Loss of cookies and weak first-party data hampers media buyers’ optimistic outlook on 2021, IAB says
All signs point to 2021 being a banner year in the digital advertising space, but some technical hang-ups such as the blocking of web cookies have frightened media buyers and dampened their optimism about next year, according to a new report from the Interactive Advertising Bureau.
After originally forecasting a slowdown in digital revenue in late 2019, the IAB has changed its tune, predicting that the medium will account for 71% of all marketing budgets next year, with digital’s top four subsectors—social, paid search, display and video—accounting for the lion’s share of its spend. That’s a year-over-year increase of 14%, compared to this year’s estimated actual digital spend.
“Digital has democratized access to advertising,” IAB CEO David Cohen says of the medium’s explosive growth. Linear TV has predominantly been the domain of the world’s 200 largest advertisers, he says, while platforms like Facebook and YouTube have in excess of 10 million advertisers, “and that is the heart of the small- and mid-sized business.”
The Marketplace Outlook Survey’s bullish digital expectations even exceed other year-ahead ad forecasts, which generally estimate that digital spending will comprise between 50% and 60% of all media transactions in 2021.
“We’ve seen programmatic growing quite nicely. It has now eclipsed direct buys in the digital ecosystem,” he adds.
Conversely, linear is projected to take a hit next year, according to the IAB, with traditional advertising poised to drop 5% in 2021 to account for just 29% of the industry’s total spend. Similarly, the Bureau also found that 60% of digital buyers expect to shift linear TV dollars into connected TV in the new year.
That outlook is roughly in line with reports from other major firms, including Magna and GroupM, which also project linear spend to continue its long-standing downward trend—one that was only accelerated by the COVID-19 pandemic this year.
The IAB’s surveyed group offered up myriad reasons for their optimistic outlook going into 2021, including a strengthening economy, a return of out-of-home and cinema spending, better omnichannel experiences and a major upswing in e-commerce.
But there are aspects of the ad industry that are giving some media buyers pause, with concerns about a lack of web cookies, insufficient first-party data and the success of cross-platform measurements being identified as chief areas of concern.
Critically, 41% of media buyers do not know if their stakeholders have a clear understanding of the consequences of anonymized digital traffic, such as the blocking of targeted cookies—something that has gained traction in recent years, albeit while hindering the fullness of third-party data.
Advertisers have had to learn about flexibility on the fly this year, which is evident in many peoples’ plans for 2021; while media buyers collectively expect a 6% year-over-year spending increase, nearly four-in-10 have identified their upcoming annual budgets as “ballparked.”
“Month-over-month, quarter-over-quarter, [buyers] are re-evaluating and reprojecting what their investments are going to be, and that has had a great impact on the sales cycle,” says Sue Hogan, the IAB’s senior VP of research, noting that those frequent adjustments further lend to the industry’s reliance on future estimations.
“Flexibility remains the name of the game,” Cohen adds.