Advertising Spend Expected to Trickle Back to TV as Consumers Embrace Streaming

The Covid-19-induced collapse of ad spend in 2020 has been well-documented. But as the nation heads into a more optimistic spring with more vaccinations on the horizon, Nielsen is predicting that advertising spend—likely led by big-ticket advertisers—is heading back up. According to Nielsen’s March 2021 Total Audience Report, online retailers and insurance companies led the pack in terms of increasing advertising spend in 2020. From the fourth quarter of 2019 through the fourth quarter of 2020, online retailers spent 24% more on advertising, while insurance companies spent 14% more. The report also found that pharmaceutical companies spent 1% more year over year. Those increases didn’t offset the huge drops in spend from the travel sector, which spent 55% less on advertising within the same timeframe, financial services, which spent 22% less and brick-and-mortar retailers, which spent 18% less. Overall, ad spend on the major channels—which include TV, digital, radio, print, out-of-home and theater advertising—decreased by 15% in 2020, from $132 billion in 2019 to $112 billion in 2020. The largest drops came in the second and third quarter of 2020, where there was a 25% decline in ad spend. But the measurement company anticipates that as consumer optimism begins to climb, advertising spend will soon follow. “Spending picked up closer to the end of 2020, and global ad agencies expect a notable rebound this year,” Peter Katsingris, Nielsen’s svp, audience insights, wrote in the report, which was released today. One of those areas of spend may just be the auto sector. Among those surveyed, 40% of adults 18 and older said they intend to purchase or lease a new or used vehicle within the next 12 months, Nielsen found. More than 50% of consumers between the ages of 18-49 said they had postponed a major purchase over the course of the pandemic, and 16% of adults 18-49 say they plan on making the purchase they had postponed within three months of Covid-19 restrictions being lifted. Nearly 40% of adults 18-34 said they would make the purchase within three to six months, and 30% of adults 35-49 said they would do the same. The report also noted that as several industries return to ‘normal’ over the course of this year, there's anticipation toward seeing improvements in these sectors reflected in the ad spend. As the return to pre-pandemic activities continues, advertisers may also continue to move away from using the pandemic as a part of their creative. It’s already happening: while 18% of all television ad units had Covid-19 themes in the second quarter of 2020, that figure dropped 7 percentage points to 11% by the fourth quarter, according to Nielsen Ad Intel. Even as advertisers contemplate what the future holds, there are some changes that are here to stay. While consumers still spent the bulk of their video consumption time on live and time-shifted TV, that time is shrinking, and time spent on TV-connected devices is steadily creeping up. In the third quarter of 2019, viewers spent an average of three hours and 56 minutes watching live and time-shifted TV and 55 minutes watching video via TV-connected devices. And a year later, viewers spent 15 minutes less time on live and time-shifted TV and 10 minutes more on TV-connected devices. “TV remains a media diet mainstay and key opportunity for advertisers to present in a visual medium,” Katsingris wrote. “2020 was a year of widespread streaming adoption, which has fueled an array of new services and platforms—both subscription and ad-supported.” In a bit of good news for ad-supported streaming services like Tubi and Pluto TV, viewers streaming in January 2021 spent slightly more time streaming linear channels (from 4% to 8%) and watching on ad-supported platforms (from 24% to 26%) than they did a year ago. The lion’s share of streaming time still includes subscription video-on-demand services, but total share is dropping: 66% of streaming time went to streaming that included SVOD services in January 2021, compared to 72% in January 2020.