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Screenshot: Will the digital advertising boom ever end?

City AM logo City AM 29/07/2021 James Warrington
a group of people walking on a city street © Provided by City AM

This week

**Media Moment of the Week: You are what you tweet

**Will the digital advertising boom ever end?

**Esports: Britain’s next big thing?

Media Moment of the Week: You are what you tweet

You know the scenario: someone says something you don’t like on Twitter and you have an overwhelming urge to rise to the bait. We’ve all failed in this area, but if you’re a chief executive it can lead to some awkward conversations with shareholders.

That’s what happened to Just Eat Takeaway’s Jitse Groen, who was this week shamed by one of his company’s biggest investors over his social media clashes — in particular his spat with Uber boss Dara Khosrowshahi back in April. Mind you, at least he’s not Elon Musk, whose ill-advised weed joke on Twitter led to a $20m fine.

Will the digital advertising boom ever end?

It will come as a surprise to precisely no one that the tech titans have done rather well out of this pandemic. It was more of a revelation, however, when any prospects of a post-lockdown slowdown were blown out of the water this week as Apple, Google, Microsoft and Facebook all soared to eye-watering new heights.

At the heart of this continued growth is the clear and welcome indication that the global ad market is bouncing back after a year that most are more than ready to forget. Twitter and Snap paved the way with their expectation-beating results last week. On this side of the Atlantic, ITV said June was its best month ever for ad revenue thanks to the Euros and the return of Love Island, while Mirror publisher Reach reported strong digital growth. The latest official figures for the UK showed these benefits were being felt across the economy, with ad spend forecasts for 2021 hiked to £27.7bn — more than recovering the £1.8bn wiped off the market during the pandemic. As ITV boss Carolyn McCall cautiously put it: “I hope it’s not a sugar rush.”

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That the advertising market is surging back is perhaps an inevitability. What’s more interesting, though, is just how the media mix will look post-Covid. The tech giants’ results suggest that the pandemic-induced shift to digital formats is not a temporary move, but rather that the habits we’ve adopted during lockdown are here to stay. Google’s decision to delay its ban on third-party cookies will give the ad industry more time to adapt to sea changes in how users are tracked online, and no doubt come as a further boost. UK ad forecasts confirmed this upward trend, with growth for the online display, search and digital video on-demand subsectors all accelerating even as restrictions eased.

But what does this mean for the wider market? In the UK, cinema and out-of-home — two of the media channels worst impacted by the pandemic — are poised for a huge bounceback in ad spend this year. However, this is largely a corrective to last year’s woes and less optimistic forecasts from PwC predict that total UK cinema revenue (which, admittedly, includes tickets and retail sales as well as advertising) will never return to pre-Covid levels. While proponents of TV advertising — myself included — maintain it has a future, the pressure from streaming rivals is impossible to deny. Meanwhile, print continues its steady decline. 

So digital, it seems, is on the ascendency, and Big Tech executives are confident the boom will continue. Only one thing stands in the way: regulation. Facebook has been hit with a two-pronged crackdown by UK and EU authorities on the way it uses advertising data, while Brussels last month opened an investigation into alleged anti-competitive practices in Google’s ads business. There are plenty of other probes into the tech giants, but the focus on ads is likely to be particularly concerning for bosses over in Silicon Valley. Perhaps, then, the latest bumper results are a double-edged sword, as regulators latch on to tech’s soaring profits as further ammunition. Big Tech will be hoping it’s not the victim of its own success.

Esports: Britain’s next big thing?

a person wearing a costume: Esports stars — the rock stars of the 21st century? © Provided by City AM Esports stars — the rock stars of the 21st century?

Writing about esports is a difficult thing. At best, it attracts blank stares from people who don’t understand the concept (it’s essentially competitive video gaming). At worst, it’s mocked as a geeky hobby. Dismiss esports at your peril, though, because there’s big money to be made. Last year I wrote about the attraction for advertisers through both native in-game ads and esports sponsorship deals. But there could well be a golden opportunity for the UK tech sector more widely.

New figures revealed by City A.M. this week show British esports firms enjoyed record levels of investment in 2020, reflecting not only higher interest in gaming during the pandemic, but also a bigger trend. Investors pumped £42m into the sector, marking a record for both number of deals and total value. This momentum has continued into 2021 with £15m secured so far.

These are new players, too. The data showed 45 per cent of total funding rounds over the last two years went to startups that had never previously raised investment. What’s more, the Square Mile is starting to take notice. London esports firm Excel, which is backed by footballer Dele Alli, recently raised £17m from backers including City bigwig Lord Spencer.

Surely, then, there’s an opportunity here to tap into a market that’s now thought to be worth around £1bn globally. Here East — the tech campus based in Queen Elizabeth Olympic Park — is leading the way, and earlier this year launched a major new initiative to build a world-class esports cluster on its site.

As we’ve discussed at length in these pages, UK tech is enjoying a boom, and it leads the world in areas such as fintech and health tech. With a little encouragement, maybe esports could be Britain’s next big thing.

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