A Changing Advertising World Amid The Pandemic
- The pandemic has acted as a catalyst for digital marketing, accelerating the evolutionary process by 5-7 years
- Key trends revolve around connected TV, e-commerce and DTC model, video and display marketing
- Global concentration among media owners may become further pronounced in the years to come
The advertising world is looking resilient as the end of 2021 approaches.
Advertising expenditure in 2021 is projected to rebound by 19%, catapulted by a 26% spike in digital spend, according to a GroupM report.
After a slip of 3.5% to $628 billion in 2020, the current estimates are beating the ones made in December (the media agency had predicted a 12% increase). The rising number of digital startups has acted as a catalyst for digital spend.
In terms of geographical leadership, Asia accounts for almost 38% of global ad spend, closely followed by North America (~36%). Most of the global companies with high ad spend have either a strong presence in China or they are well spread across the globe.
The top advertising nations in 2021 are the United States, China, Japan, the United Kingdom, and France.
Buzzing trends: shifting goal posts with a pivot toward digital
Connected TV
Consumers live online these days – from shopping to consuming content that spans the realms of entertainment to education. This makes connected TV a big traction zone for ad spend as the industry is expected to grow by 25% globally to $16 billion in 2021.
For example, NBC Universal and Warner Media launched Peacock and HBO Max respectively, which became highly popular during the pandemic.
The revolution in streaming TV was expected to happen gradually, but COVID-19 has shortened the evolutionary process from around five years to one. This has led to significant cord-cutting. eMarketer estimated 6 million U.S. households terminated their pay TV subscriptions in 2020, leading to a drop of TV ad spend by 15% in the year.
Rise of e-commerce
Consumers have grown accustomed to the convenience of online shopping and are now spoilt for choices by marketers globally. The momentum will carry on till another disruption hits the industry.
In 2020, U.S. consumers alone spent $791.7 billion on e-commerce, showing a tremendous increase of ~32% since 2019. Marketers are now required to invest not only in new technologies to ensure touchless shopping, but also in training staff to adapt to this shift in culture.
The rise of e-commerce also meant doom for retailers that were deemed to deal in non-essentials, e.g., Simon Property Group, Taubman Centers, Washington Prime Group, etc. Many retailers, including Brooks Brothers, J.C. Penney and J. Crew filed for bankruptcy in 2020. Some retailers like Macy’s are trying an innovative approach by opening smaller-format stores away from malls.
Video marketing
Video advertising is another top marketing medium with a majority (~86%) of companies leveraging it as a strategic arm. The penetration of internet through mobile devices, even in remote parts of the planet, has supported the growth of video marketing.
Display advertising
The medium of display advertising has become a hot trend because of better consumer understanding. This has enabled marketers to send targeted display messages to their consumers. A common adoption is using videos in banners to attract more views.
Print reinvented
While print advertising has seen some decline in traction in recent years, the pandemic has made it relevant to many consumers, as it brings a tactile experience (consumers enjoy browsing targeted and meaningful brochures and direct mail) which has been lacking with digital advertising.
The way forward
The usual suspects of Amazon, Google and Facebook have been again at the forefront of the digital advertising avalanche. In fact, the marketing industry is witnessing global concentration; the top five ad sellers account for 46% of global ad spending, while 10 years back, the top five covered only 17%, per GroupM.
With the rise of the direct-to-consumer model, global marketers can now reach their end consumers anywhere in the world, and without support from local media companies. Imagination, and not the pandemic, will be the chief limitation to marketers in the new normal.
Sources and references:
https://www.thedrum.com/news/2021/06/14/global-ad-market-projected-grow-14-2021
https://www.statista.com/statistics/240679/global-advertising-spending-growth-by-medium/
https://influencermarketinghub.com/coronavirus-marketing-ad-spend-report/
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