Advertising Digital Publishing
3 mins read

Why publishers’ advertising revenues jumped last year

For some publishers, the long-awaited digital future arrived in 2021, bringing with it record-breaking ad revenues

The promise of significant digital rewards came true for some publishers in 2021. Revenue records were broken in a media market buoyed by lockdown innovations and the post-pandemic bounce back but underpinned by long-term investment in digital transformation. Adweek took a look at why some publishers’ ad revenues rocketed last year.

Takeaways

  • Adweek’s media reporter Mark Stenberg took a look at last year’s digital advertising numbers to try to understand why publisher revenues had increased by so much in 2021. He examined growth factors across five areas, from global growth trends to the impact ecommerce has had on ad spend.
  • The top-line driver for growth appears to be the fact that marketers came into the year with permission to spend after a year of frozen budgets. Figures from GroupM show ad spending rebounding at record levels, from a 3% contraction in 2020 to a 22.5% increase in 2021.
  • Advertising spend follows consumer demand and, as global economies began to recover from 2020’s shutdown, marketers with unspent budgets began spending again at record levels. Stephen Colvin, chief commercial officer at Bloomberg Media said everyone kept their powder dry in 2020. Then, he explained:

When the economy began to recover, that gave marketers and companies the confidence to do what they’re employed to do, which is market and spend the budget.

Digital ad share

  • With the bounce-back in ad spend came a shift in spending patterns. Following the pandemic inspired increase in online activity, marketers moved more of their ad budgets to digital than in previous years, speeding up the long-term shift away from traditional channels.
  • According to data from GroupM, every other area of ad spend – TV, audio, newspapers, magazines and outdoor – fell in market share between 2020 and 2021. In contrast, digital’s share grew by almost 4%. This followed an increase of more than 8% in 2020.
  • Publishers that had invested in developing digital audiences saw the greatest benefit from the spike in digital media consumption and increased digital spend. David Cohen, chief executive of the Interactive Advertising Bureau (IAB) said:

At the end of the day, we are looking to monetize attention, which has been moving from traditional channels to digital channels. That was put on fast-forward over the last two years.

Other growth drivers

Beyond the opening up of the economy and the spike in digital activity, Adweek identified three other factors that contributed to record digital advertising revenue.

  • Agencies are exhibiting a preference for working with a smaller number of larger clients. This has led publishers to expand the range of channels that they can offer brands, from newsletters to video and audio. This greater number of ad vehicles has increased the average deal size publishers are able to make.
  • Publishers building reader revenue streams have had to develop a deeper understanding of audience behaviours. As subscriber bases grow, publishers’ advertising efforts will grow more effective, Michael Silberman of subscription software supplier Piano told Adweek.

One of the benefits of a subscriptions business is that it forces you to be more thoughtful about user engagement. What publishers learn from subscriptions is also valuable in trying to drive deeper engagement for advertisers.

  • Publishers with strong commerce operations also benefitted from the boost in digital advertising that came with brands upping their online efforts. Data from eMarketer shows ecommerce ad spend growing from $18.7 billion in 2020 to $28.25 in 2021. Projections show ecommerce ad spend booming to reach $63.8 billion in 2025.

This piece was originally published in Spiny Trends and is re-published with permission. Spiny Trends delivers updates and analysis on the industry news you need to stay on top of if you’re running a media and publishing business. Subscribe to a weekly email roundup here.