Improvado Research on The Impact of COVID-19 on Digital Ad Spend [2021 Research]
The impact of Covid-19 on brands’ digital ad spend
Towards the end of 2020, consumer electronics, sporting and consumer goods saw an uptick in digital ad spend, while hospitality, entertainment, travel, leisure & tourism brands reduced spending as the long-term effects of the Covid-19 pandemic are felt across many industries.
As experts in marketing data management and aggregation, we set out to explore the changing nature of digital ad spend across all brand categories on Google Ads. Gathering data from third party services including SEMrush, SpyFu and SimilarWeb Pro, we looked at Google Ads spend estimates across 6,000 US companies and here is what we found.
While traditional media platforms suffered at the mercy of Covid-19 in 2020, our data showed that digital has benefited, with overall spending on Google Ads increasing by 20%.
“During the last 2020 there were several changes in the general Ads spend of companies, a fall in the first two quarters and a rise in the last quarter thanks to BlackFriday and Christmas campaigns.Those changes helped new leaders to appear in terms of expenses such as higher education and consumer electronics while Google’s 2020 total net revenue was in decrease having only 11.39 Billion in Comparison with the 18.35 Billion in 2019“ — Natalia Zhukova, Head of Marketing, Market Research at Semrush
The rise and fall of digital ad spend by sector
With more and more consumers forced to spend time at home during the pandemic lockdowns, industries such as consumer electronics (+217%), sporting goods (+81%), consumer goods (+80%), furniture (+68%) and utilities (+67%) had been quick to take advantage of this opportunity, posting the highest increases in ad spend by the end of 2020.
Smaller, but significant, increases in ad spend budgets were apparent in the insurance sector (+2%), along with hospital & healthcare (+12%), financial services (+13%), food production (+16%), non-profit organisations (+17%) and business supplies and equipment (+17%).
At the other end of the scale, industries which generally rely on large crowds of customers coming together, such as entertainment (-82%), leisure, travel & tourism (-78%), airlines & aviation (-77%), hospitality (-77%) and recreational facilities (-69%), saw the most significant drop in ad budgets during this time, in no small part due to the tough and stricter restrictions on consumers being able to use their services.
The computer software (-4%), real estate (-5%), information technology (-6%), construction (-8%), luxury goods & services (-11%) and automotive (-12%) industries also noted smaller declines in ad spend during this period.
Ad spend growth by industry
- HIGHER EDUCATION saw huge growth throughout 2020, with ad spend increasing almost six times. With universities desperately needing more students and a more difficult task in convincing young people to get a higher education, it requires more ad investments to fulfil their facilities.
- ENTERTAINMENT companies are no longer spending on ads, with budgets dropping almost five times. This could be down to a combination of organic growth for digital entertainment companies, coupled with the fact that people are unable to visit out-of-home venues such as theatres, museums and outdoor entertainment venues.
- LEISURE, TRAVEL & TOURISM and AIRLINES & AVIATION have been two of the hardest hit industries of the global pandemic, with ongoing travel restrictions impacting consumers’ ability to move freely between countries and take holidays.
Then vs now
We conducted a similar piece of research at the beginning of the pandemic, which gave us the opportunity to compare and contrast these findings with what we discovered at the end of 2020. This highlighted some stark contrasts in digital ad spend by industries and uncovered some interesting trends about how Covid-19 has impacted industries of all shapes and sizes.
→ COSMETICS remains high on the list in terms of the biggest increase in ad spend. This is likely due to beauty salons being closed and consumers finding themselves experimenting with new products and having to do this themselves.
↓ MANAGEMENT CONSULTING went from being in the top 5 at the beginning of the year for increased ad spend, now to a decrease in spend.
→ HOSPITALITY continues to suffer the long-term impact of the pandemic and is the only sector to feature in the bottom five in both sets of research.
↑ The INTERNET SECTOR spend saw a big jump in ad spend during this period, moving from bottom of the list at the beginning of the pandemic to feature in the top 20, perhaps a reflection of the “new normal” we are all now accustomed to.
↑ RETAIL spending increased significantly, despite reducing spending at the beginning of the year. This could be due to the fact that physical stores remain closed, leading more and more brands and retailers to adapt and update their ecommerce offering in line with consumers doing more online shopping. In such a crowded marketplace, it’s no wonder they are turning to digital to promote their offerings and create a simpler shopping experience journey for customers. The apparel & fashion sector saw a 19% increase in ad spend.
What does all this data tell us?
While some of these findings might seem obvious, it also highlights some key changes in how brands are advertising their goods and services in a time of uncertainty. While some industries will have seen organic growth, in line with how consumer habits have changed, others are finding they have to step up and boost their digital ad spend in order to capture the attention of consumers which they aren’t able to attract elsewhere.
SPEED and AGILITY have been key business learnings for brands and businesses during this global pandemic and those companies who can REACT and ADAPT to market changes both quickly and efficiently will benefit the most - and to do that relies heavily on DATA.
Improvado’s top tips for navigating out of the global pandemic:
- BE DATA-DRIVEN: Data has been hailed the Holy Grail of Marketing for some time now but what the past year has shown is that it’s more important now than ever before. Lots of invisible changes are happening as new risks and opportunities appear; businesses need to be able to adapt to those market changes and data enables them to do that.
- BE WILLING TO CHANGE YOUR PRIORITIES: The world is changing quickly and it’s likely this will continue in 2021, in the short-term at least. Adopting an agile business mindset and radical thinking will enable you to change priorities quickly and stay up to speed with how the marketplace is evolving.
- EXPAND YOUR HORIZONS: Bringing in data from various different sources gives you a much broader view of what is happening across the digital landscape, which will enable you to achieve the most reliable outcome.
There are more than 7,000 market platforms currently on the market today and an average company uses dozens of them. We all know that data is the vital element in assessing, measuring and optimising campaign performance, so viewing and understanding marketing data should be simple, accessible in real-time and it shouldn’t require having to outsource to developers. It’s also very costly to build in-house solutions, so outsourcing to a trusted data management and visualization service like Improvado saves time and money.
For the purposes of this research, we analyzed 6,000 companies from our pipeline: extracting datasets with key company details: vertical, firmographics, revenue, adtech providers, etc. After enriching this data with AdSpends evaluations based on a number of trusted data providers, including third party services SEMrush, SpyFu and SimilarWeb Pro.
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