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Picture it. It’s Q1 2020. Canada’s ad market was in a growth position vs the prior year, with January and February ad spend from the larger national advertisers tracking up +3% vs the same months in 2019. Then in March the pandemic took over, ad dollars began to leave the market, and Canada would face twelve consecutive months of YoY declines, the first five of which were seeing double-digit losses. Even the historically strong holiday period in Q4 saw less ad spend than the year before, finishing down -4%.

There was hope for 2021, but it started out soft, with both January and February spend unable to reach the same levels as we saw in pre-pandemic years. March 2021 was the first month where Canada saw cross-media ad spend surpass both March 2020 and March 2019 levels. Perhaps Canada was finally rebounding? Maybe advertisers were feeling confident enough to start spending again? Not so fast.

Q2 told us otherwise with ad spend still down -6% vs Q2 of 2019. If Canada had any hope of returning to pre-pandemic investment levels in 2021, it would have to be in the back half. We didn’t disappoint!

July started the quarter off strong, up +71% vs July 2020 and up +19% vs July 2019. August continued the trend, up +24% vs 2020 and up +21% vs 2019, and September rounded out the quarter up +12% vs 2020 and up +10% vs 2019.

Q3 2021 gave us our first full quarter of ad spend that surpassed pre-pandemic levels, with SMI declaring that Canada’s market was no longer in recovery mode, but that it had officially recovered.

Q4 continued this trend with October up +18% vs 2020 and up +13% vs 2019. 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. All indicators currently point to Canada finishing 2021 in a growth position vs both 2020 and 2019, continuing to see stable YoY growth through 2022. To give context to the scope of the recovery in North America, SMI estimates that $17B (USD) advertising dollars were lost in the U.S. because of COVID-19.

Shifting Media Mix

Ad dollars shifting from traditional to digital media is far from a new concept. The Canadian ad market has watched dollars shift away from traditional media in favour of digital for a while now. As far back as 2017, digital media was taking the majority share of ad investment at forty-two percent. Prior to the pandemic-induced losses of 2020, digital media was taking 48 cents of every ad dollar, with linear TV close behind at 36 cents for every dollar. Those two channels combined made up 84% of all cross-media ad investment in Canada.

During the twelve consecutive months of YoY cross-media declines we saw in the market starting in March 2020, digital media only experienced five consecutive months of losses.

By the second half of 2020, digital media types, including search, social and online video (OLV), began to see growth, despite the reduction of overall ad dollars. Digital share saw big gains in a short period of time as advertisers leaned into the optimization capabilities and agility of digital ads, while simultaneously capitalizing on the increased eyeballs to channels like search and social.

Some of these digital share gains came at the expense of linear TV which had dropped to a 32% share in the last half of 2020, but most of the increased investment to digital was from other traditional media types such as terrestrial radio and linear out-of-home. We saw these dollars begin to move to digital audio and digital out-of-home.

As the market normalized and recovered in 2021, digital share did not go back to pre-pandemic levels. In 2021 digital share was at 56%, while linear TV share was at thirty-five percent. Those two channels combined made up 91% of all cross-media ad investment in Canada, a +7.0 point gain compared to pre-pandemic 2019.

Three months in 2021 saw digital approach or surpass a 60% share, indicating that the share acceleration caused by the pandemic will not slow down in 2022. Digital will continue to take most of the ad investment in Canada, with search and social continuing to grow. Other areas of growth to keep an eye on are digital audio and digital out-of-home. Expect the OTT and CTV landscape to develop in Canada as offerings increase, albeit at a slower rate than our American counterparts.

Advertising Categories – Winners and Losers

All twelve of SMI’s tracked product category groups were up in 2021 vs 2020. Most saw double-digit gains with some of the biggest growth coming from Apparel & Accessories (+97%), Travel Services (+86%), Wellness (+48%), General Business (+46%), Entertainment & Media (+36%), Technology (+33%), and Financial Services (+33%).

However, given the reduced market in 2020, a more accurate benchmark for growth would be to compare investment to 2019. Only five of SMI’s product category groups saw double-digit growth in 2021 when compared to 2019. Technology (+55%), Apparel & Accessories (+40%), Wellness (+40%), CPG (+25%). And Restaurants (+22%).

From a volume standpoint, the top-three cross-media spenders in 2021 were CPG, Automotive, and Financial Services. Only CPG saw double-digit growth in 2021 compared to both 2020 and 2019. Automotive (a category largely affected by supply chain and manufacturing challenges) was down -18% in 2021 compared to 2019. Financial Services did see some growth compared to pre-pandemic 2019 but only in the single digits at plus five percent (+5%).

Within CPG, Beverages (both alcoholic and non-alcoholic) were up vs both years, as was Food and Personal Care. But the biggest increases were seen across Household Supplies which were up +35% vs 2020 and up +66% vs 2019.
CPG was the top-spending category every month in 2021 and is expected to continue this trend into 2022. Other categories expected to remain strong in 2022 include Pharma (which saw 2021 gains compared to both prior years), Wellness, and Retail. Within Retail, online retailers saw growth of +143% in 2021 compared to 2020 and +72% compared to 2019 and is expected to continue growing into 2022.

This information is driven by Standard Media Index’s Core solution in Canada, sourced directly from the major holding companies and leading independent agencies. Source: SMI Core Canada excluding SMI Pool.

Kelly Fedoruk, Senior Client Solutions Manager, Standard Media Index (SMI)

Kelly has over twenty years of advertising, research, and marketing background. Prior to 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.