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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.

Does Elon Musk make Tesla tech?

Between the massive valuation and the self-driving software, Tesla isn't hard to sell as a tech company. But does that mean that, in 10 years, every car will be tech?

You know what's not tech and is a car company? Volkswagen.

Image: Tesla/Protocol

From disagreements about what "Autopilot" should mean and SolarCity lawsuits to space colonization and Boring Company tunnels, extremely online Tesla CEO Elon Musk and his company stay firmly in the news, giving us all plenty of opportunities to consider whether the company that made electric cars cool counts as tech.

The massive valuation definitely screams tech, as does the company's investment in self-driving software and battery development. But at the end of the day, this might not be enough to convince skeptics that Tesla is anything other than a car company that uses tech. It also raises questions about the role that timeliness plays in calling something tech. In a potential future where EVs are the norm and many run on Tesla's own software — which is well within the realm of possibility — will Tesla lose its claim to a tech pedigree?

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Becca Evans
Becca Evans is a copy editor and producer at Protocol. Previously she edited Carrie Ann Conversations, a wellness and lifestyle publication founded by Carrie Ann Inaba. She's also written for STYLECASTER. Becca lives in Los Angeles.

As President of Alibaba Group, I am often asked, "What is Alibaba doing in the U.S.?"

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J. Michael Evans
Michael Evans leads and executes Alibaba Group's international strategy for globalizing the company and expanding its businesses outside of China.
Protocol | Workplace

Apple isn’t the only tech company spooked by the delta variant

Spooked by rising cases of COVID-19, many tech companies delay their office reopening.

Apple and at least two other Silicon Valley companies have decided to delay their reopenings in response to rising COVID-19 case counts.

Photo: Luis Alvarez via Getty

Apple grabbed headlines this week when it told employees it would delay its office reopening until October or later. But the iPhone maker wasn't alone: At least two other Silicon Valley companies decided to delay their reopenings last week in response to rising COVID-19 case counts.

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Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Protocol | Workplace

Half of working parents have felt discriminated against during COVID

A new survey found that working parents at the VP level are more likely to say they've faced discrimination at work than their lower-level counterparts.

A new survey looks at discrimination faced by working parents during the pandemic.

Photo: d3sign/Getty Images

The toll COVID-19 has taken on working parents — particularly working moms — is, by now, well-documented. The impact for parents in low-wage jobs has been particularly devastating.

But a new survey, shared exclusively with Protocol, finds that among parents who kept their jobs through the pandemic, people who hold more senior positions are actually more likely to say they faced discrimination at work than their lower-level colleagues.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

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Alphabet goes deep into industrial robotic software with Intrinsic

If it succeeds, the gambit could help support Google Cloud's lofty ambitions in the manufacturing sector.

Alphabet is aiming to make advanced robotic technology affordable to customers.

Photo: Getty Images

Alphabet launched a new division Friday called Intrinsic, which will focus on building software for industrial robots, per a blog post. The move plunges the tech giant deeper into a sector that's in the midst of a major wave of digitization.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

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