Online advertising took us on a wild ride in 2020. Here’s what to expect in 2021.
Big gains, followed by major losses, with plenty of twists and turns in between. That became the norm for digital publishers in 2020. With a constant stream of new advertising platforms and ad serving plugins being released, digital publishers are expected to see a renaissance in 2021. Traditional advertising programs are being thrown by the wayside in favor of more robust, comprehensive strategies.
Display advertising is no longer the only game in town. Digital publishers who are looking to fill out their advertising programs are now seeing a host of additional options, including section sponsorships, native advertising, sponsored content, and newsletter advertising.
Regardless of how the top tech platforms have changed over the past few years, advertising-driven publishing looks like it’s still here to stay. For nearly a hundred years, advertising has been used to increase profitability at media publications. The French newspaper La Presse had a successful advertising program going on back in the 1800s. All these years later, publishers are still using many of those same tactics to generate revenue through advertising sales.
The Covid-19 pandemic accelerated the growth in online advertising, particularly among digital news publishers and online magazines. Although traffic to digital-native news websites had plateaued prior to the start of the pandemic, local lockdowns and shelter-in-place orders led to a massive spike in online traffic this spring.
While the vast majority of digital display ad revenue is still going to Google and Facebook, digital news websites and online magazines are seeing renewed interest from local advertisers looking to connect with engaged audiences. That interest is only expected to increase in 2021. Many publishers are rushing to expand their online advertising programs to accommodate the anticipated growth.
According to the latest U.S. Local Advertising Forecast published by BIA Advisory Services, local advertising revenue is expected to see steady year-over-year growth of 2.5%, rising to $137.5 billion nationally in 2021. And that’s without the ad dollars that came from political campaigns in 2020, which were significant. Seventeen-percent of next year’s projected $137.5 billion in local advertising revenue is expected to come from mobile and online advertising. Even though that is an increase from 2020’s forecasted year-end total of $134.1 billion across all media, it shows that online advertising still has a ways to go before the market fully recovers from the impacts of the Covid-19 pandemic.
Other forecasters are predicting a slow recovery in online advertising spending during the first half of 2021. Researchers at WARC are predicting that magazines will hold steady in the coming year, with an expected $4 billion in spending. WARC also predicts that online display ads will see spending growth of 10%, although most of those gains will be driven by spending on social media and online video. Digging into individual ad formats, WARC found that online video seems to be performing the best. Online video is poised to become the fastest-growing format next year, with spending expected to rise by nearly 13%.
One silver lining to come out of 2020 could be the quick evolution of e-commerce as a revenue channel for digital news publishers. Amazon affiliate links and other commission-based programs became commonplace among digital publishers this year. Although these strategies were far outside the realm of traditional online advertising, they played an important role in profitability and revenue generation for digital publishers during an otherwise tough time.
As we look into 2021, expect to see an online advertising market that’s healthier and more mature than ever before. Forecasts predict that local advertising could soon comprise the majority of all advertising, thanks in large part to the lower costs, greater accountability, and increased flexibility for advertisers.
Has your publication experienced any hints of what’s to come in 2021? Drop us a note and let us know about the biggest obstacles you’re facing, and we’ll see if we can help.