Posted by Naina on August 19, 2021
Customer behaviours have changed over the past year due to the COVID-19 pandemic, and the same goes for the global ad spend. When the ad spends reports from Zenith and Group M are combined, the report indicates that the media landscape continues to undergo a massive transformation as social media platforms and paid search grow, cutting into traditional media channels like TV and print.
Despite an initial fall-off due to the COVID-19 pandemic, digital advertising spending grew 12.2% year over year in 2020, according to a new report commissioned by the Interactive Advertising Bureau and conducted by PwC.
Digital advertising and social media have a key advantage over any traditional media; first-party data about their user or potential users for ad targeting. Many social media channels also have now expanded their appeal among small and local businesses by giving them an opportunity to create hyper-localized or geo-targeted campaigns aimed at their potential local customers.
All media sectors, except digital, saw double-digit percentage declines in spending, with print taking the biggest hit.
In 2020, Zenith projected global digital ad spend to grow by 1.4%, increasing their share of ad spend to 52%, up from 48% in 2019. Due to lockdowns, customers couldn’t head out and shop, which left them with only the option of online shopping. Led by search and social media, customers were encouraged to rely more on e-commerce, forcing the marketer to build and maintain consumer relationships via social media.
By 2023, Zenith expects digital ads to account for 58% of all global ad spend. In their report, Zenith notes that digital transformation is rapidly shifting budgets toward digital advertising, “The pandemic has permanently changed consumers’ shopping habits, and for many, e-commerce has become the norm,” said Lauren Hanrahan, Chief Executive Officer, Zenith USA. “Retailer media offers brands the opportunity to connect with consumers at the most crucial point of the customer journey when the final purchase decision is made.”
According to Group M’s study on Canadian Ad spend,
Canadian newspapers saw a 40% decrease to $726.7 million in ad revenues (all dollar figures are listed in USD) from $1.21 billion last year, which equates to a three percentage point drop in ad spend share to 7.2%.
Magazines left the year with $221.6 million in total ad investment, down 45.0% from $403 million in 2019 and dropping to a 2.2% ad spend share from 3.4%.
Digital media (which excludes the digital extensions of certain channels such as out-of-home, in Group M’s research) saw spending rise to $5.9 billion from $5.8 billion. This year marks the first time digital accounted for more than half of all ad spending in Canada, reaching 58.1% share. That’s a huge jump from the 49.2% share it held last year.
Sebastian Rennie, chief investment officer for Group M in Toronto, says digital’s extreme growth is “a function of TV and out-of-home taking some hits.” The acceleration of Canada’s e-commerce market drove much of that spending shift as people stayed at home and avoided physical retailers far more than in years past.
The projects and reports for 2021 show recovery from last year’s sharp declines for almost all sectors. Future projections assume a more normal year overall in terms of consumer spending and behaviour.
Next year, Group M projects television spending will return to 2019 spending levels, reaching $2.4 billion from $2 billion this year. Audio, newspapers and OOH/cinema will see more limited recovery, though they are not expected to return to their full pre-pandemic levels.
Magazines, however, show an interesting trajectory over the next few years. Projections show further declines for two years — another 5% loss in investment in 2021 and a 10.6% drop the year after that. But Group M then projects positive growth in 2023 and 2024, unlike newspapers.
Online advertising’s future appears to be a relatively straight line of steady increases. By 2024, Group M predicts its overall share of Canada’s ad spending will crest 60%.
The Future is Digital
As a result of the pandemic, global advertising spending fell by 8.1% last year. However, online advertising reported a growth of 53% of all global ad spends. And the rise of search, social media, video, e-commerce—in contrast to TV and print—becomes more evident.
Although search ad spends recently plateaued, its rise over the last decade has been dramatic. With digital content consumption doubling since the pandemic began, the growth of social, e-commerce, and search ad spend is likely to continue.
If these trajectories are any indication, advertising budgets will only be getting more digital in the coming years.
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