As the COVID-19 pandemic continues to alter the way people live and work, economic concerns are growing. The financial crisis of 2007–2008 is still fresh in everyone’s memory, and many are now worried that this healthcare crisis will lead to a similar outcome. However, the US economy might have an unexpected ally when it comes to fighting this global pandemic on the economic front. As US advertising spending continues to grow, economic and financial difficulties seem to shrink. Some brands are now reconnecting with their customers, while others are driven by the pandemic to develop a digital presence.
Digital marketing solutions were on the rise even before the start of the pandemic, but the healthcare crisis may have convinced some brands to join this trend even faster than expected. Furthermore, the economic recovery is also fueling digital marketing strategies and actions in what could prove to be a virtuous cycle. As US companies are adapting to “the new normal”, they are also turning more and more to digital advertising resources. This may lead to a rise in spending, especially in certain industries, which in turn helps economic recovery. Advertising may have been linked to economic growth in the past, but how can digital marketing help the US economy in the future?
Advertising and Economic Growth
Studies like the one above have already linked advertising to incentives for business change and long-term economic growth. According to research, advertising spending and economic growth are indeed connected, and advertising expenditures could also result in economic growth and vice versa. Digital marketing strategies and actions may prove to have a positive impact on the economy, and that impact may also prove to be especially important during crises. A new Magna forecast seems to confirm these findings, linking advertising spending to economic recovery.
According to Magna, US advertising spending grew 32% year-over-year in the first half of 2021. As the economy grew above expectations, US advertising spending also reached $130 billion. The economic boom that appeared as many people adapted to “the new normal” sparked a surge of marketing activity in most industries. It ultimately led to a rise in both advertising spending and media owners’ revenues, which surpassed advertisers’ expectations. However, the unprecedented growth in advertising spending is not only good news for US marketers, but also for companies and people alike. As the economic growth boosts advertising spending, so could advertising fuel economic growth.
Reasons to Hope
While economic growth played an important role in the rise of advertising spending, Vincent Letang, EVP, and Global Market Intelligence at Magna, says that other factors also contributed to the boost. According to him, US brands revived the relationship with their consumers, while the enduring changes brought by the COVID-19 pandemic on peoples’ lifestyle and shopping behavior continued to boost huge digital marketing spending. “These ongoing organic growth engines, combined with Olympic budgets and the Mid-Term election spending, will continue to generate double-digit spending growth in the second half and into 2022,” Letang says.
The US economy grew at a 6.7% annual pace in the second quarter of 2021, and there’s good reason to hope for economic growth in the future. Government stimulus payments helped in the spring, while the COVID-19 vaccine roll-out allowed many businesses to reopen during the first half of the year. Although new variants of the virus that caused the pandemic continue to appear and spread, many people have already adapted to “the new normal”. Furthermore, vaccines and cures will continue to be developed, and for this reason the holiday season is expected to bring an increase in both advertising spending and shopping. Since both are good news for economic growth, there seem to be good reasons for hope.
Marketing in general, and advertising in particular, seem to be linked to economic recovery and growth. While many feared that the COVID-19 pandemic could lead to a financial crisis similar to that of 2007–2008, the truth is that US consumers started spending at increased rates in the second quarter of 2021, fueling economic growth. American brands and marketers may have contributed to this growth by reconnecting with their customers and developing new digital strategies. With the holiday season fast approaching, the economy might benefit even more from advertising spending and other marketing strategies.
