Why search ad spending is growing despite (or perhaps because of) the pandemic?

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Mar 12, 2021 / by
Why search ad spending is growing despite (or perhaps because of) the pandemic?

While many sectors shrank in 2020 as a direct result of the COVID-19 pandemic, others soared amidst the chaos. Video conferencing and app-based delivery services have never been in better health.

Another area that has seen substantial growth in the months since the start of the pandemic is digital ad spending, with eMarketer finding a 5.9% growth in 2020 alone, a growth that seems liable to rise even further as we become a more ‘connected’ culture.

It was estimated, back in March last year, that ad spending would drop as a result of the travel industry freeze (the travel industry being one of the top ad spenders) but with retail shifting to digital channels, they more than picked up the slack. Search ad spending is growing at a slower pace but it is still growing.

A permanent shift?

The overall search spend amount looks set to dramatically exceed pre-COVID estimates in the next 12 months, with advertisers estimated to spend just under $60 billion.

The growth, it would appear, is primarily down to an increase in mobile searches and it’s not difficult to see why.

As a constant stream of lockdowns has forced us into our homes, we’re spending more time than ever before sitting on our phones, daydreaming about the future or buying things to make ourselves feel better.

This has led to a major increase in mobile ad spend and a lack of growth in desktop ad spend and this is something we foresee outlasting the pandemic at this point.

The future of ad spending

In October last year, Google reported a 6.5% year-on-year growth in ad revenue. With this in mind, the growth is expected to continue apace, with estimates placing ad spend at almost $100 billion by 2024, with mobile accounting for two-thirds of that spend.

It’s an increasingly mobile-focused world and as more commerce shifts online and stays there, it’s only going to get more so.

Ultimately, it would appear that the pandemic resulted in a lot of short-term pain but it could lead to some significant long-term gains. The general consensus seems to be that digital advertising will grow while traditional advertising will shrink.

Magna estimates a rise in ad spend of 7.6% in 2021 but a digital media growth of 10.4%. Interestingly, it also posits that India will be the leader of total ad spend. It’s not quite as rosy close to home though.

Ad spend in the UK

The WARC Expenditure Report predicts that ad spend recovery could be slower in the UK than elsewhere. Indeed, it’s not expected to fully recover until well into 2022.

However, this is perhaps due to the continued delays of cinema’s reopening (cinema advertising playing a surprisingly large part in overall ad spend) and lockdowns cutting into OOH spend.

As far as search ad spend is concerned, specifically, a 14.5% rise is expected and that’s just for starters.

Stephen Woodford, Chief Executive, Advertising Association, commented: “Not only does the data show the overall decline expected in 2020 may be less than feared, but the recovery in 2021 will be stronger than we would have dared hope even a few months ago.”

A large part of that is down to search ad spend. So give yourselves a pat on the back, SEO folk!