Canada’s Ad Market Recovery in 2021 and What it Means for 2022
We all remember – probably too well – when the WHO sounded the alarm on a new virus in early 2020 and the world began shutting down. Normal routines ceased and markets panicked. As a result, advertisers pulled back on their spending. It was a chaotic time for the industry, Canada, and the world. As we approach the second anniversary of shutdowns, I wanted to take time to reflect on ad spend trends in 2020 and 2021 and what they can tell us about 2022.
A Q3 Recovery
As we celebrated the end of 2020, we had hope for the promise of 2021. March 2021 was the first month that Canada surpassed cross-media ad spend when compared to March of 2020 and 2019. But recovery wouldn’t fully present itself until Q3, which gave Canada our first full quarter of the year where ad spend surpassed pre-pandemic levels.
July saw +71% YoY growth and +18% growth when compared to July 2019, August continued the trend, with +24% YoY growth and +21% compared to 2019, and September saw +12% YoY growth and +10% growth vs 2019. After more than a year of navigating pandemic storms, Canada’s advertising market was no longer in recovery mode, it was recovered, ending Q3 up +30% vs Q3 of 2020 and up +16% vs Q3 of 2019.
Q4 continued this growth trajectory. November 2021 marked the highest month of ad spend in the 5-year history of SMI data and was the sixth consecutive month where Canada saw growth vs both 2020 and 2019. Q4 finished up +12% vs 2020 and up +7% vs 2019 with all indicators currently pointing to Canada continuing to see stable growth throughout 2022.
CPG Dominates Ad Spend
Some categories contributed to the recovery more than others. All twelve of SMI’s tracked categories saw at least double-digit ad spend gains YoY. Some of the bigger increases we saw in the market vs 2020 were made by Apparel & Accessories (+82%), Travel Services (+100%), General Business (+45%), Wellness (+44%), Entertainment & Media (+36%), Financial Servies (+33%), and Technology (+30%).
However, given the reduced market in 2020, a more accurate benchmark for growth would be to compare investment to 2019. In this case, only five categories saw double-digit growth in 2021 when compared to 2019. Technology (+49%), Apparel & Accessories (+39%), Wellness (+38%), CPG (+26%), and Restaurants (+24%).
From a volume standpoint, the two largest cross-media spenders in 2021 were CPG and Automotive, with CPG holding a 23% share and Automotive holding a 16% share. However, Automotive, a category largely affected by supply chain and manufacturing challenges, was still down -18% in 2021 compared to 2019. Within CPG, the sub-category of Beverages was up vs both years (+48% vs 2020 and +39% vs 2019), as was Food (+13% vs 2020 and +20% vs 2019), and Personal Care (+10% vs 2020, +8% vs 2019). However, the biggest increases within CPG were seen across Household Supplies which grew +26% YoY and +65% compared to 2019.
Looking at 2022, we see CPG and Automotive remaining as the top-spending categories and expect to see continued growth from categories like Financial Services (3rd highest volume category in 2021) and Retail (4th highest volume category in 2021). Other smaller-volume players like Pharma, Travel, and Wellness, are poised to continue increasing spending and gaining share.
Digital Making Gains
Headlines touting the rise of digital, connected TV, and OTT services have made us all familiar with the idea of ad dollars shifting to digital media at the expense of traditional media. But where were advertisers truly spending within their media mix in 2021?
As far back as 2017, way before the pandemic, digital media already held a 42% share of all national brand ad investments. In 2019 that number had grown +5.0 points to 47%. By the end of 2020, despite an overall market reduction brought on by Covid-19, digitally managed a 54% share, a +7.0-point YoY increase.
During the twelve consecutive months of YoY cross-media declines that Canada saw starting in March 2020, digital media only experienced five consecutive months of losses. By the second half of 2020, digital media types like social and online video began to see growth despite the reduction of overall ad dollars in the market. Digital share saw big gains in a short period as advertisers leaned into the flexibility and agility of digital media while at the same time taking advantage of increased eyeballs to digital as provincial and federal restrictions made it more difficult for people to consume traditional media types like terrestrial radio and out-of-home.
Some of these digital gains came at the expense of linear TV which had dropped to a 32% share in the back half of 2020, a -2.0-point decline vs the back half of 2019. However, most of the increased investment to digital came from other traditional media types such as terrestrial radio which fell to a 5% share (from 7%), and linear out-of-home which fell to a 4% share (from 8%). Dollars moved to the digital offerings of these media types allowing digital audio to see a +27% volume increase and digital OOH to see a +162% volume increase vs the same time in 2019.
Continuing the growth into 2021, digital saw three months where share approached or surpassed 60%, indicating that the acceleration caused by the pandemic will not slow down in 2022. We anticipate that digital will continue to take most of the ad investment in Canada, with search and social fueling that growth. We also expect linear TV to remain strong as it rebounded in the back half of 2021, regaining its 34% share and up in volume by +26% vs 2020 and up +9% vs 2019.
2021 was a resilient year for the market and 2022 looks bright for Canadian national brand ad spend. We saw recovery from the uncertainty of the pandemic and advertisers were back to spending at pre-pandemic levels with 2021 full year finishing in a growth position of +4% vs the full year 2019.
Kelly Fedoruk: is the Senior Client Solutions Manager at Standard Media Index with over twenty years of advertising, research, and marketing background. Before SMI, Kelly’s most recent role was Research Manager at Publicis Media, working with top brands and publishers across all media types, both linear and digital. Her love of media measurement and data allows her to make sense of the Canadian marketplace and create actionable insights for the industry. In her current role at SMI, she works to build and maintain client & agency relationships, in addition to driving product development to ensure the highest level of client service.
Standard Media Index: the most trusted and recognized global source of advertising revenue and pricing globally, is present in 5 markets – Australia, New Zealand, UK, US, and Canada. SMI accesses actual spending from the world's largest media buying groups, as well as leading independents, and then harmonizes and structures that data to create a clear, granular, and easy-to-use database for our clients and agency partners. Source: SMI Core Canada