From digital ad spend overtaking traditional and the growth of mobile to the most resilient advertising channels during the Covid-19 pandemic, here are 13 stats that show how advertising is changing in 2020 and beyond.
Digital advertising has come a long way since the banner ads of the late 1990s and early 2000s. Nowadays, advertisers have a plethora of ways to reach their chosen audience whatever they might be doing, with all kinds of formats and creative: from social media ads to video, mobile in-app advertising to digital out of home (DOOH) advertising.
The coronavirus crisis has thrown a spanner in the works for many predictions about what advertising would look like in 2020 (and beyond), as campaigns were pulled and budgets slashed. However, many advertising channels are expected to rebound next year, while others have proven surprisingly resilient in spite of the crisis. It’s also worth noting which new avenues have opened up for advertisers due to the changes in habits that the crisis has brought about.
As we enter the final quarter of 2020, how is advertising faring, and what will it look like in the future? We’ve rounded up 13 key stats – plus a few extras – that show how advertising is changing.
Traditional versus digital advertising
1. Digital ad spend is set to overtake traditional advertising in 2020
Ad spend is often split into “traditional” versus “digital”, or sometimes “print” versus “digital”, in order to illustrate the growth of newer ad formats in comparison to stalwarts like newspaper and magazine advertising, radio advertising and television ads.
While advertising in all its forms has taken a hit in 2020, digital advertising has rallied better overall, with businesses more likely to turn to the digital channels where consumers have been spending increasing amounts of time during the lockdown to grab the attention of potential customers.
Forecasts by both GroupM, the WPP-owned media investment company, and IPG Mediabrands-owned Magna Global predict that 2020 will be the year that digital advertising spend overtakes that of traditional advertising, as reported by the Financial Times. GroupM predicts that overall ad spending will fall by 11.8% worldwide, but traditional ad formats such as television, newspapers and outdoor advertising will take the bulk of the damage, falling by 20.7% compared to just 2.4% for pure digital ad spending.
Although publishers and broadcasters are drawing a wider audience than ever, many businesses have opted to cut costs by moving their ad spend to cheaper digital channels instead, leaving print and broadcast channels hurting for ad revenue. Another factor contributing to the continued rise of digital advertising even in the face of Covid-19, according to Vincent Letang, Director of Global Forecasting at Magna, is that many small and local businesses have turned to digital ads for the first time to promote themselves.
According to estimates by eMarketer, spending on digital ads had already overtaken spending on traditional advertising in the United States in 2019. eMarketer predicted in February 2019 that total digital ad spending would make up 54.2% of total US ad spending that year, amounting to $129.34 billion worth of ad spend. However, for the rest of the world, it seems to have taken the Covid-19 pandemic to put digital advertising spend ahead of traditional.
2. Traditional ad spend in the UK declined by 48% in Q2 2020
Giving a sense of just how much traditional advertising channels were hit in some parts of the world during the coronavirus pandemic, data from Nielsen found that there was a 48% year-on-year drop in traditional advertising spend between 23rd March and 30th June in the UK. Warc reported that entertainment and leisure saw the largest cuts in ad spend, followed by travel and transport. Unsurprisingly, out of home advertising took a “significant hit” during the same time period as footfall fell away – remaining well below normal levels of spend even once restrictions had begun to ease.
Some of the biggest cuts to advertising spend on a brand level were enacted by McDonald’s (-97%), Amazon (-77%) and Sky (-60%), while big increases came from Disney+ (+962%), Microsoft (+142%) and O2 (+65%). But the biggest year-on-year increase by far came from Public Health England, which increased spend by 5,037% on advertising messages to encourage hygiene best practices and compliance with the lockdown.
3. 2019 saw social media overtake print to become the third-largest advertising channel
In October 2019, research by Zenith Media determined that social media advertising would overtake print advertising by the end of the year to become the third-largest global advertising channel, accounting for a 13% share of global ad spend (or US $84 billion).
Spend on print advertising, meanwhile, was predicted to fall by 6% to US $69 billion, putting it in fourth place behind television (29% of global ad spend), paid search (19% of global ad spend) and social advertising (13% of global ad spend).
Zenith’s research determined that social advertising’s growth is slowing as it matures: from 20% growth in 2019, social advertising was predicted to fall to 17% growth in 2020 and 13% in 2021, giving social advertising a 16% share of global ad spend by 2021. While these predictions were not explicitly updated to account for the Covid-19 pandemic, Zenith noted in a later news release that the Covid-19 pandemic had proven favourable for digital advertising as a whole, noting that, “Consumption of digital media … spiked in the early weeks of lockdown. Although both are now trending down again, they are not expected to retreat to pre-crisis levels any time soon.
