Digital Ad Spend Increased 12.2% in 2020

digitaladspendincreased12.2in2020

When the pandemic first started in March 2020, we held our collective breaths, hoping the economic fallout wouldn’t be as bad as predicted. In particular, we worried the bottom would fall out of the ad market as businesses closed across the world. While traditional media formats suffered, PwC, in conjunction with the IAB, reports digital ad spend increased 12.2% in 2020 when compared to 2019. A lot happened behind the scenes as marketers shifted to digital advertising and the changes have implications for your clients. Here is the backstory.

2020 Final Results

Q2 2020 experienced a 5.2% drop in digital ad spending as businesses reacted to shutdowns. When advertisers ran campaigns, “Q2 2020 saw a shift from performance to mission-​based messaging due to COVID-​19 [and] accelerated the speed of programmatic adoption for agencies and brands,” said Susan Hogan, Senior Vice President, Research and Analytics, IAB. By Q3, an enormous pivot was underway, and businesses spent 11.7% more 2020 than in 2019. The spending spree continued in Q4 with a 28.7% boost over the same period in 2019. And while some of that spending was linked to political campaigning, marketers were determined to make up for lost time during the traditional holiday period.

Formats with Strong Growth Rates

Consumers spent a lot of time watching TV last year. While local TV news benefited from consumers who wanted to know the latest about the pandemic, marketers spent more money on programmatic advertising. The automated buying method was popular in the connected TV sphere and grew 25% last year. With strong growth expected in 2021, analysts aren’t sure how much the controversy about and the removal of third-​party cookies will impact programmatic spending.

Marketers spent $41.5 billion on social media advertising in 2020. This channel now accounts for nearly 30% of all digital ad spending. Digital video had a similarly successful year with a 20.6% jump over 2019 spending levels. Marketers spent about 18.7% of all digital ad budgets on video.

That spending resulted in a great outcome for marketers who opened ecommerce sites and sold online at a record pace in 2020.

What Should Organizations Do to Ease Consumer Concerns?

Since the pandemic started, consumers have grown more suspicious about how their personal information is being used. At least 36% of consumers aren’t as comfortable sharing information as they were previously.

At the same time, as more money moves into digital messaging and technology improves, marketers will shift their measurement focus from impressions to outcomes. It’s far easier to justify ad spending when you can demonstrate that 500 consumers purchased your product after seeing a promotion on social media versus announcing that 50,000 consumers saw your promotion online.

But outcome-​based marketing requires access to consumer information. Consumers tend to share their information when they receive something of value in return and when they trust the marketer. If your clients have not yet started building trust with their customers, it’s time to start. They should explain exactly how they’ll use data such as names and email addresses and who they’ll share it with.

Digital Ad Spend Increased 12.2% in 2020

After surviving 2020, your clients know how to pivot, and they’ll expect continued flexibility from their media partners. When one ad campaign doesn’t produce desired results, they’ll want to change course quickly. You can help them remove some of the guesswork out of their ad buying process by showing them the types of media their target customers respond to. That information is available on the AudienceSCAN profiles and the Digital Audit, both available from AdMall at SalesFuel.

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.