The ad tech industry was stretched thin at the beginning of the pandemic. However, spending rebounded quickly and reached higher levels than last year.
Which industries are driving the growth in programmatic advertising—and which brands were the top spenders in August?
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Programmatic spending recovered from initial slump quickly
Early on in the pandemic, it was clear that the economic recession would put pressure on the ad tech industry. Smaller companies felt like they would need to either join forces or look for an exit by selling to a bigger company.
“This will expose ad tech companies that haven’t been prepared, mission critical or don’t have a strong value proposition,” said Steven Wolfe Pereira, CEO of media company Encantos. Companies without large cash reserves felt the initial crunch most.
Cash flow in the ad tech ecosystem is complicated. Though ads are bought faster than a blink of an eye, payments to publishers can take months. Payments have to go through agencies, DSPs and SSPs before getting to the seller. Because of the different layers in the system, a delayed or cancelled payment can cause stress on each level, especially if one of the companies doesn’t have sufficient cash flow.
However, despite the initial pausing of ad campaigns and reduced spending, brands started spending on programmatic faster than other formats once the initial shock of the crisis settled.
Publishers were thrilled to see their programmatic dollars return quickly. “I feel like that’s a godsend compared to what I was expecting,” said CEO of Ranker Clark Benson to Digiday. “We’re feeling relief that the sky hasn’t fallen.”
Brands are relying on ad tech during the pandemic because they want to allocate dollars where they can scale easily, be flexible and track data more effectively.
According to a recent IAB report, programmatic is expected to hit $98 billion in ad spend by 2021, which makes up 68% of digital media advertising. The difference is, however, that brands are bringing programmatic in-house more, because of the privacy changes coming soon from Google and Apple.
Overall, programmatic spending is up YoY. That increase is driven by certain product categories that are spending heavily.
Product categories that were up the most YoY in August included:
- Education & Training: +77%
- Media: +55%
Though these were the categories that increased the most, not all the top spenders came from these industries. When we look at spending, the top five programmatic advertisers in August 2020 were:
It’s also important to note the companies who are upping their programmatic ad spend the most YoY. They include:
- VF Corp
Unfortunately, not every category has rebounded yet. Product categories that were down the most were:
- Travel: -58%
- Beverages: -40%
- Auto -12%
We will continue to monitor trends in programmatic as the economy recovers. For now, these are the categories and brands that are investing big in programmatic.
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