Digital Advertising: Incl Impact of COVID-19 - US - September 2020

OVERVIEW
What you need to know 
Key issues covered in this Report 
Definition 
COVID-19: Market context
Economic and other assumptions
EXECUTIVE SUMMARY 
Top Takeaways 
Market Overview 
Growth slows due to COVID-19, but digital will remain substantial
Figure 1: Total US digital advertising revenues and forecast, at current prices, 2015-25
Impact of COVID-19 on Digital Advertising
Figure 2: Short-, medium- and long-term impact of COVID-19 on advertising, August 2020
Opportunities and Challenges 
Re-emergence 
Recovery 
Marketers need to tailor their ad mix to their target audience
Figure 3: Online ads in the past seven days, by age, June 2020
Partnering with live streamers could reach a highly engaged audience
Figure 4: Frequency of content consumed per week, by content consumed, June 2020
Brands are challenged to reach ad avoiders
Figure 5: Number of ad-avoidance methods, June 2020
Brands need to beware of ad fatigue
Figure 6: Digital ad behaviors, June 2020
Follow the consumer
THE MARKET – KEY TAKEAWAYS
US digital ad market to grow despite COVID-19
Mobile ads garner majority of overall digital ad spend
Paid search remains the largest digital ad channel
Digital video advertising is the fastest growing 
Digital voice assistants will play a growing role as usage increases
2020 election year should spur further digital advertising revenue
MARKET SIZE AND FORECAST 
COVID-19 pauses ad spending, but digital will be first to return to growth
Figure 7: Total US digital advertising revenues and forecast, at current prices, 2015-25
Figure 8: Total US digital advertising revenues, at current prices, 2015-25
Impact of COVID-19 on digital advertising
Figure 9: Short-, medium- and long-term impact of COVID-19 on advertising, August 2020
Lockdown
Re-emergence
Recovery
COVID-19: US context
Learnings from the last recession
SEGMENT PERFORMANCE
Mobile-based marketing drives growth
Figure 10: Digital ad revenue, by desktop and mobile, 2010-19
Paid search remains the mature staple of digital advertising 
Figure 11: Breakout of US digital ad spend, by segment, at current prices, 2018-20
Figure 12: Breakout of US digital ad spend, by segment and year-over-year percentage change, 2014-20
Digital video marketing continues rapid growth 
Figure 13: Breakout of US digital ad spend growth, by segment, at current prices, 2015-20
Figure 14: Breakout of US digital ad spend share, by segment, 2014-20
MARKET PERSPECTIVE
Digital voice assistants can still grow in a marketing role
AR/VR adoption could bring new marketing platforms to consumers
White space to leverage zero-party data
Transition to ad-free streaming services increases value of remaining video inventory
MARKET FACTORS 
Legislation could quickly transform digital marketing landscape
Mass pullback in advertising due to overall market uncertainty
Figure 15: US real GDP growth (annual percent change), 2007-21
5G developments could bring more connectivity on-the- go
Click fraud continues to concern digital industry
Podcast downloads taking a hit due to COVID-19
MARKET OPPORTUNITIES 
2020 Election should generate significant ad spend
Programmatic digital video ads should boost video ad segment
Social media offers low-cost advertising from organic fans and influencers
High-volume streamers could spur revenue for ad-supported services
Unsold digital video inventory needs to be accessed
Figure 16: ESPN streaming commercial break screen, August 2020
COMPANIES AND BRANDS – KEY TAKEAWAYS 
Google Search generated nearly $100 billion in 2019
Facebook flourishes despite widespread boycotts
Twitter stops accepting political ads
TikTok faces potential ban in US
Spotify makes major push to podcasting
Comcast’s internal ad operations look to leverage vertical integrations
The Trade Desk continues rapid growth but faces COVID-19 headwinds
Shopify continues to grow its merchant count
COMPETITIVE STRATEGIES
Shifting retail behavior spurs Amazon’s search revenue
Figure 17: Google and Amazon ad search revenues, by quarter, July 2018-June 2020
Twitter decides to ban political ads
Figure 18: Twitter and Facebook quarterly revenue, July 2018-June 2020
Local businesses go digital to replace pre-COVID foot traffic
Figure 19: Shopify quarterly revenue, July 2018-June 2020
Spotify invests significant sums into podcasting
Figure 20: Total podcast ad revenue, 2015-20
Comcast’s FreeWheel to integrate linear and digital video advertising
THE CONSUMER – KEY TAKEAWAYS 
Media consumption is on the rise post COVID-19
Live streaming and gaming streaming get more regular viewership
Social media and email ads have highest levels of recall
One third of consumers use multiple methods to avoid online ads
Inefficient ad targeting leaves room for improvement
Entertaining ads correlated with purchasing
Ad fatigue could alienate potential customers
Ads are necessary but a nuisance
