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HomeWeb NewsHow Covid-19 changed the advertising industry


Times Square in New York City.

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This time last year, The Trade Desk CEO Jeff Green watched as advertisers started to pause every campaign they could. 

The ad tech executive said in the early days of the pandemic, digital advertising was at a disadvantage. It was easier for advertisers to flip the switch and pause spending as they tried to figure out what to do. But in the following months as marketing dollars started to turn back on, it became clear they were flowing online.

“Everybody becomes more data-driven and more agile during a recovery, because every dollar has to count,” Green said. “So that’s when that’s when it really accelerated for us. So we were disproportionately hurt in the first month. And we’ve been disproportionately benefiting ever since.”

The Trade Desk saw firsthand how certain pieces of the ad industry were catapulted years forward as consumers stayed at home during the pandemic. Digital reigned supreme: Flexible buys, an ability to switch out messaging and direct-response buys that clearly showed return-on-investment were in high-demand by many advertisers who often had no idea what the next month, or even the next week, would look like. 

Those themes lent themselves to major progress in areas like connected TV and e-commerce marketing, where the pieces were already in place for growth, but which the pandemic thrust forward. And the way the ad industry may have also changed the way it works in the process.

“These things were already happening,” said Barak Kassar, co-founder at independent creative agency BKW Partners. “And it just, whoosh, just made it happen faster.”

Experts and executives in the space spoke to CNBC about three areas where the ad industry saw leaps ahead during the pandemic.

Connected TV 

As soon as pandemic-related lockdowns began in March, the streaming binge began. Platforms like NBCUniversal‘s Peacock and WarnerMedia‘s HBO Max launched as people were forced to stay home. And since different states had different rules about gatherings and business openings, and rules were changing by the day, advertisers running placements on TV also wanted the ability to be flexible in buys and messaging in a way that linear TV arrangements haven’t historically made easy.

Green said on The Trade Desk’s first-quarter 2020 call in May that he had been expecting a “revolution” in the area of streaming TV. His company, which helps brands and agencies reach targeted audiences across media formats and devices, has a growing presence in the category. But Green had expected this revolution to happen over a matter of years. It ended up taking months. 

Since then, it’s sped up even more: “If we crammed two years into the first six months, well, we crammed another three years into the next six months,” he said. “It did feel like five years of change in 2020.” 

Everyone was home watching more video, and commuting time was in many cases reallocated to media consumption. Movies were released via streaming. Cord-cutting was on the rise: eMarketer forecast late last year that more than 6 million U.S. households had canceled their pay TV subscriptions last year, with TV ad spend dropping 15%, to its lowest level since 2011.

Lauren Hanrahan, CEO of Publicis Groupe-owned media agency Zenith USA said things have changed forever in the space. 

“It’s not like 2020 was the year for connected TV, but now back to our regular media mix,” she said. “That consumer behavior has permanently shifted. And we’re going to have to adjust where and how we reach them.” 

Kasha Cacy, global CEO of agency group Engine, believes the pandemic pushed CTV forward by a matter of five to seven years. 

“I used to work on Sony Pictures, and the idea of launching a movie on a streaming platform was like blasphemy,” she said. “And now, that barrier has been broken.” 

She said factors like Google moving away from third-party cookies in its Chrome browser have further positioned CTV well.  

“The combination of Google’s announcement around cookies and identity, and CTV being outside of their control, I think you’re gonna see ad dollars start to flow in there, too,” she said.

E-commerce 

Brands and platforms have been working for years on getting consumers comfortable with the idea of buying something they haven’t actually seen, touched or tried on. But in the past year, many consumers haven’t had a choice and have turned online to order groceries, essentials and other items.

Americans spent $791.7 billion during 2020 on e-commerce, up 32.4% from 2019, according to data published by the U.S. Census Bureau in February. And though shopping at physical stores may pick up again once restrictions are lifted, the retail industry has changed forever.

Zenith’s Hanrahan said that growth wasn’t just seen in a single demographic or audience, but all across the board.  

