Majority Rules? Pandemic Accelerates Digital Share Of Ads

If your newspaper is a monopoly with little or no competition and has a lock on local advertising, you can stop reading here.

To the rest:

Last week, The Wall Street Journal highlighted a report from the world’s largest ad buyer (Group M, a unit of WPP PLC) that estimated advertising spending in 2020 — and in 2021.

It didn’t get much attention. Enter Relevant Points:

  • *First, an important first. “More than half of the U.S. advertising spending is set to go to digital platforms such as Google and Facebook.”
  • *”The milestone is just the latest proof of digital advertising’s meteoric rise, which has concentrated ad spending with several tech giants at the expense of other platforms, including newspapers, local television and magazines.”
  • *Marketers are expected to spend $110.1 billion on digital ads this year, or 51% of the total $214.6 billion total U.S. advertising-spending forecast. This doesn’t include political ads. Next year, the expectation is for U.S. ad spending to grow 12% to $240 billion, and digital advertising to account for $130 billion, or 54% of the total.
  • *Some context about the acceleration:
  • “Three years ago, digital ads accounted for just one-third of all U.S. spending, Group M said — about the same size as newspapers, radio, magazines and local TV combined. As of 2020, these latter four categories’ combined share of the U.S. advertising market has shrunk to 21%.”
  • *A chart accompanied the WSJ story depicting the estimated U.S. digital ad revenue market share in 2020: Google, 29.8%, Facebook, 23.5%, and hard-charging Amazon at 10.2%. That means the Big 3 snagged 6 out of every 10 dollars.
  • *Pause and reflect on this insightful quote from GroupM’s global chief executive, Christian Juhl, that offers direction for community newspapers as well: Facebook, Google and Amazon “have done a good job of showing ad performance — and when they show performance marketers shift dollars.”
  • *Finally: “GroupM expects the pandemic to accelerate the downward trends for print. It predicts that next year ad spending in newspapers and magazines will decline 12% and 8%, respectively.”
  • Community newspapers can buck the “expert” predictions in 2021. It will require more hard work, an intense set of priorities, strong execution, and, yes, a little luck (think vaccine).

What to do?

Focus on smart initiatives to better document how newspaper ads — print and digital — deliver the best results. Share the Juhl of a quote above so those words motivate you and your staff.

Continue to bundle print and digital to attract the biggest audience for your advertisers and sponsors. Be creative.

Hammer home the the biggest point that giving the Big 3 local dollars doesn’t pay for local journalism that’s needed now more than ever by your community.

The brutal fact is the pandemic has more consumers spending more of their time and money online. In turn, the COVID lockdowns are causing local businesses to “flock” to digital advertising.

Follow the money.

—TAS

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