Advertising has long been dependent on available media to get the message across. As the industry adapts to technology innovations, the gradual shift from traditional to digital advertising became evident over recent years.
- The United States is the world’s largest advertising market.
- The advertising market did not meet forecasted growth recording -9% in 2020.
- Digital advertising take 51% of overall advertising spending in 2020.
The advertising industry is pretty much congruent with the innovations occurring in media. Whether it’s a LED hologram or an irregular-sized screen on public transport, advertisers always find a way to get the message across various channels creatively.
As technology advances, the growing advertising paradigm has sub-divided into two: traditional advertising and digital advertising. Traditional advertising broadcast ads consist of radio, print, billboards, and television. While digital advertising focuses on reaching out to its target audience online—search ads, social media, video streaming services, and websites.
The Advertising Market
The United States is the world’s largest advertising market, with more than $229 billion in advertising investment in 2018. That figure is double the amount spent by China—ranking second in the market—in the same period.
Being an important market, we look closely at the United State’s total advertising spending on both traditional and digital platforms. As illustrated in the graph below, spending in traditional markets will slightly decrease while slowly increasing in digital. The gap between traditional and digital advertising spends grows year-over-year. And by 2023, the total budget for digital ads would double traditional ad spends.
Both traditional and digital advertising are components of the overall global advertising market, which accounts for $563 billion dollars. However, this 2020, due to the unprecedented coronavirus pandemic, the growth did not meet the market forecast and was negative at -9%.
Source: Statista (2020)
The Rise of Digital Advertising
Looking further into the channels, the Statista graph below shows the distribution of advertising spending by the medium. Spending on internet advertisements rose 51% in early 2020, surpassing the television at 28%—the long-time favorite advertising firms’ platform. This steep rise can also be attributed to the COVID-19 pandemic, wherein most retail brands resorted to digital platforms to continue their operations.
As can be observed on the Borrell Associates’ graph above, since 2015, the digital shift has been a more evident year on year. All sorts of businesses—big and small—are more inclined to resort to digital marketing due to the low barrier of entry. Digital media campaigns are more affordable and easier to launch than traditional media, helping businesses generate relevant leads and sales at significantly lower costs.
Today, we also see traditional media go digital to provide streaming services online. Radio programs post live stream videos online, newspapers have their own websites, and television commercials are also shown on social media. Many traditional media along with other businesses have decided to leverage digital marketing to offer as part of adaptation to the technology evolution.
Based on eMarketer’s digital ad spending report, the retail industry has been seen as the top spender on advertisements in the United States with a $28.33 billion ad expenditure in 2019. Followed roughly $15 billion ad spends made by the US automotive industry and the financial services sector.
However, the forecasted numbers for 2020 might have not been met due to the precedence of the COVID-19 pandemic.
Nielsen revealed its finding pandemic paradox in the advertising sector. It refers to the phenomenon where advertising budgets are reduced just as when consumers spend more time on media. Nielsen also presented valuable multicultural-approach marketing insights in targeting consumers in the automotive industry.
More businesses are resorting to digital advertising to propel their business sales and brand awareness across industries. Aside from being cheaper, unlike traditional media that broadcast the ads widespread and scattered across, digital marketing enables marketers to target specific niches and people actually searching for specific products or services.
Moreover, harvesting insights from digital analytics is a goldmine. Digital analytics is embedded in digital campaigns, it enables marketers to get a handful of information—such as age, country of residence, source of viewership—about their potential customers and leads. In comparison, these valuable insights are not easily measured or acquired by traditional media channels.
The Future Outlook of the Advertising Industry
The digital marketing versus traditional marketing debate is far from over. Though the term “traditional” was used for the earlier utilized medium, it doesn’t mean these channels are outdated and will not anymore fit in the digitalized society.
Traditional ads are staying in the next five years, Forbes report. Though digital spending is a top priority for marketers, TV and radio closely remain alongside digital being labeled as a prioritized advertising channel by 60% of survey respondents.
In the year 2023, experts predict that digital will surpass other traditional advertising markets. The digital advertising market is forecasted to reach $160 billion as per PricewaterCooper data. 40 million
RR Author
Real Research News is the media platform that presents insights and studies of wide-range of topics. It focuses on insights gathered from its survey app.