“Together with the rise of ecommerce and data, this has driven a rapid shift in media budgets from traditional to digital media, accelerating the trend that was already taking place.” Zenith has subsequently revised its forecast of the percentage of spend that will go towards digital advertising in 2020, up from 49.5% to 51%. It predicts that by 2022, digital advertising’s market share will reach 54.6% of overall advertising spend.
Social Media Advertising Best Practice Guide
Mobile advertising
4. Mobile advertising is predicted to be worth US $408.58 billion by 2026, and has proven resilient during Covid-19
According to analysis published in March 2020 by Fortune Business Insights, the global mobile advertising market will reach US $408.58 billion by 2026, up from US $44.12 billion in 2018, representing a compound annual growth rate (CAGR) of 32.5%.
Fortune attributed this impressive growth forecast to the growing demand for smartphones and increased availability of internet connections worldwide, as well as brands’ appetite for mobile advertising across industry verticals due to its ability to directly target the consumer and deliver strong ROI. The research also pointed to the popularity of in-app ads used to target young people spending time on social media platforms, and mobile video ads, which acquired 25% mobile advertising market share in 2018, and “is likely to grow significantly in the coming years owing to the rising usage of smartphones”.
Fortune’s research, despite being published at a time when the coronavirus pandemic was rapidly taking hold worldwide, did not account for the potential impact of Covid-19 on mobile ad spend. However, more recent figures have indicated that the mobile advertising market has been resilient amidst the coronavirus pandemic, despite shrinking ad budgets. Pubmatic’s Q1 2020 Quarterly Mobile Index Report found that mobile ad spending fell by 15% in the wake of Covid-19, compared with the 25% decline seen in desktop ad spend. “Mobile’s fortitude,” wrote the report author, “is largely due to the surge in app usage from gaming, food delivery services and video streaming apps.”
PubMatic’s next report, the Q2 2020 Quarterly Mobile Index, bore even better news for mobile advertising: it found that mobile ad spend in Q2 of 2020 had “skyrocketed”, increasing 71% over the previous year, with the Asia-Pacific region being responsible for major gains. Mobile video ad spend had also bounced back, rising 116% over pre-pandemic levels.
It remains to be seen whether this spike will be enough to offset earlier declines in spend, as well as what mobile ad spend will look like throughout the rest of 2020 – but the recent figures are not unencouraging.
5. The global in-app advertising market is forecast to grow by 278% between 2020 and 2027
Research published by Global Industry Analysts, Inc. has predicted that the global in-app advertising market, currently worth an estimated US $99.5 billion in 2020, will reach a value of US $376.4 billion by the year 2027, an increase of 278% over seven years.
Published in July 2020, the revised predictions in the report account for the likely impact of Covid-19 on the in-app advertising market, which is forecast to grow at a compound annual growth rate (CAGR) of 20.9% between 2020 and 2027. In China, the world’s second-largest economy, in-app advertising is projected to reach US $64.3 billion by 2027, trailing a CAGR of 20.1%. Other noteworthy markets include Canada, Japan, and Germany, which are forecast to grow at 18.8%, 18% and 15.3% CAGR respectively.
The report also analysed the probable growth rate of different segments of the in-app advertising market. Messaging, for example, is forecast to reach US $157.2 billion by 2027, with a CAGR of 21.6%. Online shopping, meanwhile, is predicted to record 22.6% CAGR, with growth driven by the USA, Canada, Japan, China and Europe. These regions will reach a combined market size of US $56.8 billion by 2027, according to the forecasts by Global Industry Analysts, Inc. The online shopping market in Asia-Pacific is predicted to be worth US $45.9 billion by 2027, with growth led by countries like Australia, India and South Korea.
6. Mobile accounted for more than 50% of digital ad spend in the UK in 2018
Much like digital overtaking traditional advertising spend, the growth of digital ad spend on mobile in comparison to desktop is a key indicator of how advertising channels are growing and changing. While mobile ad spend is yet to overtake desktop on a global scale, in some regions it already accounts for more than half of digital ad spend – including in the UK, where it passed the 50% mark in 2018.
According to last year’s annual IAB UK and PwC Digital Adspend Study, published in April 2019, UK advertisers spent a total of £13.44 billion on digital advertising in 2018. For the first time ever, ad spend on smartphones overtook spend on desktop, accounting for 51% of UK digital ad spend – up from 45% in 2017. This translates to a year-on-year increase of £1.65 billion.
In a press release about the report, the IAB wrote that, “These latest figures show that advertising spend now better reflects consumer behaviour, with recent UKOM audience data showing that people spend two thirds of their online time on smartphones.”
The IAB and PwC have been reporting mobile ad spend separately from desktop since 2009. During the ten-year span between 2009 and 2018, mobile ad spend in the UK rose from £38 million to £6.88 billion, an increase of 18,005%.