“I think that there’s a real stickiness there, I think there’s a consumer behavior that’s now been built,” she said. “If you’ve ordered multiple times from a platform from your phone, and now that app is on your phone … you’ve now adopted that behavior.”

The swelling of e-commerce — and its tailwind effect on digital ad growth — was evident in the performances of companies like Snap, which advertisers turned to for augmented reality for virtual “try-ons” as dressing rooms at many retailers remain closed and there were new precautions around sampling products like makeup. Pinterest was another beneficiary as shoppers perused the platform for inspiration and shopped along the way.

eMarketer forecast in the fall that marketers would spend $17.37 billion in advertising on e-commerce sites and apps in 2020, up 38% from 2019. And the trend isn’t likely to die: Hanrahan added that the pattern of growth with e-commerce can be seen when looking at a market like China, which has been far more advanced in that area. 

“I think the biggest indicator that we are not going to go back in time and drop all those behaviors is because in other countries that are kind of over that tipping point, it’s just continuing to accelerate,” she said.  

Brendan Gahan, partner and chief social officer at ad agency Mekanism, agreed that a new baseline has been set, even once things go back to “normal.” He said what so much of e-commerce entails is reducing friction and helping people save time, which is a benefit that doesn’t go away even when people can more safely shop in stores if they want to.

“Whenever the world gets back to normal, that baseline of adoption is going to be much higher than if the pandemic never happened,” he said. “It might regress a little bit initially. But there’s no going back.”

Gahan said the pandemic also may have cemented the status of influencer for some marketers.

“From a sheer production standpoint, there weren’t really a lot of options” for some marketers in the early days of the pandemic, he said. He said some brands that hadn’t done much work with creators gave it a shot. And dollars began to shift over to creators even more: A report from influencer marketing platform CreatorIQ said sponsored posts were up 46.6% year-over-year during the post-Thanksgiving sales weekend.

Flexibility

This past year has been a bit of a “right place, right time” situation for We Are Rosie, a community of independent marketing workers founded by Stephanie Nadi Olson in 2018. 

Forrester Research forecast last year that the U.S. ad agency sector would lay off 52,000 jobs in 2020 and 2021 amid spending cuts. Flexible marketing organizations have been one place those workers could turn.

“Covid has expedited the inevitable,” Olson said. “This was coming. What Covid did is it kind of poured gasoline on the situation.” 

The company has worked with major companies including Bumble, WW, Nextdoor and LinkedIn, growing its annual projects from 25 in its first year. Olsen said it’s already on track to do 1,000 in 2021. 

We Are Rosie’s talent base runs the gamut. Some don’t live in major markets. Some are caregivers for family members. Some have medical challenges or are terminally ill. Some are war veterans. They represent racial, age, educational and geographic diversity. That kind of talent has been often shut out of, or hasn’t been empowered to rise through the ranks of, a predominantly white industry that often wants its employees to sit in major markets. 

“I think that in a weird way, we needed to be forced into it to really recognize that all of the excuses and all the hurdles we would [give as reasons] that this would never work” are working now, Olson said. She said the industry has traditionally had the assumption that creative work needs to be done with everyone in the same room. 

“We’ve seen it,” she said. “Creativity is thriving, and broad strokes, we’re doing it, the work is still happening.”  

Olson believes this past year will mean a lasting shift in how the industry functions. She believes with talent wanting to work in a flexible way, brands wanting project work and agility on their side will equal some of these changes lasting. 

“I think the loss of the binary thought of either in house with full time employees or you give it to an agency or consultancy, I think that’s gone forever,” she said. “The rise of flex talent… is here to stay.” 

Engine’s Cacy said the company recently conducted a national survey that showed that nearly 80% of working moms would like to continue working from home. Cacy said the company thinking about flexible models that would allow for that.

“In an industry that is trying to get more women to senior positions, in an industry where we’re trying to get more diversity into the workforce, the idea of being able to offer that to employees, and to go to different markets outside of New York to source talent, especially diverse talent, there’s something really attractive about that,” she said. 



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