We will kick off our three-part 2020 Digital Benchmark Report blog series by examining how different verticals, or ad categories, fared in 2020. From there, Parts 2 and 3 will reveal the effect of the pandemic on digital advertising sales representatives and on the economics of digital advertising, respectively.
2020 was obviously an extraordinary year marked by unprecedented circumstances (it’s cliche because it’s true). Here at Marketron, we know COVID-19 impacted nearly everything about daily life, so we dug in to see how it impacted third-party digital advertising among broadcasters.
To assess how the COVID-19 pandemic affected digital advertising sales, we analyzed the data from more than 5,000 campaigns that ran on our platform and performed a year-over-year analysis of 2020 versus 2019. Our goal is to provide insight that you can use to focus your revenue growth in digital. By understanding how the pandemic impacted advertisers’ approach to digital advertising, and how broadcasters responded to that impact, you can better position yourself as an informed, trusted advisor to your clients — and help them rebound more quickly and effectively.
Digital Advertising Revenue by Vertical in 2020: Top Five Takeaways
Let’s start with the data. How did the top 10 verticals by revenue compare between 2019 and 2020?
As you can see, the top 10 verticals remained fairly static, with most industries shifting up or down by just a few spots. This speaks to the overall growth of confidence and adoption of digital advertising, regardless of vertical. When the pandemic hit and belts began to tighten, none of these industries abandoned the digital channel altogether.
In fact, many increased their investment in digital advertising. After an initial knee-jerk reaction to pull ad dollars, smart businesses realized they needed a way to communicate with their customers in such dynamic times. They could still serve their target audiences, but they needed to be found — and in 2020, the place to be found was on digital channels, from surfing the internet to making Spotify playlists to going down the online video rabbit hole.
How did each industry fare? We noticed five significant trends.
- Home improvement invested more as people turned to projects. What better way to spend time at home than fixing it up? Home improvement businesses took advantage of consumers’ increased time and interest in home projects, reaching them on their devices to inspire them to tackle that next fix or upgrade.
- Entertainment and hospitality nosedived. No surprise here: Most entertainment options, from live concerts to in-theater movies, were canceled in 2020. Many restaurants and hotels had to close for extended periods of time and faced significant restrictions and barriers to reopening. With their businesses on the line, and nothing to advertise for some time, it makes sense that investment in digital advertising dropped dramatically.How steep was the drop-off? The entertainment industry dropped from the No. 4 most revenue-generating vertical in 2019 to No. 17 in 2020, while hospitality went from No. 7 in 2019 to No. 15 in 2020. We do, however, expect to see these verticals make a full recovery as life begins to return to normal in the second half of 2021.
- Businesses providing critical services took advantage of demand. Interestingly, industries including finance, real estate, education and legal all saw an increase in digital advertising revenue.Why? Consumers needed these services as life was turned upside down. They looked for alternative education providers when schools closed. They looked for financial assistance as they struggled with jobs, stimulus checks and PPP loans. They looked for legal advice to navigate the uncharted waters of furloughs, closures and more. They looked for real estate help as they fled the cities, upgraded for more space to accommodate working and learning from home, or bought or sold property in the year’s wild market.These businesses clearly understood that their services were required as people adjusted to the realities of 2020. By investing in digital advertising, they ensured that they were top of mind and could be easily reached when consumers needed them.
- Automotive and retail didn’t decrease as much as you might expect. While the automotive and retail industries both lost a few spots, neither dropped off dramatically like entertainment and hospitality.Automotive likely reduced digital advertising dollars during the early days of the pandemic, when demand for new cars in particular went down. But as sales of used cars began to increase due to people avoiding mass transit and watching their budgets, car dealerships increased ad dollars to take advantage of the boom.Similarly, retail businesses probably stopped advertising during lockdown. When stores began to reopen, however, they needed a way to inform their audience that they were open and that they were safe. Digital advertising provided a means to share their message as their situation evolved.
- The election drove increased political spend. Again, no surprise here: Political spending always increases in election years. Both parties invested significantly in digital advertising, almost doubling 2019’s revenue in 2020.
Overall, the shuffling of positions in the top 10 revenue generators list was surprisingly minimal given the scale of change and upheaval during 2020. The pandemic showed the strength of digital and accelerated its growth among most industries. This is consistent with other data and reports, like the recent RAB-Borrell Digital Benchmarking Report, showing that digital advertising spend in general did not decrease as much as other channels. While we can never predict the future, these trends seem to indicate that digital will continue on its upward trajectory.
What do these insights mean for you? Use this information to cement your position as an integrated marketing expert with your advertisers. Show them how their industry fared versus other industries and what we can extrapolate from that data. Explore ideas for continued growth if their industry was up, or for re-establishing growth if their industry declined. Most importantly, consider how their 2020 went. Listen to their current objectives, and advise them on the right product mix to meet those goals.