Trend Roundup: Past, Present and Future of Internet Ad Revenue
Disruption. 2020 has been defined by it.
This is a time of halting change. It’s everywhere you look. But, as advertisers we are comfortable with disruption. We recognize that with disruption comes incredible opportunity.
So, what does all the disruption mean for advertising trends? What did we learn from 2019 trends that we can apply to media strategy and media mix today?
The Interactive Advertising Bureau (IAB) recently published its 2019 full-year report on internet ad revenue, reporting 2019 as a banner year with 16% growth year-over-year.
No doubt, the landscape in 2020 is entirely different from 2019, but there are still insights to glean as you look to develop media strategies and recommend media mix for your clients and stakeholder as we head into 2021.
If you don’t have time to go deep on the full report, we’ve summarized the 2019 trends and recapped the impacts of the Corona virus through H1 2020.
Trend #1: Video advertising spend up 33.5% from FY 2018.
Video advertising has been head and shoulders above other channels for some time, and 2019 was no different. Consumers across demographics are watching videos for substantial periods of time, which means that advertisers can reach nearly any audience with this format.
In 2019, video was responsible for 17.4% of all internet advertising revenues. A huge component of that growth was on smartphones and tablets, rising 43.9% from FY 2018. Why is video advertising a great way to reach audiences? Because, advertisers can:
- Apply first- and third-party data to hone in on targeting specific audiences.
- Track the impact of video campaigns faster, with the ability to pivot in real-time if needed.
- Re-engage viewers within households across multiple devices with complementary ads on other channels, such as display.
- Screen ads in concert with premium inventory where audiences are fully invested.
COVID Impacts: Increased U.S. media consumption is primarily video-based
It’s no surprise that video consumption during March and April saw a big spike. IAB reports these stats as a result in shifting behavior due to COVID:
- Video streaming on Internet connected devices increased 100% YoY.
- Heavy sports viewers reallocated their viewing time to other video content.
- Video game content such as twitch.tv and social video apps such as TikTok have seen a dramatic increase in viewership, likely in part due to a transfer in viewership from those who normally watch sports.
Do these trends have staying power? According to IAB’s research, yes! Of the people who report currently consuming more, the following plan to do so after the outbreak:
- 76% of people plan to consume more online videos.
- 68% of people plan to consume more broadcast TV.
- 67% of people plan to consume more online TV or steam films.
- 63% of people plan to consume more video games.
In 2020, more than any other year, consumers are streaming and watching through Connected TV. According to IAB, buyers expect Connected TV to increase 19% YoY in 2020 vs. 2019. Did you know that more than half of buyers are shifting dollars from Broadcast (53%) and Cable TV (52%) advertising toward CTV?
Trend #2: Mobile advertising spend up 24% year-over-year.
The percent of time that people spend on their phones and tablets has been steadily climbing for the past few years. People spent 18% more time on their mobile devices in 2019 than in 2018. Mobile devices now make up 69.6% of Internet ad revenue share.
To capture the attention of mobile phone users, publishers and platforms have created a slew of apps where vast audiences are spending a significant amount of time. As such, ad dollars continue to shift to mobile devices because it allows advertisers to:
- Get a more complete picture of audience behavior.
- Get laser focused with their targeting strategies.
- Give the user a consistent ad experience across channels, in one ubiquitous environment.
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Video and Audio: Leaders of the Mobile Pack
Mobile video saw growth at a rate of 43.9%. The social stories format fueled that growth because it allows brands to connect with their audiences in authentic ways.
Audio on mobile devices grew 25.3% in large part due to the growth of podcasts.
COVID Impacts: Average time spent on digital spiked when consumers began home quarantine, increased usage has remained through July of 2020.
IAB reports a 10% increase in total time spent online between March and July 2020 vs. the same time period in 2019. Given the share of mobile users, we know that people turned to their mobile devices to consume online content.