Mobile Marketing Best Practice Guide
Google, Facebook & Amazon
7. Google’s year-on-year ad revenue declined in Q2 2020 in historic first
When the coronavirus pandemic began to severely impact ad spending, it was clear that not even the ‘duopoly’ – Google and Facebook, so named for their overwhelming combined dominance of the global advertising market – would emerge unscathed.
Sure enough, in their Q2 2020 revenue reports, both Google and Facebook reported that their ad revenues had been negatively affected by the pandemic. However, of the two ad giants, Facebook was less impacted, reporting 10% year-on-year ad revenue growth – its slowest growth since its IPO in 2012, but far higher than analysts had been predicting.
Google, meanwhile, reported a year-over-year decline in ad revenues for the first time in its publicly traded history, with ad revenues down 8% YoY, compared with a gain of 16% in the same quarter of 2019. Analyses of the situation have determined that Google was hit particularly hard by declining search revenue from verticals like travel, which is a major driver of revenue for Google, and automobile.
Facebook, meanwhile, is seeing strong demand from small and medium-sized businesses, with its top 100 spenders on advertising only accounting for 16% of overall spending, a share which has declined over the past year.
While both Facebook and Google will be able to recover the ground lost during the pandemic, the impact of the pandemic on their respective advertising businesses is significant for the ad industry as a whole – particularly as each is vying to maintain a lead over the other and over Amazon, the other major up-and-coming force in the western advertising market.
8. Amazon’s ad revenues forecast to grow 470% between 2019 and 2023
A 2019 report published by Juniper Research forecasts that Amazon’s advertising revenues will reach US $40 billion by the year 2023, up from $294 billion in 2019 – an increase of 470%. This would represent an average annual growth of 15%, which Juniper predicts will be driven by “the use of AI-based programmatic advertising to deliver highly targeted ads” and Amazon’s unparalleled store of consumer retail data.
If Amazon’s ad revenue grows in line with estimates, it will represent 8% of global digital ad spend by the year 2023, up from 3% in 2018.
As with all predictions published prior to 2020, there is the impact of the coronavirus pandemic to account for; however, Amazon’s earnings reports for Q1 and Q2 2020 indicate that the company’s advertising revenues have not taken a severe hit during the pandemic. In Q1 of 2020, Amazon’s ‘other’ category, which mostly comprises its advertising business, was up by 44%, with the company noting that it saw “some pullback from advertisers” that was less severe than other players in the ad market, and was offset by very strong traffic to Amazon’s site. The following quarter, ‘other’ revenue grew by 41%, which represented a decline in growth, but only a small one – and Amazon’s revenue growth has yet to fall below 40% for the past four quarters.
While Amazon is still a way behind Facebook and Google in terms of its advertising market share, the coronavirus pandemic and the shift to ecommerce that it has enabled has helped Amazon to weather the impact of the pandemic better than its two biggest rivals, which could set the stage for it to become (even) more of a threat.
Digital Shift Q1 2020 Chapter 5 – Learning from Jeff
Audio
9. Podcast ad revenues are forecast to grow to nearly US $1 billion in 2020, an increase of 15%, despite the pandemic
Podcasts have been growing steadily in popularity as an advertising medium over the past few years, as the number of podcasts and regular podcast listeners grows exponentially, and advertisers recognise the potential they have to offer in reaching a highly engaged audience.
Notably, they are also weathering the coronavirus pandemic far better than most advertising media. Revenues from podcast advertising are projected to grow by 14.7% year-over-year to reach close to US $1 billion in 2020, according to the IAB and PricewaterhouseCooper’s full-year podcast ad revenue study, published in July.
Prior to Covid-19, the IAB had predicted that the podcast advertising market would grow by 29.6% in 2020, then 55% in 2021 and 36% in 2022. These estimates have been revised downwards as many advertisers pulled campaigns with podcasts due to the pandemic – but the medium is still growing.
Factors that have contributed towards podcasting’s resilience as an advertising channel include the high number of direct-to-consumer businesses (which have overall fared better during the pandemic) that advertise on podcasts and the flexibility of podcast ad creative, which can easily be swapped out remotely – or adapted if it is host-read.
10. Digital ad spend on local US radio grew from US $286 billion in 2010 to $1,002 billion in 2019, accounting for 10% of advertising revenue
Digital advertising is accounting for an increasing percentage of spend on local US radio stations, according to a report by the Radio Advertising Bureau and Borrell Associates, published in February 2020.
The report illustrates the growth of digital ad spending on local radio over the past 10 years: from US $286 million in 2010 to more than $1 billion in 2019, representing 10% of the industry’s total advertising revenue. Between 2018 and 2019, local radio stations’ ad revenues grew by 25%, and were forecast to grow by a further 29% in 2020, taking digital ad spend to a total of $1.29 billion.
According to the report, 70% of local radio stations now offer digital advertising services, up from 62% the year before.
