This week marks one year since the global coronavirus crisis was declared a pandemic. The public health emergency sent markets into turmoil and prompted companies of all sizes across multiple industries to slash their advertising budgets, resulting in a 4% drop in worldwide ad revenue for 2020.
While some sectors remain shut down, others have reopened for business, and advertising revenue is expected to reach new heights in 2021, climbing 10% to $651 billion. In this blog post, we’ll explore the factors driving both the reduction and resurgence in ad spend and the verticals leading the way to better days. We’ll also cover how ad management software can help you get your media organization’s advertising business back on track.
Challenges for the advertising industry
Recovery from the Covid-19 pandemic in sectors such as arts and entertainment, education, food services, manufacturing, and travel and transportation may take until 2025, according to research from McKinsey & Company. As a result, publishers can, and should, expect less business from their advertising customers in these industries until their cash flow situations improve and their marketing budgets begin to increase.
In the wake of this declining ad spend, media organizations themselves have suffered the economic effects of the public health crisis. Some publishers—especially those who have been unable to maximize digital advertising revenue and have relied more on traditional print ad sales—have been forced to shut down the production of long-standing titles.
In-person event cancellations have also complicated matters for broadcast networks and media companies such as The Atlantic and The Athletic, who have had to make staffing cuts to cope with event revenue losses and pivot their event strategies to virtual formats.
Even the brands that still have healthy advertising budgets—for example, those who can afford the price tag of a Super Bowl ad—are facing messaging-related challenges. Last year was marked not only by the Covid-19 pandemic but also by extreme political and social unrest in the United States and worldwide, as issues of social justice and public trust reached a fever pitch.
“Many Americans have lost their jobs and the nation remains polarized following the 2020 presidential election, a condition that can turn even the most well-meaning of ad messages into an unpopular Twitter meme,” according to Variety.
Sectors that have weathered the pandemic storm
It’s clear that media organizations and their advertising customers still face significant challenges a year into the public health crisis. However, there are also many good news stories to celebrate, which signal opportunities for publishers to maximize digital advertising revenue from several industries.
Companies in the home entertainment and exercise, food delivery, and online retail verticals have been thriving since stay-at-home orders forced many brick and mortar businesses to close up shop. Brands like DoorDash, Peloton, and Zoom have become household names as societies shifted their day-to-day activities online.
In the online retail sector, market leader Amazon saw global sales for independent businesses from Black Friday to Cyber Monday jump by 60% in 2020 over the previous year. The retail giant raked in over $4.8 billion for these sellers on its platform during those four days alone, setting a new record.
Consumer behavior in response to the pandemic has also impacted companies’ bottom lines. For example, Procter & Gamble’s 2020 sales increased by 9% over the previous year and its net profit grew by 19%—in part due to consumers buying products like toilet paper in bulk quantities.
Lasting trends and future outlook
Even as social restrictions begin to lift, it’s unlikely that most consumers will cancel their streaming subscriptions and food delivery orders or put down their mobile games anytime soon. Covid-19 has had a profound effect on multiple facets of our lives, both personally and professionally.
Media organizations must continue to find ways to serve emerging verticals, while also preparing for the day when their customers in tourism and other industries are ready to launch their next advertising campaign. Here are a few trends on the horizon to watch:
Digital advertising spend will increase
Revenue for Big Tech and other media companies that focus solely on digital ads is expected to rise by 14% to $397 billion this year. This means nearly two-thirds of worldwide ad spending will be captured by digital channels. One potential reason for this is the relatively low cost of digital advertising, which will likely be especially attractive to businesses with modest marketing budgets in the wake of the pandemic.
Search ads will surpass earlier predictions
Prior to Covid-19, research indicated that search ad spending would total $91.3 billion in 2024, according to eMarketer. However, the company has adjusted its original prediction to account for the shift toward online shopping brought on by the public health crisis and now estimates that search ad spending will reach $99.2 billion by 2024.
Connected TV will help advertisers stand out
In an increasingly virtual world, consumers are seeking human connection, which is why Esther Maguire, SVP of Marketing at VideoAmp, believes Connected TV (CTV) will thrive in 2021.
“Barriers and regulations like GDPR…and the death of the cookie are only the beginning. People want to make authentic connections with brands, not feel like a target. For an advertiser to find the right moments to connect with consumers, CTV should be in their arsenal,” she said in this Forbes article.
How the right ad management software can help
Staying up to date on digital advertising trends is crucial, but as a publisher, you also need to master online ad management to maximize your digital advertising revenue. Faster, more efficient ad ops made possible by the right ad sales tech have the potential to lead to happier advertisers. This is especially important when your customers are working to bounce back from a challenging year.
Learn more about how Lineup’s media sales solution, Adpoint, can help you streamline digital ads management and delight your customers.
