpole events such as the Olympics and NCAA March Madness. The most recent data suggest that nearly a quarter of media buyers and brands have canceled their ad spend for the second quarter while another 48 percent say adjustments are in order for the same time period.
“The second quarter will have massive headwinds,” says Will Doherty, exec VP of global marketplace development at Index Exchange, which provides software for publishers to sell ad space programmatically. “And it will only likely accelerate throughout the year.”
“We will see companies close under these conditions,” he adds.
Not helping matters are the standard patterns of payment across the supply chain. Although it takes merely nanoseconds to purchase an ad, it can take several months before anyone in the ad tech ecosystem gets paid (see chart below).