The largest corporations’ spending is becoming ever more concentrated, while the percentage of money spent by advertising agencies is decreasing.

There are large digital ad budgets for tech companies on the back of a stay-at-home holiday shopping season and a continuing ad turnaround from the start of the pandemic, companies appear to be on track to post an exceptional 2021.

“The setup for the digital ad names couldn’t be any better,” Bernstein analysts wrote in a note last week, citing factors such as an online holiday shopping season with stores closed and an extended holiday season after Amazon launched Prime Day deals in October. In comparison to 2019, there were two extra peak shopping days between Thanksgiving and Christmas.

Despite a significant drop in the second quarter due to the initial effects of the Covid pandemic, digital ad spend in the UK increased by five percent in 2020. According to the IAB UK’s Digital Adspend Study, which was created in collaboration with PwC, overall expenditure for the year was £16.5 billion.

Spend rose ten percent in the first quarter, according to PwC, before falling twenty percent from April to June. It then rebounded with ten percent growth in Q3 – leaving the first nine months of the year approximately flat as compared to the same time last year – before accelerating to eighteen percent growth in Q4.

“Although Covid continues to have an effect on sectors such as travel, concerts, and movies, demand remains strong,” they wrote. Snap and Pinterest are expected to beat by ten points, while Google, Facebook, and Twitter are expected to beat by less points, according to Barclays analysts. According to them, e-commerce growth was particularly high this quarter as people shopped from the comfort of their own homes.

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Analysts will be on the lookout for promising signs, but they’ll also be asking these firms about their plans for dealing with future privacy changes. Apple’s move to iPhone settings in the name of privacy, for example, would possibly expose some tech firms more than others.

However, while the top five firms, including Google, Facebook, and Amazon, grew by ten percent in 2020, the remainder of the market fell by nine percent. The top five firms now control seventy-nine percent of the industry.

Smartphone spending reached £9.75 billion in 2019, up ten percent from the previous year. This now accounts for fifty-nine percent of the overall industry, up from fifty-seven percent last year.

Spending on social display increased nineteen percent to £4.28 billion, according to format. This segment accounted for twenty-six percent of the overall market, up from twenty-three percent the previous year. Since 2016, social display has increased its market share by a substantial amount per year.

Video spending increased nineteen percent to £3.43 billion, with mobile video spending up twenty percent to £2.75 billion.

Although search grew more slowly than the rest of digital advertising, it nevertheless increased by seven percent to £8.37 billion, a faster pace than the rest of the industry. For the first time, data on digital audio and podcasting is included in this year’s Digital Adspend study, demonstrating the growing importance of audio in the digital world.

The demand for digital audio increased by seventeen percent to £104 million. This included a £33 million investment in podcast advertising, up forty-three percent year on year. The amount of money spent by agencies has decreased, accounting for just thirty-three percent of overall spending this year, compared to thirty-six percent last year.

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“When the pandemic struck, all of our expectations for 2020 went out the window,” said Jon Mew, chief executive of IAB UK. We realized it was going to be a difficult year for the entire media industry, including digital ads, and the effects are still being felt.

“It’s fantastic news that the digital ad market has rebounded and is growing again, boosted by investment in areas like video and social media, but it is important to remember that this momentum won’t be felt across the board, and that the recovery is still underway. The results from today are very promising and demonstrate that we’re on the right track.”

“In this year’s Digital Ad Spend survey, we see new areas of spend gaining ground in line with evolving customer preferences and behavior,” Stephanie Claxton, senior manager, digital and programmatic at PwC, added.

“The staggering growth of podcast spending, in particular, indicates the expanding opportunities for brands in the audio sector.” It will be interesting to see how this field progresses, just as it was when we first began measuring mobile ads in 2008.”

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