This year, digital will make up more than half (51%) of total US ad spending for the first time, according to new GroupM estimates.
The company expects digital advertising (excluding political advertising) to grow 5% this year, following 17% growth last year. (By comparison, our estimates put 2020 US digital ad spending growth at 7.5%, down from 19.2% last year.) GroupM said that digital advertising has been a "bright spot" for advertisers in a difficult year, particularly when stay-at-home orders meant that consumers were spending more time online than before.
Google, Facebook, and Amazon were the biggest winners, as reflected in their successful Q3 earnings reports. Google's worldwide ad revenues were up 6.5% YoY for search, 8.9% for Network Members, and 32.4% for YouTube; Facebook's ad revenues were up more than 20%; and Amazon's ad revenues increased 51%. We estimate that the triopoly will account for nearly two-thirds of total US digital ad spending this year.
GroupM attributed increased digital ad spend to small businesses that had to focus on digital ads to increase ecommerce sales. As Brian Wieser, global president of business intelligence at GroupM, put it, "The resilience of small businesses has been nothing short of breathtaking, as we see in the numbers from Facebook and Google." He added that they're "much more digitally present, and … probably spending more on advertising."
Going forward, digital's share of ad spending will grow. GroupM estimates that digital will account for 55% next year, and our forecasts show that its share is consistently growing—54.7% in 2019, 61.3% in 2020, and 63.5% in 2021.
The pandemic has stressed to brands the importance of reaching consumers where they're spending the most time—and digital has been particularly important for direct-response options, as well as burgeoning social commerce applications.
Ad sellers have been steadily rolling out new features for marketers: Snapchat has long been investing in performance advertising—which has paid off; its vice president of sales said in October that direct response helped bolster its ad revenues during the pandemic. On the social commerce front, TikTok was reportedly testing a "shop now" button for influencers in April, and Facebook launched its Shops feature in May.
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