Rising Digital Ad Revenue Spells Good News for Marketers

By Sarah Cohen  | 

Finally, some good news out of the pandemic: digital advertising revenue rose by a healthy 12 percent to nearly $140 billion in 2020, despite difficult economic impacts caused by Covid-19. A new report from PwC and the Interactive Advertising Bureau (IAB) shows a robust comeback during the second half of the year, after digital ad revenue initially fell 5.2 percent due to reduced advertising activity when lockdown measures first went into effect. Several factors contributed to the rebound. Here’s how they broke down.

Video and Social Skyrocketed
The world went into lockdown mode and everyone stayed home, which meant more time was spent consuming media on connected devices like smart TVs and mobile phones. Marketers recognized that shift and sought to meet consumers where they were viewing, browsing and shopping, resulting in the highest growth for digital video, at 21 percent, with revenue totaling $26.2 billion. Total internet ad revenue for digital video also grew by 1.3 percent to nearly 19 percent. Marketers especially focused their efforts on ad-based video-on-demand (AVOD) platforms like Pluto TV, Tubi and the Roku channel, following consumers’ shift in attention from linear television to digital viewing sites. Google may have seen its first decline in ad revenue ever, yet the second quarter still ended strong for the tech giant. Record sales were partly driven by a 46 percent jump in ad revenue at YouTube that brought its full year total to $6.89 billion. Social media also saw a significant increase, with advertising revenues hitting $41.5 billion. That 16 percent growth contributed to almost 30 percent of all internet ad profits. Facebook had a particularly happy end of year: ad earnings swelled 21 percent compared to 2019, for a whopping total of $84 billion. A separate Pew Research Center study reported that roughly seven out of 10 Americans use social media, a number that’s remained constant for the last five years.

Making it Happen on Mobile
Last year’s advertising on desktop devices exceeded $40 billion for the first time, yet this was no match for the victory enjoyed by mobile. “It’s unquestionable that mobile is cannibalizing the percentage of ad spend,” said CJ Bangah, principal at PwC. As 5G networks continue to lure consumers, that growth is only expected to escalate. Samsung well understands the power that mobile can wield. Their latest campaign promoting the Galaxy smartphone focuses on the incredible things people can produce when armed only with a mobile device. A 30-second launch film combines footage from Gen Z creators around the world, including snippets of a tattoo artist in Bangkok, a skate crew in Nigeria, Kurdish-British model Deba and choreographer Alina Ryzhkova. Edited together seamlessly, the pieces form an ad bearing the tagline “Awesome is for everyone.” Gen Z contributors, hailed by Samsung VP of Mobile Marketing Matthew Leem as “potentially one of the most creative generations in human history” were specifically chosen for the task of leveraging “their smartphones as a tool to turn their ideas and passions into reality and share them with the world.”

Targeting Gen Z with Digital
Like Samsung, Constellation Brands spotlights – and targets — Generation Z consumers in a digital-first promotion for their Pacifico beer label. Four 15-second spots plus an assortment of 30-second videos comprise the “Live Life Anchor’s Up” campaign that will air on sites favored by this demographic, including Hulu, YouTube, Snapchat, Twitch, Twitter, Instagram, Spotify and Facebook. Each spot highlights a different archetypical Gen Z personality, like a skater at the X Games, an adventure-seeking couple, a pro surfer who divulges favorite Southern California board-riding sites and a sand artist whose fleeting beach work bears the message “Make your mark without leaving one,” thus appealing to the environmentally conscious nature of Gen Zers.

Political ad spending and holiday season sales further contributed to what IAB dubbed the sector’s “pendulum swing.” Overall, digital advertising is enjoying a boom. “The clear and resounding message here is: The industry as a whole is very healthy,” said PwC’s Bangah.

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