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US internet advertising is forecast to contract more than 3% this year

Video advertising will be flat, while subscription video will see massive growth, predicts PwC.

US internet advertising is forecast to contract more than 3% this year

Ad spending has become a bit of a wild card ever since the beginning of the pandemic.

Chart: Janko Roettgers and Datawrapper

The total amount of internet advertising revenue in the U.S. is expected to decline by 3.4% year-over-year in 2020, PwC is predicting in the latest edition of its Global Entertainment & Media Outlook. That's a massive decline when compared to last year, which saw ad dollars in the U.S. grow by nearly 16% year-over-year.

PwC is expecting the online ad market to return to growth in 2021, and ultimately arrive at a compound annual growth rate of 4% for the five years spanning from 2019 to 2024. The U.S. ad market will be hit harder than overseas markets, with PwC predicting that global 2020 online ad spending will be down around 2.5% year-over-year.

Ad spending has become a bit of a wild card ever since the beginning of the pandemic, with industries like hospitality, travel and theaters hit hard, while online shopping has done comparably well. As a result, many companies withdrew their guidance for this year. PwC Principal CJ Bangah told Protocol that the company usually releases its annual Entertainment & Media Outlook report in June, but that it decided to delay the publication this year to better account for the impact of the crisis.

"Advertising is extremely susceptible to the economic performance," Bangah said. "It also recovers very quickly."

As in previous years, PwC is predicting the move from desktop to mobile advertising to continue. And while mobile hasn't been immune to the decline of ad spending, video advertising actually seems to be the least affected, effectively staying flat year-over-year in 2020.

However, our collective pandemic binging didn't help ad-supported video services nearly as much as it did for the Netflixes of this world, with online video subscription revenue expected to grow 30% in the U.S. this year. Video subscription services' revenue will continue to increase with a compound annual growth rate of 12.65% until 2024, while video advertising revenue will only see a growth rate of 6%, according to PwC.

Bangah attributed some of that to changing consumer expectations, with especially younger viewers preferring ad-free environments over those with high ad loads. "They want fewer ads," she said.

Ultimately, the current environment requires tech and entertainment executives to remain vigilant and flexible, Bangah argued. "Consumer habits can take a lifetime to form," she said. In a crisis like this one, consumers may ditch them overnight.

Protocol | Policy

5 things to know about FCC nominee Gigi Sohn

The veteran of some of the earliest tech policy fights is a longtime consumer champion and net-neutrality advocate.

Gigi Sohn, who President Joe Biden nominated to serve on the FCC, is a longtime net-neutrality advocate.

Photo: Alex Wong/Getty Images

President Joe Biden on Tuesday nominated Gigi Sohn to serve as a Federal Communications Commissioner, teeing up a Democratic majority at the agency that oversees broadband issues after months of delay.

Like Lina Khan, who Biden picked in June to head up the Federal Trade Commission, Sohn is a progressive favorite. And if confirmed, she'll take up a position in an agency trying to pull policy levers on net neutrality, privacy and broadband access even as Congress is stalled.

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Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

If you've ever tried to pick up a new fitness routine like running, chances are you may have fallen into the "motivation vs. habit" trap once or twice. You go for a run when the sun is shining, only to quickly fall off the wagon when the weather turns sour.

Similarly, for many businesses, 2020 acted as the storm cloud that disrupted their plans for innovation. With leaders busy grappling with the pandemic, innovation frequently got pushed to the backburner. In fact, according to McKinsey, the majority of organizations shifted their focus mainly to maintaining business continuity throughout the pandemic.

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Adobe wants a more authentic NFT world

Adobe's Content Credentials feature will allow Creative Cloud subscribers to attach edit-tracking information to Photoshop files. The goal is to create a more trustworthy NFT market and digital landscape.

Adobe's Content Credentials will allow users to attach their identities to an image

Image: Adobe

Remember the viral, fake photo of Kurt Cobain and Biggie Smalls that duped and delighted the internet in 2017? Doctored images manipulate people and erode trust and we're not great at spotting them. The entire point of the emerging NFT art market is to create valuable and scarce digital files and when there isn't an easy way to check for an image's origin and edits, there's a problem. What if someone steals an NFT creator's image and pawns it off as their own? As a hub for all kinds of multimedia, Adobe feels a responsibility to combat misinformation and provide a safe space for NFT creators. That's why it's rolling out Content Credentials, a record that can be attached to a Photoshop file of a creator's identity and includes any edits they made.

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Protocol | China

Why another Chinese lesbian dating app just shut down

With neither political support nor a profitable business model, lesbian dating apps are finding it hard to survive in China.

Operating a dating app for LGBTQ+ communities in China is like walking a tightrope.

Photo: Nicolas Asfouri/AFP via Getty Images

When Lesdo, a Chinese dating app designed for lesbian women, announced it was closing down, it didn't come as a surprise to the LGBTQ+ community.

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The Oura Ring was a sleep-tracking hit. Can the next one be even more?

Oura wants to be a media company, an activity tracker and even a way to know you're sick before you feel sick.

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Photo: Oura

Oura CEO Harpreet Rai swears he didn't know Kim Kardashian was a fan. He was as surprised as anyone when she started posting screenshots from the Oura app to her Instagram story, and got into a sleep battle with fellow Oura user Gwyneth Paltrow. Or when Jennifer Aniston revealed that Jimmy Kimmel got her hooked on Oura … and how her ring fell off in a salad. "I am addicted to it," Aniston said, "and it's ruining my life" by shaming her about her lack of sleep. "I think we're definitely seeing traction outside of tech," Rai said. "Which is cool."

Over the last couple of years, Oura's ring (imaginatively named the Oura Ring) has become one of the most recognizable wearables this side of the Apple Watch. The company started with a Kickstarter campaign in 2015, but really started to find traction with its second-generation model in 2018. It's not exactly a mainstream device — Oura said it has sold more than 500,000 rings, up from 150,000 in March 2020 but still not exactly Apple Watch levels — but it has reached some of the most successful, influential and probably sleep-deprived people in the industry. Jack Dorsey is a professed fan, as is Marc Benioff.

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