Over half of U.S. advertising spending this year, or 51 percent, will go to Big Tech, such as Amazon, Google and Facebook, as the pandemic drastically affects the industry, according to The Wall Street Journal (WSJ).
This is the first time that milestone has been reached, WSJ reported, with digital advertising clearly on the rise over older forms. Spending has concentrated as of late on tech giants as opposed to numerous smaller sources like local TV, magazine and newspaper sources.
That’s because online ads can be less expensive overall as opposed to other media platforms, according to WSJ, and marketers can access better ways to target and market to the consumers they want to reach.
The pandemic, WSJ reported, has made those advantages even more important. As the pandemic hit in March, many companies targeted ad spending as one of the first areas to cut from the budget as they had to slash spending. Meanwhile, customers forced to stay home began to do exponentially more spending online.
This is a sharp increase from just three years ago when digital advertising comprised only a third of U.S. ad spending, which was around the same size as that of newspapers, radio, magazine and local TV combined, according to reporting by GroupM, per WSJ. But in 2020, the balance has shifted far enough to where the latter four categories make up only 21 percent of the ad market.
PYMNTS reported that the mass spending from big companies like Google parent Alphabet and apps like Snapchat and Pinterest have seen positive gains through the pandemic. Alphabet reported robust third-quarter numbers with 6 percent gains in ad revenues this year, totaling $26.3 billion in Q3.
Snapchat, meanwhile, reported a 52 percent increase in revenue year over year with $678.7 million. And Pinterest reported a third-quarter revenue spike of 58 percent catapulting it to $443 million.
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