The Interactive Advertising Bureau (IAB) says one “clear trend” for U.S. consumers during the past year has been the acceleration of digital adoption, particularly streaming video content. The survey of digital executives that resulted in the release of the IAB Outlook: 2021 report predicts that as vaccination numbers rise, not everything will be returning to pre-pandemic normal.
“While the long-term mental and physical health effects do not yet have clearly defined consequences, early signs indicate that the pandemic will drive behavior changes and, in some cases, economic changes that are expected to last a lifetime,” says the report released Monday at the IAB Annual Leadership Meeting. It noted that 78% of surveyed consumers indicated they were consuming more online services during the pandemic.
For audio, that evolution means digital radio advertising is expected to grow 7% with music service ads forecast to grow 8.6%. “Combined, these segments are projected to reach $4.3 billion by 2024,” says the IAB, which released the report in conjunction with PwC. “Podcasts are projected to grow 18.8%, reaching $1.6 billion in U.S. advertising revenue by 2024,” it says.
Media companies ranging from radio groups like Entercom to podcasters like Barstool Sports investing in esports are also poised to benefit by what the IAB sees as continued growth in online games and advertising. The report forecasts esports advertising will reach $86 million by 2024.
But it is mobile and digital television where the biggest dollars are being spent. Even though half of the 70% who reported watching more TV since the start of the pandemic expect their use to taper off once normal activities return, the IAB says it expects the shift toward more digital video to persist. Digital TV and video ad spending is projected to reach $34 billion by 2024 across both wired and mobile formats. And mobile-delivered internet ads overall are projected to hit $117 billion.
Among the potential warning signs IAB sees for radio and ad-supported streaming services is an evolution in the value exchange that supports the mediums. Consumers no longer think the exchange of free content for watching or hearing ads is good enough, it says, as consumers have grown accustomed to content without interruption from streaming services, and advertising pods may feel too long and too disruptive.
“To put it bluntly, the old value exchanges just aren’t enough. The model is broken,” said Sue Hogan, Senior Vice President of Research & Analytics at the IAB. “Publishers and media companies have to reimagine reciprocity or risk the flight of consumers to competitors,” she said.
And as cookies disappear as a digital tool, CJ Bangah, Principal of Technology Media and Telecommunication at PwC US, told the conference that she sees digital publishers and ad tech companies playing a leadership role in driving more outcome-based marketing campaigns.
The report is the result of interviews with 20 senior thought leaders across brands, agencies, publishers, and their supply chain partners. An updated version of the report will be released in September and will be released on an annual basis thereafter.
The Roaring ‘20s
The IAB report also highlights how brands are thinking about the post-COVID world. The IAB says it picked up “strong parallels” with the circumstances that led to the Roaring 1920s, including a pandemic. “A number of interviewed executives anticipate that history will repeat itself in the post-pandemic 2020s,” it says. “Some predict consumers will have an insatiable demand for immersive shopping and in-person experiences like travel and music festivals, and in the 2020s, for immersive digital experiences as well. Others believe mobile will become even more dominant as digital consumption soars.”
But the IAB says the most important question may not be whether history will repeat itself, but whether anything can be learned from the past to avoid the crash that followed the previous “Roaring ‘20s.”
Download the IAB Outlook: 2021 Digital Ad Ecosystem report HERE.