More than half of all money spent on advertising in the United States was directed toward digital advertisements in 2020 — a historical achievement for the online industry, an international media investment company found.
Five years ago, digital advertising locked up $47 billion of a nearly $200 billion industry — already muscling out magazine, newspaper, and radio advertising, which combined claimed just more than $50 billion of the advertising space, according to a report from media investment company GroupM.
In 2020, digital advertising was the only spending category not to experience a precipitous drop in revenue amid the coronavirus pandemic, according to the Wall Street Journal, which saw many businesses pull back significantly on advertisement spending as others closed for good.
Digital advertising, fueled by digital behemoths such as Google, Facebook, and Amazon, in 2020 raked in 51% of all the advertising revenue for $110 billion. Radio, newspapers, and magazines compose 21% of all advertisement spending, taking in less than $30 billion.
“The biggest beneficiaries are Google, Facebook, and Amazon,” GroupM top global executive Christian Juhl told the Wall Street Journal. “They have done a good job of showing ad performance — and when they show performance, marketers shift dollars.”
Google, Facebook, and Amazon together account for nearly two-thirds of all digital advertisement spending — meaning that just three companies, armed with algorithms designed to tailor advertising to specific consumers and the data to prove results, took in more advertising money than all money spent on television ads, establishing a trend that GroupM doesn’t expect will go anywhere anytime soon.
“It appears that the underlying trends supporting 2020’s outcomes will persist from a new, heightened plateau, which suggests that a higher share of advertising will go toward digital media than we might have previously thought,” GroupM wrote in the report.
In addition to the coronavirus, the election cycle proved to be a boon for digital advertising — fundraising for candidates and issues increased by roughly 80% compared to spending for the 2018 midterm elections. Campaign spending composed roughly 4% of the entire digital ad market.
The pandemic is poised to “accelerate the downward trends for print” beyond 2020, according to GroupM, which expects that newspapers and magazines can expect 12% and 8% decreases, respectively, by December 2021.
