Digital advertising spending is up 12% in 2020, despite a pandemic

Despite an initial downturn due to the Covid pandemic, digital ad spend grew 12.2% year over year in 2020, according to a new report commissioned by the Interactive Advertising Bureau and conducted by PwC. But the report also found that the largest players in the ecosystem have further entrenched their grip on the U.S. digital ad market in 2020, gaining market share year over year.

The pandemic caused an immediate drop in advertising budgets in 2020, with certain areas, such as travel, remaining sluggish throughout the year. But in the second half of 2020, political ad spending and holiday sales helped offset losses in the first part of the year to $ 139.8 billion in total for the year. Growth was slower than between 2018 and 2019, when spending increased by 15.9%.

The IAB said a boom in connected television, e-commerce shopping and home delivery created a “swing” that helped the industry continue to grow despite the turbulence earlier this year.

But spending was largely concentrated with the major ad players, and even more than in previous years. The IAB said the top 10 companies had a 78.1% share of revenues in 2020, with total revenues of that group alone exceeding $ 109 billion. The top 10 companies accounted for a 75.9% share of revenue in 2018, rising to 76.6% in 2019. The IAB said companies ranked 11th to 25th only accounted for 6.2% of revenue for their take into account, while smaller companies account for 15.7%.

The IAB does not disclose how much of this consists 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 above 10% for the first time in 2020. Google’s share was 28.9% of the US digital ad market in 2020 and Facebook’s was 25.2%. according to eMarketer.

Annual growth declined 5.2% in the second quarter, the IAB report said, but spending during the third and fourth quarters increased 11.7% and 28.7% year on year, respectively. The report said the fourth quarter of 2020 saw the highest revenue ever recorded for digital ads in more than 20 years, attributed in part to ads leading up to the election. Advertisers also released budgets for 2020 that had been cut earlier in the year due to the pandemic.

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

Programmatic ad revenues also rose 24.9% to $ 14.2 billion in 2020, but the IAB report questioned whether privacy changes, such as Google’s abandonment of third-party cookies, will make growth unsustainable in the future is.

“Changes in consumer identities and attribution models announced by Google and Apple had no material impact in 2020 and are expected to lead to a tipping point as ecosystem participants and consumers adapt to new models,” the report said. “Rather than having an immediate and significant impact, the loss and blocking of IDs on ad products, tracking and other capabilities will be noticeable over time.”