We saw a headline recently on the Media Voices podcast website: “Strong advertising recovery sees subscription-only publishers reconsider ‘all ads are bad’ mantra”
“For a couple of years now, we’ve been talking about how subscription revenue is more stable than advertising revenue and chronicling the rush to reader-pays models,” wrote Peter Houston as part of the Media Voices Media Moments 2021 Report. “Startups in particular have tried to distance themselves from a digital advertising market dominated by the Triopoly and decimated by COVID-19 for most of 2020.”
And yet, there he was, describing the bullish world of advertising in 2021. No wonder. At 2021’s conclusion, wrote eMarketer in November, worldwide ad spending will have grown faster than at any other point since tracking began 10 years ago. Digital ad spending in particular would chalk up historic increases. Worldwide digital ad spending was projected to increase by 29% in 2021, and reach $491.7 billion. This year, it will pass half a trillion, according to eMarketer. And growth will continue through the first half of this decade, though at a slower rate than this year.
So most media companies still value subscription revenue at a premium, but advertising is red hot. There are a variety of reasons for this phenomenon. One is that advertising is no longer the awareness-oriented function it once was—mainly, or entirely, aimed at top-of-the-funnel activity. Now, advertising is used to produce insights based on reader activity, resulting in highly accurate predictions of buyer intent. In addition, new ad formats and much more precise targeting, enhance the ability to produce lead. And then, massive amounts of marketing spend was diverted during the last two years from live events into advertising.\
That’s the good news. The bad news is that the advertising triopoly—Google, Facebook, Amazon—continues to dominate the space. The three giants combined to capture an astonishing 64% of the digital ad market in 2021, roughly the same as the last few years, and likely to remain at that total for the next few years as well, according to eMarketer.
For a great overview of the advertising market in 2021 and 2022, check out Peter Houston’s full report here.
This report originally appeared on MediaPost.com