What is ad sales and how Covid-19 impacts the $493 billion industry
Never heard about ad sales? Or have you heard of it but have zero clue what it does? Well you’ve come to the right place, because I’m about to tell you all the basics that you need to know about the space that is crucial to companies like Google, Facebook, and where I work, NBCUniversal. Ad sales is when companies sell advertising space to entities on their platforms, such as on TV, print, or digital (the internet). For Google, advertising revenue accounted for 70.9% of its total $134.81 billion in revenue in 20191. At an even more astonishing number, Facebook’s advertising revenue makes up 98.5%. of its global revenue2. Looking at it from a broader perspective, that means advertising revenue is also dependent on their clients’ financial well-being.
When you grasp how companies across all industries are so dependent on advertising dollars, Covid-19 impacts beyond just those like the hospitality and transportation industry. Looking closer into the advertising players, NBCU experienced a 2.2% ad revenue drop due to the postponement of sporting events. With a space traditionally dominated by legacy advertisers, such as Coca-Cola or P&G, the importance of having a diversified ad portfolio is more important than ever.
That’s why my intern group is working to increase NBCU advertising revenue by targeting direct-to-consumer brands that never spent in TV platforms before. This is a huge opportunity for NBCU, and our Direct-to-scale business unit was recently established in 2018 to spearhead that. We determined that it was important for our intern group that we focused on a project that puts diversity and inclusion at the center, in light of social movements that are changing the way we do things. Quite opportunely, more than 1,000 advertisers had already pulled out of Facebook due to the #StopHateForProfit movement. We see this as an area where we can step in to help our D2S team research and make contact to bring them into our platforms.
After multiple meetings with the D2S leadership team, I learned so much about how companies need to not rely on only digital outlets. It’s extremely important to spend on offline platforms as well. Advertisers who work with us has seen their sales revenue double as they increase spending on NBCU portfolio, and decrease again if they stop spending. In multiple case studies, it is demonstrated that advertising requires an multichannel approach. In the ad sales industry, an upfront is when TV ad space buyers and sellers come together to do business. It’s where companies like NBCU sell most of its inventory for the entire year. This year, due to Covid-19, NBCU is hosting upfront online. Unlike other players like ViacomCBS, NBCU is making a “30 Rock” special, reuniting the 30 Rock cast for a special reunion to host the upfront presentation on all of NBCU networks. Nevertheless, I’m so excited to be part of NBCU and the industry-changing efforts we are doing as a company.
1: Clement, J. “Google: Ad Revenue 2001-2018.” Statista, 5 Feb. 2020, www.statista.com/statistics/266249/advertising-revenue-of-google/#:~:text=In%202019%2C%20advertising%20accounted%20for,percent%20of%20the%20company’s%20revenues.
2:Clement, J. “Facebook Ad Revenue 2009-2018.” Statista, 28 Feb. 2020, www.statista.com/statistics/271258/facebooks-advertising-revenue-worldwide/#:~:text=In%202019%2C%20about%2098.5%20percent,increase%20in%20comparison%20to%20the.