As we head into 2021 there is more uncertainty than usual about what trends to expect in the coming year. That said, many of the current trends we see in the advertising landscape were being established well before COVID, and are now accelerating because of the current environment. Something we expect to continue as we go into 2021. Below are four of those trends to watch for next year:
1. Direct-to-Consumer Growth in E-commerce Sales
As seen throughout 2020, e-commerce provides consumers with an efficient and socially distant way of purchasing goods and services. This has continued to draw more consumer dollars, and as a result, more advertising dollars as well. Direct-to-consumer brands still make up a relatively small portion of all e-commerce sales (<5%) but it is a market that is growing quickly. According to an e-marketer article from earlier this year D2C sales will grow at nearly 20% in 2021 and will pass $21B in sales. This trend is unlikely to slow down even post-COVID as consumers find new and unique brands that can easily be accessed through improving online shopping experiences.
2. Streaming Usage
Even prior to 2020, and the shifts in media consumption brought on by the pandemic, streaming usage was rising at a rapid pace each year. The lockdowns, social distancing, and changes toward people working and schooling from home have only driven greater changes to consumption and growth in streaming usage. This growth is now being partially driven by older audiences that are beginning to shift some of their traditional linear TV consumption to streaming as highlighted by this chart released by Nielsen showing the overall and share of consumption by age group:
This trend will continue as more services are being released by the various media companies (Peacock, Discovery +, Paramount+, etc.) and more established services are increasing production budgets to continue to gain share of the market.
3. Recovering Ad Spend
It is expected we will continue to see a rebound in ad spend as we go into 2021. A recent Forbes article shows near consensus among research and agency holding groups around the bounce back we will see as categories like Cinema, Retail, Travel, and Restaurants begin spending more heavily into next year. This is a continuation of a trend that we have seen throughout the second half of the year where ad dollars are slowly coming back and tightening up demand. We will likely see some initial softness going into the first part of Q1, with three major category spenders from Q4 missing (Political, Open Enrollment Healthcare, and Holiday Retail) but that will change as we go further into the year and more categories begin spending again.
4. Diminishing value of user level tracking and attribution
Upcoming changes that Apple and others have planned for 2021 will increasingly diminish the value and precision derived from user-level tracking and attribution. Most prominently, Apple will be bringing their privacy-minded approach to mobile app tracking after sufficiently rendering tracking cookies useless in their Safari web browsers with ITP (Intelligent Tracking Prevention). iOS app developers will now need to request user consent to track via IDFA on a per app basis—meaning that a user can decide to ‘opt-in’ to tracking for App A but ‘opt-out’ for App B. Recently branded as App Tracking Transparency, the feature’s release was delayed until early 2021 to give mobile app developers more time to brace for the changes, but it is positioned to impact all of Apple’s mobile devices that have adopted the latest operating system, iOS 14. Despite opt-in rates being speculative at this point, the privacy update is expected to shake up the ad industry in many ways. From targeting and ad monetization to measurement and attribution, every part of the ad industry is likely to feel pressure from App Tracking Transparency once released in the new year.