2021 Economic is Growth Pegged at 6.6%

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With more consumers being fully vaccinated and ready to become more economically active than they were last year, your clients have an opportunity. 2021 economic growth is pegged at 6.6% by key analysts. Your clients have heard these projections and will likely be advertising more to reach consumers who will be driving sales increases during the busy back-​to-​school and back-​to-​work season this summer.

Consolidation in the Ad Market

The ad market is on a roll and by the end of the year, overall spending in the U.S. will be 15% higher than it was at the end of last year. 

But the ad market has consolidated in the past year. A significant portion of this year’s spending increases will be largely controlled by the triopoly of Amazon, Facebook and Google.

Here’s how spending is likely to break out in 2021:

  • Digital $137.51 billion
  • Other $22.37 billion
  • Magazines $7.45 billion
  • Newspapers $7.98 billion
  • Radio $12.90 billion
  • TV $57.2 billion

While projected radio and TV media sales show a slight increase over 2020 levels, sales of magazine and newspaper ads are expected to drop. Digital ad sales will grow from $112.84 billion last year to $137.51 billion this year. The nearly 22% increase in digital will likely be controlled by three giants. In 2020, Facebook, Google and Amazon reported advertising revenue of $25.44 billion, $147 billion, and $15.73 billion, respectively.

Their dominance in the digital advertising market is even more impressive when percentages are viewed as follows:

  • Google 28.9%
  • Facebook 25.2%
  • Amazon 10.3%
  • Other 35.6%

Two of these businesses largely control the search ad market with Google at 56.8% and Amazon at 19% of the total this year. That leaves Microsoft/​Bing with 5.3% and Verizon Media/​Yahoo with 1.3%.

Because the competition between these key industry players is so intense, they continue to introduce new features to attract marketers. Facebook recently declared itself a credible alternative to TV for marketers who want to reach specific audiences. On the Facebook platform, in-​stream standalone video ads “reach 2 billion people every month.” And the company recently announced that “Stories led to a 1.5‑times increase in ad recall and a median 20% decrease in cost per incremental recaller for advertisers.”

2021 Economic Growth is Pegged at 6.6%

Your clients are seeking the best way to stand out from the competition. They can start by increasing ad spending. 

You may have your own ideas about how ad budgets are developed and how to convince clients to spend more. So does Brian Wieser at Group M. Small businesses have trouble correlating ad spend to increases in revenue. With $1 million in annual revenue, many spend only $10,000 on advertising.

But when there’s a disruptive event in the business cycle, businesses may increase their ad budgets. This year, because more businesses started doing business online, they saw the benefit of increasing their online ad budgets. Businesses can also be convinced to increase ad spending when their competitors introduce a new product or when a new competitor moves into the market. As far as Wieser is concerned, “Creative destruction may be the most important source driving advertising growth at present.” Give your clients a comparative analysis of their digital presence by running a Digital Audit on AdMall by SalesFuel. The data will show them where they should be advertising.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.