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SMI: U.S. Ad Market Simmers After 2021’s ‘Unprecedented’ Gains.

After reaching a full-boil in 2021, the U.S ad market is settling to a simmer in the first half of 2022, a new report from Standard Media Index (SMI) says. “The pandemic hit the ad industry hard, but the industry bounced back,” the report says.

COVID erased a staggering $17 billion in U.S. ad spending from the SMI pool of agency-placed media buys by September 2021. Instead of the forecasted $141.14 billion in ad spending, the actual number came in at $123.68 billion, following a slew of pandemic-caused cancellations and reductions.

SMI says its pool tracked $93.5 billion in U.S. ad spend in 2021 from its ad agency pool, which includes ad receipts from Havas, IPG Mediabrands, Omnicom, dentsu Aegis, Publicis, Group M and others agency giants.

While traditional media was “knocked off course,” the rebound is ongoing, SMI says. Its data show ad spend grew an “unprecedented” 18.5% year-over-year in 2021 as the ad industry recovered 100% of its pandemic losses. First quarter 2022 “started hot,” jumping 15-20% thanks in part to advertising tied to the Winter Olympics.

The report shows, in striking detail, how the COVID effect accelerated the migration of ad dollars to digital media. After increasing by two to three percentage points a year from 2017-2019, digital’s share of media investment surged to 48% in 2020, from 42% in 2019. Then in 2021 it leapfrogged ahead of traditional media to reach 53%. That represented a stunning 30% year-over-year gain. All in, the SMI pool hit a new high of $93.5 billion in 2021.

Fast forward to first quarter 2022, and SMI projects March ad spend to stabilize at $7.6 billion, the same as it was one year earlier.

In the fast-evolving video space, March’s digital uptick is projected to counteract linear TV’s fallout. And nearly all digital channels, including search, social, and pureplay internet radio, are forecasted to reach a new March spending peak.

Digital Audio Heats Up

SMI uses one word to describe the digital audio market: “hot.”

As Inside Radio reported last month, the gap between digital and AM/FM radio continues to close, at least when it comes to where national advertisers are placing their dollars. According to SMI, while both segments have seen double-digit growth during the past year, the rate digital advertising spending increased is triple the rate and is now approaching parity with broadcast radio in terms of national ad dollars. Digital audio ads have risen rapidly from a 24% share of national audio ad spend in 2017 to 49% in 2021. “Broadcast radio ad spend increased slightly during the period, but the medium was hard hit by pandemic remote work,” the report says.

The SMI data excludes local ad dollars, which represent the majority of radio ad spending.

SMI says that while broadcast radio’s national ad dollars increased by a respectable 14% year over year during 2021, national advertisers boosted their spending on digital audio by 43% compared to 2020. The gravitational pull toward digital is not limited to any one ad segment, according to SMI. It says ad categories such as consumer packaged goods, technology, financial services, and entertainment/media are all now allocating more of their national ad budgets to digital audio than to broadcast radio.

The SMI figures for digital audio include spending data from streaming services, the online simulcasts of broadcast radio and what it says was the biggest factor in the exponential growth last year – podcasts. The firm says national marketers increased their podcast ad spending 68% last year versus 2020. And podcasts now account for eight percent of all digital audio ad spending.

Driving those numbers are what national advertisers are paying for podcast ads. The average CPM for digital audio overall from November 2020 to October 2021 was $16. But SMI says podcasts now lead all media categories in CPMs at an average of $25 for video podcasts and $24 for audio podcasts. “Video format on podcast platforms is a particular premium, although a small share of all video inventory,” SMI says.

The highest priced digital ads are host read ads on podcasts, which command an average CPM of $26. That tops even premium video ads on OTT, which have an average CPM of $23. Video ads served via streaming audio platforms commanded an average CPM of $17 while audio-only streaming audio ads had an average CPM of $10.

Zeroing in on specific ad categories, SMI says travel is likely to fully rebound in March while entertainment is anticipated to bring in the most new ad dollars for the month.

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