Marketers to Invest in Performance-​Based Digital Platforms

performancebaseddigitaladvertising

As marketers learn how to use technology to lead buyers deep into the purchase funnel, the advertising economy will undergo a fundamental shift. The economic turmoil last year led marketers to invest in performance-​based digital platforms. This growing trend means that U.S. ad spending may amount to 1.59% of the GDP by 2025. This estimate comes from Michael Nathanson of the research MoffettNathanson research firm.

2021 Ad Spending Estimates

MoffettNathanson's overall U.S. ad spending estimates show optimism about our economic recovery. Here are the anticipated spending levels by media format:

  • Online $150.9 billion
  • TV $79.6 billion
  • Outdoor $6.6 billion
  • Radio $12.7 billion
  • Newspapers $8.9 billion
  • Magazines $6.6 billion

Of the $265 billion projected ad market for 2021, 57% will go to online formats. And when compared to 2019 levels, online advertising will see a 44.1% increase this year. TV and out-​of-​home advertising will be the only traditional formats to grow in comparison to their 2020 levels.

In terms of anticipated year-​to-​year growth, GroupM’s projections are similarly optimistic for the 2021 ad market. Analysts expect a 15% increase in ad spending over 2020, excluding the political component, or a 6% bump from 2019. This new projection, released in March, is an improvement over the December numbers released by GroupM analysts. And the additional investment in ad spending indicates expectations for a strong recovery after the COVID-​19-​related slowdown.

Ad Market Changes

As a media seller, you may have noticed a key change in the ad market in recent years. Larger marketers continue to use traditional media for brand building. Whether it’s CPG or automobiles, these businesses have the resources to blanket national TV and radio with their branding messages.

Large businesses, especially those that are tech-​based, continue to buy advertising at high levels. For example, as Amazon, Microsoft and Google are competing for market share in the cloud-​related sector, their ad spending as a percentage of their revenue will be higher than average. These businesses are opting for a media mix that includes both traditional and digital formats.

They aren't the only drivers of ad spending. GroupM analysts also reported on the huge increase in new business applications filed in 2020. Many displaced workers were inspired to start their own businesses as a way to replace lost income streams. These new business owners will buy advertising, but they are likely to spend their resources on media formats that will quickly deliver results – Facebook and Google.

According to Nathanson’s analysts, the ad market has accounted for about 1% of the GDP in the past decade. That percentage began to increase significantly in 2019 and will likely amount to 1.2% in 2021. He predicts “the strongest growth to come from stages further down the funnel, which are more closely tied to business outcomes.”

Investing in Performance-​Based Digital Platforms

Nathanson points out that as more marketers have success with performance-​based digital platforms, “more marketing dollars will be pushed lower.” These performance-​based digital platforms deliver superior results because they are targeting specific audiences who have signaled purchase intent. You can give your clients audience-​specific and purchase intent information by checking out the AudienceSCAN profiles in AdMall by SalesFuel. And you can also run a Digital Audit to help them understand the kinds of content that sways their target audiences. Providing these kinds of resources increases your credibility and encourages more buyers to do business with you.

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.