Ad Buyer Survey IX

THE COWEN INSIGHT

We surveyed 52 US ad buyers representing ~$14.7 billion in ad spend in early December ‘20. We raised our established worldwide digital advertising forecast by ~6% on average annually from ’22-’25. Digital share gains continue at expense of traditional mediums and shift from live events, with video the fastest growing medium among digital channels.

Key Trends & Conclusions

1) US ad buyers expect total ad spend to increase 4% y/y; Pandemic still affecting spend

Ad buyers expect total ’21 US ad spend to rise 4% y/y (on average). This is mainly  driven by further migration to digital from traditional mediums & live events. It is also due to vaccine-driven rebound positioning.

About 60% of ad buyers spent below expected budget in ’20, mostly affecting TV and print. As such US advertising spend was down ~3% y/y in ’20. 80% of ad buyers are still below normal ad spend levels. Though, over half expect ad spend to normalize by mid ’21, with the remainder expecting normalized spend in ‘22.

2) Digital ad shift continues at the expense of traditional mediums. Ad buyers also see spend shifting away from live event budgets due to the pandemic.

We raised Cowen’s established worldwide & US digital ad forecast from ‘22-’25 by 4% and 6% annually on average. We forecast US digital advertising of $165 billion in ’21, +18% y/y accelerating vs. +10% y/y in ’20 and rising 13% annually next 5 years.

Key drivers: 1) Mobile (form factor) and 2) Video and Social (channels).

3) Expect total global ad market to reach $1 trillion by 2026

We expect 9% growth annually, as digital has democratized advertising for the long tail.  It has opened the market to many that wouldn’t have advertised on traditional ad mediums. This will drive growth above historical levels.

4) Digital video advertising has the largest share of gains within digital

Digital Video to pick up ~5% share of digital ad budgets the next 2 years per buyers. This aligns with a continued shift away from TV. The survey also indicates rising mobile video ad effectiveness; 64% of ad buyers suggested Mobile Video ads were more effective vs TV.