With the quarantine shutting down many brick-and-mortar businesses, shoppable ads became a way to reach customers in the first half of 2020. Even as the country has opened back up and as people slowly return to brick and mortar shopping, there is staying power for shoppable ads. Both Paid Search and Social ad spend are up 26% and 25% respectively in 2020 vs. 2019, which could mean that there is untapped potential in the shoppable ad space.
Trend #3: Audio advertising spend up 21.2% year-over-year.
According to IAB, the digital audio universe continues to expand. They report more than two-thirds of people ages 12+ listened to online audio last year.
As more and more people adopt voice-activated technologies, audio inventory opportunities expand. Advertisers can leverage this channel by purchasing inventory programmatically. A programmatic audio buy allows you to:
- Get specific with age, gender, location and musical-taste targeting.
- Get hyper-focused by layering on third-party data.
- Avoid committing to lengthy and expensive contracts.
COVID Impact: The Number of People Listening to Podcasts Increased During Quarantine.
From Gen Z to Boomers, there was a cross-generation increase of 18% in podcast listenership during quarantine. Will it stick? According to IAB, 62% of those who say they are consuming more podcasts during the outbreak plan to continue doing so. More impressively, 74% of people who started streaming music during quarantine plan to continue doing so after the outbreak.
For many, programmatic audio is a new frontier. When developing your omni-channel lineup, shift your thinking about audio ads from a “nice to have” to a “need to have.” In fact, the IAB reports podcast advertising revenues nearing $1billion in 2020, projecting revenues to increase nearly 15% despite COVID.
Need some proof points to justify allocating more media dollars to this channel? These compelling facts may help:
- When part of a broader media mix, the power of audio is becoming apparent. A study by The Trade Desk and Spotify reported that programmatic audio outperformed a direct audio buy in a head-to-head test, achieving a 32% efficiency in CPC and 1.51x higher CTR compared to direct audio buy.
- Programmatic audio is a highly transparent environment, and premium sellers such as Pandora and Spotify ensure a good user experience.
- Advertisers enjoy a 100% share of voice in a one-to-one setting, particularly on mobile devices.
- Podcast hosts are becoming trusted influences with loyal communities, advertising in this environment can lead to greater brand affinity and ultimately improved ROI.
Trend #4: Display ad spending up 13.8% year-over-year.
Digital display ad spend is expected to end the year 15% higher than in 2019. One of the biggest drivers of an increase in display ad spending is the adoption of rich media ads. In the first half of 2019, advertisers spent $1.7 billion on rich media ads, 20% more than the first half of 2018.
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Rich media ads are display ads that use HTML5 technology to include advanced features such as images, animation, video and audio that encourage user interaction including clicks, taps, hovers and ad expansion (giving brands a larger canvas for messaging).
When used strategically, rich media ads can:
- Tell a colorful story about your brand, or convey a brand experience.
- Create connection and conversation with your target audience.
- Move users down the funnel by collecting a broader pool of user interactions for retargeting or remarketing.
COVID Impact: News consumption surrounding COVID has become a daily ritual.
IAB reports that 79% of people seek news about the Coronavirus at least daily . From Gen Z to the Boomers, there was a 68% increase in online searches for coronavirus/COVID-19 updates in Q1 of 2020. Notable, is that among those generations, millennials increased their search for news and updates 71%.
Consider this: When serving display ads, including rich media ads, don’t block sites with COVID-related content. It’s not uncommon for advertisers to want to avoid serving ads next to sensitive news content. However, 2020 is proving to be a year in which news sites provide valuable opportunity to reach targeted audiences.
Remember this: Consumers, including Gen Z and Millenials, are actively seeking out Coronavirus news.
New and emerging technologies expand display ad formats. Augmented reality and virtual reality devices are gaining traction among younger demographics and are poised to reach 3.5 billion dollars by 2022, according to Digi-Capital. Keep your eye on innovative ways to reach your audience through these devices. Mastering these channels in their infancy will give you a leg up on competition in the months and years ahead, don’t forget … make sure they make sense AS PART of your larger digital strategy.
Want to talk about other trends we are experiencing in the industry? That’s our jam. Reach out.
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