By The Numbers: Canada's ad market officially recovered
Advertisers can breathe a sigh of relief as categories show healthy growth and a jump in ad spend.
Canadian cities may have had some of the longest lockdowns in the world, but the country's advertisers sure knew how to get back to business once needles hit arms.
The latest Q3 2021 numbers from the local arm of Standard Media Index (SMI) – which also tracks advertising expenditure in the U.S., Europe, Western Asian and Asia-Pacific – showed that ad spend in Canada officially reached, and surpassed, pre-pandemic levels. CARD spoke with Kelly Fedoruk, senior manager, client solutions for SMI to get the low-down on category spend trends, channel growth and how advertiser confidence has skyrocketed over the last few months.
So we've been taking the position that the real benchmark of growth is to compare today's numbers to 2019 – the last normal year that we had in the ad landscape.
And what we found is that Q3 in 2021 was the first quarter where we saw growth over 2019. When we looked at other markets in places like Australia, U.K., New Zealand and other English language markets, they started to recover in Q4 of 2020. And by recover I mean, they were seeing year-over-year growth. Canada did not see that in Q4 of 2020. We were still down versus Q4 of 2019. And we started to ask ourselves, is the reason because Canadian advertisers are maybe more hesitant? Is it because we are still in lockdown? Are we in another wave? What's our vaccine rollout? What are all of these pandemic factors?
And then 2021 started. And in Q1, we were flat to 2019. In Q2, we were still flat. And now in Q3, we are up 13% versus 2019. That's not up a couple of digits, that's double digit growth.
What does that growth look like for digital and TV?
On the digital front, we have been seeing growth year-over-year from 2019 for a couple months now, because the pandemic just accelerated that digital spend. TV has exceeded pre-pandemic levels – Q3 was the first quarter where every month saw growth versus 2019.
In Q4 of 2020, Canada crossed a 60% digital share. And that was the highest we'd ever seen. Currently for Q3, it's sitting around 57%. That, combined with the 34% ad spend we're seeing for TV – those two channels make up 90 cents of every dollar. My guess is that the acceleration to digital driven by the pandemic is not slowing down. It would have grown anyway, because the trajectory for the last five years has been digital is growing. But I think that pandemic push has pushed it into levels we might not have seen until 2023.
Did this quarter see a unique spike, or has Canada's ad spend been trending upwards for a while (excluding the pandemic year-and-a-half)?
When looking at cross-media ad spend in Canada, Q3 2018 was flat to 2017, Q3 2019 was flat to 2018 and Q3 2020 was down about 11% versus 2019. So we have not seen, in the past five years, a Q3 double-digit growth like this. It's usually flat or flat-ish (up or down 1%). So to see 13% growth versus 2019 is an excellent indicator that everyone's back. Going into Q4, we can only hope to get into double-digit growth versus Q4 of 2019, especially with the holidays – but I think we can stop talking about recovery mode and switch over to Canada has recovered.
What does the data tell you about the health and confidence of certain categories and their marketers?
I have been tracking CPG and automotive for a while. For as long as our data goes back, they were always the top spending categories. Automotive pretty much always outspent CPG; its share of total media was usually one or two share points higher than CPG. For every year, every quarter, every month, that was the trend. Then the pandemic hit, and by the time Q3 2020 came, they had traded places, and CPG was outspending automotive. Not by a little bit, but by a lot, and it was pretty clear that it was related to pandemic buying.
And, now, all the way through 2021, up to and including September, CPG is still the top spender, with automotive right behind. But automotive is the only tracked category that is still significantly down versus 2019. It's still struggling to achieve those growth position numbers.
When I compare it to another hard-hit category like travel, travel services ad spend is massively up versus last year and also versus 2019. Automative is facing supply chain issues at the moment, but travel is also facing barriers. You have to do all these extra things to get on a flight now. You can barely even rent a car because of supply chain issues. But people are saying, 'Well, I need this. It's a reward. I have to get away. I haven't seen X family member in two years.' So I think the travel category is starting to feel more comfortable advertising to people. Their dollars are coming back into the market, even though it's still a bit shakey. Whereas I just don't think automotive purchases are regarded in the same way.
Was there anything else that surprised you when looking at the category spend trends?
I was surprised to see that the hardest hit categories are all up versus 2019. I thought they would definelty be up versus last year, but then they might be flat to 2019.
We're seeing that retail was actually up 32%, restaurants were up 6%, apparel and accessories is up 100%. That last one doubled. So areas that were massively hard hit by the pandemic, which you would think might track more like automotive – where they're struggling to get to 2019 – are actually exceeding 2019 levels. So it signals a real return, where those advertisers have been feeling confident enough to spend.
Wellness was also a bit of a surprise. To me, personally, I would have thought that the wellness category would have seen a huge uptick during the pandemic. I was expecting to see a lot of wellness advertisers start to spend, but it just never really came about in 2020. And now, late into 2021, we're starting to see wellness finally exceed 2019 numbers. I still think that's an interesting category to keep an eye on. I think that'll only keep growing as this push for self-care continues. The general pace of cities and of people's personal lives is very different now. And I think that wellness advertisers, especially in the social and digital space, are going to really start pushing more ads.