While radio advertising, like advertising of every kind, has been affected by the spending cuts implemented due to Covid-19 – eMarketer has forecast that US digital radio ad spending will drop by 17% in 2020 – the figures nevertheless indicate the shift taking place in radio towards digital advertising and sources of revenue. The RAB’s report also noted that radio stations are increasingly monetising their followings on social media and investing in podcasting platforms.
Livestreaming
11. E-sports advertising spend will continue to grow in 2020 amidst Covid-19, reaching more than $250 million by 2022
A recent report by Warc, ‘Warc Global Advertising Trends: Ad opportunities in gaming‘ has found that e-sports livestreaming has continued to attract brand investment in 2020 despite the impact of the coronavirus lockdown on ad spend and on large events – and that advertising spend on e-sports is forecast to grow by 1.7% in 2020.
Warc predicts that US $228.9 million will be spent on e-sports advertising in 2020, up from US $225 million in 2019. It forecasts continued positive growth for e-sports ad spend over the next two years, projecting 5.9% growth in 2021 and 5.4% growth in 2022, reaching a total of $255.3 million in advertising spend by 2022.
This is a vastly reduced rate of growth compared with the growth that e-sports advertising enjoyed in the late 2010s: between 2016 and 2017 ad spend on e-sports grew by 26.6%, and between 2017 and 2018, it grew by a third (33.3%). 2019 saw a decrease in momentum, with growth falling to the single digits (8.7%), before almost flattening out in 2020. Yet any positive growth at all amidst the Covid-19 crisis is noteworthy, given that traditional TV advertising is predicted to decline by 13.8% this year (as Warc pointed out in a summary of the report findings).
12. Buy-side advertisers expect CTV/OTT advertising to see the biggest gains among digital ad channels during H2 2020
Over-the-top (OTT) streaming services and connected television (CTV) are having a major moment: amidst the Covid-19 pandemic, streaming services like Netflix and the recently-launched Disney+ are enjoying all-time viewership highs. In Q1 of 2020, Netflix gained almost 16 million subscribers globally, almost double the number it had expected to gain, while Disney+ took just eight months to reach its five-year goal of 60 million subscribers. Hulu and ESPN+ have also enjoyed surging subscriber numbers.
Although advertising spent on OTT and CTV was negatively impacted at the beginning of the pandemic, it rebounded relatively quickly, with US programmatic ad spend on OTT/CTV increasing by 40% during April and May, according to a report by Pixalate. Media research firm TAM also found that ad insertions on OTT platforms in India doubled in April, the first full month of the lockdown, as advertisers shifted media budget to OTT channels.
And the outlook for later in the year appears positive. A survey of 148 US buy-side advertisers conducted by the IAB in late May and early June 2020 found that among digital ad channels, advertisers expected to see the biggest increase in spend on CTV and OTT during the second half of 2020. Buy-side advertisers forecast a 25% YoY increase in CTV/OTT ad spend in Q3 2020, ahead of social media (23%), paid search (21%) and digital video (18%). In Q4, advertisers predicted a 27% YoY increase in spend, behind only social media (32%) and ahead of paid search (21%) and digital display (20%).
When asked which digital channels they planned to increase, maintain or decrease their spend on during H2 2020, CTV/OTT again came out on top, with 59% of buy-side US advertisers saying they planned to increase spend on CTV/OTT and only 18% saying they planned to decrease spend. Digital video (non-CTV/OTT came in second, with 56% of advertisers planning to increase spend, and 19% planning to decrease spend.
Programmatic TV advertising: Key benefits and challenges
Out of home (OOH)
13. Digital is expected to drive OOH’s recovery, accounting for almost 100% of growth by 2024
Out of home (OOH) advertising is one of the most well-known casualties of the Covid-19 pandemic, with a complete dearth of outdoor footfall during the lockdown causing spend and revenues for out of home ad channels to crater.
Prior to the pandemic, 2020 had been forecast as a bumper year for out of home, which was the only ‘traditional’ ad channel seeing significant growth instead of declines, with the advent of programmatic digital out of home (DOOH) advertising and the possibilities it promises for flexible, dynamic ad placement driving a surge of interest in the medium. GroupM predicted that spend on outdoor advertising would overtake that of newspaper advertising in 2020, with spend on out of home predicted to exceed newspaper and magazine advertising combined by 2024.
Instead, the opposite happened, and out of home ad channels saw catastrophic losses that are not expected to reverse until 2021. However, OOH is expected to make a relatively strong recovery in 2021 (compared with other traditional ad channels), with digital driving the vast majority of that growth. PwC’s ‘Global Entertainment & Media Outlook 2020-2024’ report predicts that as the OOH market returns to health, digital will drive an increasing share of its growth: accounting for a 37.5% share of year-on-year growth in 2021, then 50% of growth in 2022, and finally almost 100% of growth in OOH in 2024.
