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One quarter into 2021, we made some predictions about advertising in the post-Covid world based on the trends we were seeing and the changes we were expecting.
- We were seeing ad spend growing, despite some declines in traffic
- We anticipated that readers were becoming even more valuable to advertisers for a variety of reasons
- We predicted that categories that decreased during the height of COVID’s impact (like travel and quick service restaurants) would surge back in spend
So how’d we do?
The ad industry is optimistic right now
We’re happy to say that the majority of our predictions held steady throughout the second quarter!
Revenue and CPMs continue to grow, even as traffic, predictably, normalizes — as people venture out to enthusiastically partake in travel and other activities they avoided during the height of COVID lockdowns.
Advertisers in these blossoming categories like travel are investing in the digital space more than ever before, while advertisers in categories like retail and technology are doubling down on increased investments during COVID.
We’re not the only ones feeling this positive energy.
The industry as a whole has seen tremendous growth, so much so that predictions for the rest of the year are looking very rosy. No doubt, Google’s announcement that the third-party cookie has a few more years on the clock left many advertisers feeling optimistic about continuing to precisely reach their target audiences.
GroupM, one of the biggest media agencies and a key AdThrive partner, recently released their quarterly forecast:
As we approach the midpoint of 2021, advertising growth for the year is far exceeding previous expectations, leading to a revision of our forecasts for this year and beyond.”— GroupM
Their outlook is particularly optimistic for digital advertising. While GroupM anticipates advertising overall will grow by 22% this year, they expect digital advertising specifically to surge 33%!
The report makes some more exciting predictions:
At this pace of growth, digital will account for 57% of all advertising we track in our data set for the United States. We also expect that, by 2026, digital advertising will continue to drive—and outpace—the overall market, accounting for 69% of the industry.”— GroupM
Advertiser spend continues to grow
Revenue from advertising is the combination of two things:
- how much an advertiser is willing to pay for each ad impression (CPM)
- and how many of those ad impressions there are (traffic to your site)
2020 was a strange year for revenue because of these two ingredients.
Though the year started off with a normal trajectory, as COVID hit the United States, CPMs took a hit as well. Astronomical traffic increases almost made up the difference in ad revenue, but it wasn’t until the end of Q2 2020 that CPMs started to normalize and we saw a surge in revenue.
- 2020 saw strong advertiser spending in Q1
- Even with COVID’s economic impact, advertiser spend stayed around 2019 levels for most of Q2 2020
- We saw advertiser spend begin to rebound in June 2020
So far in Q2 2021, AdThrive publishers continued to surpass even this giant surge in revenue from Q2 2020, strongly outpacing 2018 and 2019.
- Advertiser spend has been super strong so far in 2021
- We saw the year-over-year gap close in a bit in June since that’s when advertisers began to increase spending again in 2020
But publishers are also seeing post-COVID traffic declines
There have been many predictions about the dreaded decline in traffic as people leave their digital ecosystems to venture out into the “real world”. But we only saw a hint of this in the first quarter.
There could have been a myriad of reasons for this:
- Cold weather keeping people indoors
- Uncertainty about returning to out-of-home activities post-vaccination
- A permanent shift towards a more digitally-centered way of life (our favorite, of course!)
With the advent of warm weather, increased vaccination rates, the desire to make up for lost time, and maybe some amount of FOMO, what’s been happening with traffic?
Our community of publishers sees traffic grow every year, as our network expands and AdThrive publishers build amazing new readership.
- Traffic follows similar patterns each year
- 2020 was a significant anomaly, with huge traffic spikes starting in March
On an absolute level, we’re continuing to see growth in 2021. But we’re also seeing that growth normalize compared to the abnormally high traffic rates of 2020.
- The COVID traffic increase is winding down
- The average AdThrive publisher is now seeing a traffic trajectory similar to previous non-pandemic years (2018–2019)
As more people return to pre-COVID routines, this dip in time spent browsing the internet only makes sense. But it’s encouraging to see that people are still consuming more online content than in 2019.
But there’s another trend that’s keeping us optimistic that despite any declines in traffic, many publishers will see revenue stay strong…
High CPMs are the reason behind growing revenue
Ad revenue overall is high because the value brands are placing on advertising keeps growing.
AdThrive publishers’ CPMs are at a record high and continuing to grow, not only compared to 2020 but also compared to the previous “normal” years of 2018 and 2019.
- In 2020, CPMs took a dive in March and bottomed out in April, climbing back up through June
- Now, 2021 CPMs are following a similar trend as 2019, with a steeper climb from May through June as they rise to record heights
Why are CPMs growing so much?
- Consumers are eager to spend (we like the term “YOLO economy”), so brands know they need to be front and center and are willing to invest to get their attention at this key time
- With fewer pageviews available, opportunities to show advertising are more scarce, making every ad placement more valuable
- The combination of the two points above mean more competition between brands — and competition drives up ad pricing
- Overall market inflation is contributing as well
- The continued ability to rely on third-party cookies means advertisers know they can precisely target ads, and more targeted ads are more valuable
Who was spending in Q2 2021?
As we expected, the industries that saw the worst COVID-related economic impact are the ones coming back strongest, and it was especially evident in Q2. Brands are looking to win over all the travel, dining, and entertainment dollars consumers are eager to spend.
Comparing Q2 2021 revenue by category to this time last year makes that clear:
But it’s not just growth compared to the anomaly that was 2020. Many of these same categories (especially travel) are outspending Q2 2019, too.
And industries that benefited during 2020, like tech, telecom, pharma, retail, and media, continue to invest at higher levels, also beating their spend from this time pre-COVID.
Key takeaways for publishers
- Spend some time on a content audit this summer, so you can focus your energy on your highest-ROI updates and content gaps.
- Start prepping your holiday content for Q4 ad spend, now. Ideally, you want to publish holiday content a full quarter before, so you have time to move up in the search result rankings.
- Once a reader is on your page, how will you convert them to a loyal fan? Think about how to take your readers on a journey that teaches them to return to you over and over again for high-quality content.
- As you plan content, keep advertiser spending in mind. Knowing that areas like travel, tech, fast food, and live entertainment continue to grow can help you give your readers content that resonates, because that’s where they’re spending money right now.
On the AdThrive side of things, we’re not pumping the brakes on third-party cookie replacements. We’re continuing to focus on our work across the industry, identity developments, ad sales, and contextual improvements.
We’re more energized than ever to push forward with things that maintain this momentum for publishers for years to come!