Digital B2B Ad Market A Bright Spot In COVID-Suppressed Ad Industry

The U.S. business-to-business (B2B) advertising market has fared pretty well during the COVID-19 pandemic and according to data from eMarketer, is also growing. In 2020, U.S. B2Bs will spend $8.14 billion on digital ads, up 22.6 percent from 2019, when they allocated $6.64 billion to digital advertising. For comparison, total digital ad spending in the U.S. will grow just 1.7 percent this year to $134.66 billion.

“When B2B marketers lost the ability to connect with buyers in-person, digital ads had to work overtime and have been the primary way of targeting their audiences,” says Jillian Ryan, eMarketer principal analyst at Insider Intelligence. “B2Bs are relying on desktop ads to reach buyers during the pandemic, as work-from-home orders keep buyers in front of their computers and away from their mobile devices. Sponsored webinars and virtual events through publishers are popular, as are search and social media ads.”

Yet, as U.S. B2B digital ad spending has substantially grown, the total B2B advertising market made a significant downturn. eMarketer forecasts that U.S. B2Bs will spend $21.42 billion on advertising in 2020, a 9.6-percent drop from 2019 when they allocated $23.71 billion. In 2019, total B2B ad spending grew 10.8 percent. This big decline is driven by pauses in investment in traditional media, such as TV, radio, print and out-of-home, as well as abandoned plans to use traditional advertising to promote large-scale industry conferences. However, eMarketer anticipates the market to recover with a 20.4-percent increase to $25.79 billion in 2021, when B2Bs start to increase their spending and events resume.

“B2Bs increasing spend on digital while significantly reducing spend on traditional is a big deal when considering the B2B industry’s historical underutilization of digital advertising,” Ryan adds.

The healthcare sector is the fastest-growing B2B digital ad market, jumping 41.2 percent this year over 2019. This one industry saw almost double the growth of the total U.S. B2B digital market.

“This spike is driven by advertisers harnessing the high demand for medical supplies and personal protection equipment,” says Ryan. “Increases in pharmaceutical and biotech supply chain operations during this health crisis and surging needs for hospital service companies should be another bright spot for this category.”

This year, the B2B tech products and services category will spend $2.41 billion on digital media, a 37.2 percent increase from 2019 when this sector spent $1.76 billion. The growth in this category also outpaces the total U.S. B2B digital growth trend of 22.6 percent, making it the second-fastest-growing industry in our forecast.

“B2B tech companies help enable digital transformation and have therefore been insulated from marketing budget cuts and are using digital advertising to acquire new buyers that weren’t in-market before COVID-19 hit,” Ryan says.

Another sector sustaining B2B digital ad spending during the pandemic is financial services. The U.S. B2B financial services sector will spend $2.20 billion on digital advertising in 2020—a growth rate of 28 percent.

“Financial services firms are using digital advertising to boost their brand reputation and seize opportunities to help their clients,” says Ryan. “Fintech companies, such as providers that enable early wage access and digital payment processors, are driving up spend in this category.”

U.S. B2B telecom firms will spend $1.15 billion on digital ads in 2020, up 28.3 percent from 2019, when almost $900 million was allocated.

“B2B advertisers in this industry recognize how remote work has created a need for faster services, reliable connections, heightened security and more bandwidth at home,” Ryan says.

The travel sector is the only category that will shrink this year. B2B digital travel ad spending will fall 44.5 percent in 2020. Last year, B2B travel firms allocated $549.7 million to digital advertising, but the coronavirus lockdowns caused a crash in spend, dropping to just $304.9 million in 2020—the lowest amount for any year in our forecast period.

Ryan adds, “The future of B2B travel is very uncertain. Even when restrictions are lifted, companies might not feel safe letting employees travel for business. And even as in-person conferences resume, hybrid events—that mix virtual and physical elements—could become the new norm in a post-coronavirus economy.”

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