Executive Summary

One of the pandemic’s overarching effects was accelerated digital transformation across the economy and society. A steep increase in the amount of retail sales transacted digitally buoyed digital ad spending last year and boosted digital advertising’s long-term prospects.

How did the pandemic affect the US ad market in 2020?

Advertisers pulled back hard on spending in late Q1 and Q2 last year, and when they returned with updated messaging, they looked to ad channels that offered flexibility and accountability. That meant a strong recovery for digital ad spending as traditional media faced steep spending drops.

What level of rebound is expected this year?

We forecast that US digital ad spending will increase 25.5% this year, the fastest growth rate since 2018, as the ad market and wider economy continue recovering from the pandemic. We estimate total media ad spending will rebound 18.0% this year after a flat 2020. That includes a 5.2% increase in traditional media ad spending, led by a partial recovery for TV.

What advertising channels are holding strong?

Within digital media, performance-oriented channels including social network advertising and ecommerce channel advertising held up well during the pandemic and will continue growing rapidly. Connected TV (CTV) advertising was also a beneficiary of pandemic trends, as linear TV decreased in importance and cord-cutting accelerated as more programmatic CTV inventory was becoming available than ever before.

How are traditional media faring during the recovery?

TV and out-of-home (OOH) ad spending will increase this year after sharp declines in 2020—but neither medium will reach its previous peak again. Other traditional media, including print, radio, and directories, will continue their yearslong declines.

WHAT’S IN THIS REPORT? This report explores our Q1 2021 estimates of US digital ad spending and analyzes what the pandemic-related trends mean for the ad market in 2021.

KEY STAT: US advertisers increased their spending on digital ads last year by almost 15% despite the pandemic—and growth will accelerate this year as digital surpasses two-thirds of the US ad market.