Post-pandemic advertising recovery stronger than expected

Reader revenues were the big publishing story at the peak of the pandemic, but now that some parts of the world are beginning to open up again, the advertising recovery has started. The sector is poised to return stronger than ever according to some forecasts.

  • GroupM forecasts that the US ad industry will grow by 15% in 2021. That’s an upgrade on its previous 12% forecast. GroupM’s Brian Wieser has said the US “should end the year with 6% more activity than we saw in the last ‘normal’ year of 2019.”
  • Internationally, advertising agency Magna has also revised its forecasts upwards, predicting the global ad market will increase by 6.4% to $240 billion this year. That is more than 2% more than it was forecasting in December.
  • Hope of early returns to in-person activities (entertainment, sports and travel) are likely to drive the recovery. Magna believes the strongest advertising recovery will come from the travel, automotive, beverages, and movies categories.
Return to normal?
  • Brian Wieser at GroupM is cautious about recovery in some sectors, like automotive, where foreign supply chains may take longer to come back. But he is generally optimistic for the recovery: “In 2021, the American advertising industry is poised to regain all that it lost in 2020 and more.”
  • Media commentator Jacob Donnely echoes the positive sentiment: “People are suddenly getting excited about advertising again.” He says it should come as no surprise that ad spend is increasing as people start to venture out into the world again. “Ads are a tool to convince people to do something.”
  • Henry Blodget, co-founder of Business Insider says simply, “Ad spending is red-hot right now. The economy is cranking up, travel and leisure are coming back, and consumers are emerging from their pandemic cocoons.”

The pandemic supercharged digital adoption in many areas of publishing, including the switch from analog to digital advertising. While print advertising largely collapsed, digital advertising did better, posting growth of 7% in 2020.

Much of the growth was credited to small businesses promoting their new ecommerce presence and most of that budget went to Google, Amazon and Facebook. But publishers are reporting growth in the first quarter of this year vs the same period last year: Insider by more than 30%; Vice, 25%; Bustle Digital Group, more than 25%.

Bloomberg Media was up 29%, year on year. “I don’t know that I could’ve predicted it at this level,” said Justin Smith, Bloomberg CEO. “We haven’t seen digital advertising growth in high double digits since maybe 2017.”

Subscriptions + Advertising

Jacob Donnelly points out that the previous swing to subscriptions could be a positive for publishers. “With Apple getting ready to block targeting and the browsers getting rid of third-party cookies, brands are going to need to use publisher data to actually target readers.”

To that point, publishers shouldn’t be thinking about advertising vs subscriptions. Instead, they should be using the data captured through subscription development to revitalise their advertising business.

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