CONSUMER TRENDS AND DIGITAL ADVERTISING
Consumers go digital and advertising dollars follow
Technology
Rights
CONTENT CONSUMPTION: PRE- AND POST-COVID-19
Content consumption is widespread
Figure 21: Content consumed in an average month, June 2020
Streaming skews heavily toward younger consumers
Figure 22: Content consumed in an average month, by age, June 2020
Live video streaming a popular daily source of entertainment
Figure 23: Frequency of content consumed per week, by content consumed, June 2020
COVID-19 shutdowns lead to overall increase in media consumption
Figure 24: Content consumption since COVID-19, June 2020
Nearly half now spend at least three hours per day watching video content
Figure 25: Daily video consumption, before and since COVID-19, June 2020
ONLINE AD RECALL FROM PAST SEVEN DAYS
Social media and email ads top consumer recollection
Figure 26: Online ad recall from the past seven days, June 2020
Email effective for older consumers, social for younger consumers
Figure 27: Online ad recall from the past seven days, June 2020
Four in 10 recall seeing at least three types of digital ads in past week
Figure 28: Number of online ad types recalled from the past seven days, June 2020
Older consumers least likely to recall digital ads
Figure 29: Number of online ad types recalled from the past seven days, by age, June 2020
ONLINE AD RESULTS
Nearly half recall an ad for something they had no interest in
Figure 30: Online ad results, June 2020
Podcast and influencer ads more highly correlated with purchase behaviors
Figure 31: Online ad results, by online ad recall from the past seven days, June 2020
Younger men are more engaged with digital ads
Figure 32: Online ad results, by gender and age, June 2020
Entertaining ads linked with commercial success
Figure 33: Online ad results, by consumers entertained by an ad, June 2020
ONLINE AD-AVOIDANCE METHODS
A third of users use ad-blocking software
Figure 34: Ad-avoidance methods, June 2020
Consumers aren’t going out of their way to avoid online ads
Figure 35: Number of ad-avoidance methods, June 2020
Figure 36: Ad-avoidance methods, by number of methods used to avoid ads, June 2020
Figure 37: Online ad results, by number of ad-avoidance methods used, June 2020
Men are more likely to utilize ad-avoidance methods
Figure 38: Ad-avoidance methods, by gender, June 2020
Figure 39: Number of ad-avoidance methods, by gender and age, June 2020
ATTITUDES AND BEHAVIORS TOWARD DIGITAL ADS
One third of users would stop using a streaming service if ads increased
Figure 40: Attitudes toward online video ads, June 2020
Nearly half of consumers get annoyed at repeated ads
Figure 41: Digital ad behaviors, June 2020
Too many ads on apps will lead to deletions
Figure 42: Digital ad behaviors, by age, June 2020
Willingness to exchange personal information correlated with higher engagement
Figure 43: Digital ad behaviors, by digital video ad behaviors – willing to give personal information, June 2020
ATTITUDES TOWARD ADVERTISING
Ads are considered a necessary nuisance
Figure 44: Attitudes toward advertising – digital ads, June 2020
COVID-19 messaging generally welcomed by general public
Figure 45: Attitudes toward advertising – COVID-19 messaging, June 2020
Cynicism correlated with higher ad-avoidance behaviors
Figure 46: Ad-avoidance methods used, by attitudes toward advertising – COVID-19, June 2020
Consumers are more comfortable with ads from local businesses
Figure 47: Attitudes toward advertising – local businesses, June 2020
Consumers hesitant to share personal information and location to advertisers
Figure 48: Attitudes toward advertising – exchanging info, June 2020
CONSUMER SEGMENTS – ATTITUDES TOWARD ADVERTISING
Four segments of consumers identified based on attitudes toward advertising
Figure 49: Consumer segments of attitudes toward advertising, June 2020
Ad Acceptors (19%)
Characteristics
Figure 50: Characteristics of Ad Acceptors, June 2020
Figure 51: Online ads recalled in past seven days, by consumer segments of attitudes toward advertising, June 2020
Opportunities
Ad Apathetics (31%)
Characteristics
Figure 52: Characteristics of Ad Apathetics, June 2020
Opportunities
Ad Adversaries (24%)
Characteristics
Figure 53: Characteristics of Ad Adversaries, June 2020
Figure 54: Online ad-avoidance methods, by consumer segments of attitudes toward advertising, June 2020
Opportunities
Ad Apprehensives (26%)
Characteristics
Figure 55: Characteristics of Ad Apprehensives, June 2020
Opportunities
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Consumer survey data
Consumer qualitative research
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET 
Figure 56: Total US digital advertising revenues, at current prices, 2015-25
Figure 57: Total US digital advertising revenues, at inflation-adjusted prices, 2015-25
APPENDIX – MINTEL GLOBAL TREND DRIVERS
Figure 58: Mintel Trend Drivers and Pillars