Covid-19 knocked down advertising revenues for online publishers, but things are starting to look up now, as the world gradually adjusts to a new reality.
The global advertising market is poised to recover, according to the latest ad forecast released by Magna Global, the media strategy arm of IPG Mediabrands.
Digital ads benefited from the increase in screen time, and ad spends in this sector (including search, video and social) will recover in the second half, according to the forecast.
Overall, digital advertising is now projected to grow 2% year-over-year, with digital video expected to grow 10%, and social 7%.
That’s good news, especially for publishers, who could benefit from the changing trends in advertising.Sara Jerde, publishing editor at Adweek
“The market would come back with a roar”
The ad market in the US is projected to stabilize in the third quarter and recover in the fourth quarter.
“That’s a win for media organizations that were able to offer pay cuts and make other temporary changes to avoid layoffs,” Jerde notes, “betting that the market would come back with a roar by the end of the year.”
Magna EVP of Global Market Research Vincent Letang, who authored the report, expects a “short-term V-shaped recession/recovery impact on the economy and the advertising market”.
The US ad market is now expected to rebound in 2021 with a 4% gain.
Another factor that is contributing to the increase in digital ad spend is the US presidential election.
“Donald Trump’s campaign is spending far more on advertising than it did at the same stage of his 2016 race as the coronavirus pandemic limits the opportunities for presidential appearances,” according to a Financial Times analysis of Federal Election Commission filings.
The new filings reveal how the two presidential campaigns have adapted in the age of coronavirus, with both vastly curtailing expenditures on airfare and other travel costs, while increasing spending on advertising.
Trump’s campaign spent $50m in June — roughly double what it spent in May — while Biden’s campaign spent $37m. Both figures eclipsed the campaign spending of Trump and Clinton in June 2016.
A resurgence in digital advertising
It’s not just US that’s seeing a growth in ad spend after the Covid-slump. India, one of the countries worst hit by the Coronavirus, is seeing a major boost, with consumer durables, e-commerce and automotive companies driving the advertising spends.
“They are expected to be one of the largest spenders during the season as they have recovered almost 80-90% of their volumes compared to pre-Covid-19 levels,” reports The Economic Times.
June saw a resurgence in digital advertising, with volumes up 27%, according to the TAM Adex Television & Digital Advertising Report for Q1.
According to industry experts, in the coming months digital is expected to grow further as clients come back and drive further revenues.
“Digital ads are inherently more adaptable and agile with budgets being optimized day on day,” says Siddharth Devnani, Co-Founder and Partner at SoCheers. “This also makes digital faster to react to the environment, where cutting edge analytics on digital enables planners to change budgets based on real-time campaigns and business performance.”
According to Devnani, in the coming months digital is bound to grow and may even surpass previous levels. “With a large number of SMEs shifting to online sales, growing smartphone users, and lack of on-ground events or exhibitions in the near future, digital will provide the necessary advertising channels and prove to deliver impact in due course,” he noted.
A significant surge in digital
As more businesses make the move to digital, the ad dollars follow. And the trends are encouraging.
In the UK, there has been a significant surge over the last month in job ads for digital professionals. Demand has skyrocketed 15.5% compared to June.
We’ve seen two years of digital transformation happening in the space of two weeks.Antony Walker, TechUK’s deputy chief executive
“A lot of business leaders we’ve been talking to, and survey data, shows that digital will be more important to their business, as a result of the coronavirus pandemic,” Walker told the BBC.
At the same time, digital ad spend is set to increase in the UK. “Underpinning this increase is digital video spend, which will post 15.0% growth,” eMarketer forecasts.
“Cause for celebration”
Of course, it’s not just businesses shifting to digital that counts, but also whether if there’s enough consumer demand to drive ad spend. And it appears there is.
“The American consumer came back last month, with retail sales increasing 7.5% from May,” reports The New York Times.
“The jump, which sent spending back to just below where it was in February before the coronavirus pandemic sent the country into a tailspin, seemed to be cause for celebration.”
“The good news is that this does indicate there’s an appetite for spending,” said Sucharita Kodali, a retail analyst at Forrester Research.
The June retail sales report showed a 27% jump in the category of sporting goods, hobby, musical instruments and bookstores, which rose even compared with June 2019, after having surged in May.
And with limited brick-and-mortar options, consumers are increasingly moving online.
“With more people spending more time at home, digital marketing, complemented by a resurgence in linear TV, have grown ever-more fundamental to driving sales and brand-building as well as driving dormant, more traditional customers, to digital,” notes The Drum’s Elliott Haworth.
“Big malls may be going away, but this is not, as long as a small business is investing in technology and experience,” Megan Searfoss, the owner of Ridgefield Running Company, told The Times.
“The American consumer is surprisingly resilient,” says Mickey Chadha, a senior credit officer at Moody’s Investor Service. “This is going to be a consumer-driven recovery.”
“The Italians are back”
As consumer spending rises, so does ad spending. Case in point: the fashion industry.
“Fashion brands are beginning to spend on advertising again,” reports Digiday’s Max Willens.
“The budgets that have been unlocked are more focused on driving outcomes, publishers said, and some say they expect the recent trend of fashion brands doing bigger campaigns with fewer partners to accelerate this year.”
“The Italians are back,” notes Joshua Brandau, the Chief Revenue Officer of the Los Angeles Times.
“Fashion houses are asking about big, bold executions, section buyouts, and robust multi-platform packages. I’m very bullish about the vertical.”
I’d say in Q4, we’ll be back to the numbers we were hoping for.Shayna Kossove, CRO of fashion and lifestyle publication WhoWhatWear
- “Robust growth to resume in 2021”: Global digital ad spending to bounce back, reports eMarketer
- 73% expect COVID-19’s negative impacts to be short-lived: Gartner’s CMO Spend Survey