Digital advertising spending increased by 12% in 2020, despite the pandemic

Despite an initial decline due to the Covid pandemic, digital advertising spending increased 12.2% year-on-year in 2020, according to a new report commissioned by the Interactive Advertising Bureau and produced by PwC. But the report also showed that the largest players in the ecosystem have further strengthened their position in the US digital advertising market in 2020, ordering more stock from year to year.

The pandemic caused an immediate withdrawal of advertising budgets in 2020, with some areas such as travel remaining slow throughout the year. But in the second half of 2020, political advertising spending and holiday season sales helped offset losses in the first half of the year, totaling $ 139.8 billion for that year. Growth was slower than between 2018 and 2019, when spending increased by 15.9%.

The IAB said a huge increase in connected television, e-commerce shopping and home delivery created a “swing pendulum” that helped the sector continue to grow despite the turmoil of the beginning of the year.

But spending has largely focused on the main advertising players and even more than in previous years. The IAB said the top 10 companies had a 78.1% share of revenue in 2020, with that group’s overall revenue exceeding just $ 109 billion. The top 10 companies accounted for 75.9% of revenue in 2018, rising to 76.6% in 2019. IAB said companies ranked 11-25th represent only 6.2% of revenue, while companies lower represent 15.7%.

IAB does not describe how much it is made up of companies such as Facebook, Google and Amazon. In a new report this week, eMarketer said Amazon’s share of the U.S. digital advertising market was up more than 10% for the first time in 2020. Google’s share was 28.9% of the U.S. digital advertising market in 2020, and that of Facebook was 25.2%, according to eMarketer.

Year-on-year growth fell by 5.2% in the second quarter, the IAB report shows, but spending in the third and fourth quarters rose 11.7% and 28.7%, respectively. year. The report said that the fourth quarter of 2020 had the highest revenue for digital advertising in the last 20 years, which it attributed in part to pre-election advertising. Advertisers were also spending budgets for 2020 that were discontinued earlier this year due to the pandemic.

Social media advertising revenue reached $ 41.5 billion in 2020, the report said, accounting for nearly 30% of total internet advertising revenue. Digital video increased by 20.6% year-on-year, increasing its share of total internet advertising revenue by 1.3% to 18.7%.

Programmatic advertising revenue also rose 24.9% to $ 14.2 billion in 2020, but the IAB report questioned whether privacy changes, such as Google’s depreciation of cookies from third parties, will mean that growth is unsustainable in the future.

“The changes in consumer identity and award patterns announced by Google and Apple have not had a significant impact in 2020 and are expected to turn into a disruption as ecosystem participants and consumers adapt to the new models,” report. “Rather than a direct and significant immediate impact, the loss and blocking of identifiers on advertising products, tracking and other capabilities will be felt over time.”