Digital Advertising Is on a Tear
Biggest Gains Since 2006
Ecommerce is becoming increasingly important to the overall economy, and advertising dollars are following the crowd. In the US, revenue from digital advertising skyrocketed 35% to reach $189 billion in 2021—its largest gain since 2006.
Although digital audio advertising on platforms such as podcasts and streaming music posted the largest gains at 58%, the sector represents less than 3% of total sales. A handful of large companies were the primary beneficiaries. Together, Google (GOOGL), Meta Platforms (FB), and Amazon (AMZN) grabbed about 64% of the revenue. Also cashing in are companies like DoorDash (DASH), Walmart (WMT), and CVS Health (CVS), which allow brands to advertise on their websites.
New Businesses Looking for Visibility
The opportunities to extract revenue from the online market go beyond the growth of online shopping. Another factor is the explosion of new businesses looking to gain visibility. Last year, a record 5.4 million new business applications were filed, representing a more than 20% increase from 2020. These businesses are using digital advertising to develop their client bases.
Advertisers want to be visible where the customers are, whether on social media or featured within consumer-facing businesses.
What Goes Up Must Come Down
Some market observers contend that advertising is fickle. If consumers reign in their shopping habits as inflation takes its toll, advertisers may cut their digital spending. Historically, advertising has been highly sensitive to slowing economic growth.
In the current environment, with war in Ukraine, rising inflation, ongoing supply-chain disruptions, and the ongoing threat of COVID variants, some question whether the advertising explosion can continue. US midterm elections may provide a lift, as advertisers look to buy airtime on streaming news services.
Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
Comments are closed.