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Digital Losers and Winners of 2020

In Market Research


Beneficiaries and victims of 2020: Qualified.One statistics on Digital Marketing, IT and Web industries
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During the last decade Digital and Technology industry evolved remarkably and is now in fact a set of (mostly independent) sub-industries. This diversity secured the stability of the industry in the pandemic of 2020. Although, the low-scale structure of its components is quite different.

Using the Qualified.One data[1,2] on buyers and providers in 33 industries, we figured out the top-3 winners and losers based on the number of deals in each sector.

2020 losers

The most significant drop in market activity can be observed for Internet of Things development, Game Development and BPO (business process outsourcing).


Decrease in the number of tracked deals in Qualified.One database for BPO services, Game Development and IoT Development services, normalized to be equal in 2019. Data coming from the Q1 2020, extrapolated to the full year. Source: www.Qualified.One

The results are calculated from the first quarter stats of 2020 and therefore are to be refined later. This could probably be the reason for a notable decrease in BPO and Game Development contracts, which presumably were postponed towards the end of the year.

As for the IoT industry, the result looks quite reasonable and aligned, in particular, with the Intel's Internet of Things Group (IOTG) revenue[3] which was $2,124 mln. in 2020 instead of $3,816 mln. in 2019.

2020 winners

As mentioned previously, 2020 performance was completely different for various Digital and Technology niches. The top-3 beneficiaries are Video production companies, Cloud Consultants and Application support & maintenance firms, according to our stats.


Increase in the number of tracked deals in Qualified.One database for App SUpport services, Cloud Consulting and Video Production services, normalized to be equal in 2019. Data coming from the Q1 2020, extrapolated to the full year. Source: www.Qualified.One

These numbers are understandable: remote working and catalyzed digitalization required a solid IT support, whereas the high-quality video is crucial for distant sales and education. Cloud technologies were implemented in a large amount of companies, with the share of cloud-equipped SMEs doubled in certain emerging markets[4].

Market size dynamics

The number of deals can be an acceptable estimation for the market activity, but the question of the market size appears to be more interesting. The decrease in activity, for instance, could be a blocking low-term problem followed by a rapid recovery. On the other hand, buying activity rate has generally seen a decrease and hence the overall market size can probably have certain long-term consequences for both buyers and suppliers.

Project size dynamics

Let us focus on 4 combined sectors:

  • Web design, development, UI/UX design
  • Video Production
  • Digital Marketing, SEO, PPC, Content & Social Media marketing, Advertising
  • Mobile Application Development

According to the Qualified.One stats, the first two experienced a distinct growth, whereas Marketing and App Development project sizes have decreased significantly.


Average project size for Web Design & Development services, Video Production, Digital Marketing and Advertising and App Development services. Source: www.Qualified.One, 2019 (full year) vs first quarter 2020

One can see an atypical ×1,74 growth for the average Web Development project. The median value being almost constant, this means such a behavior is mostly due to the low amount of very high-volume big deals.

This can be easily seen from the project distribution chart by project size. The right-hand side here requires further research and more statistical data to show a representative result.


Distribution of tracked deals number (logarithmic scale) over the project size (in thousands of U.S. dollars). Source: www.Qualified.One, 2019 (full year) vs first quarter 2020

Share in revenue dynamics

The absolute amount of claimed revenue coming from our stats cannot be treated as a reliable source itself because of the possible user activity changes during the COVID-19 crisis. Assuming this effect to be sector-independent, let us calculate the share variation to see the actual performance of Web Development, Video Production, Marketing and App Development sectors.


Share of sector contribution in the overall amount of tracked deals. Source: www.Qualified.One, 2019 (full year) vs first quarter 2020

The picture is pretty much the same at a glance: growth for the first two categories and decrease for the latter. Investments in Digital Marketing are reduced as it was predicted last year after the Coronavirus outbreak (for example, the Deloitte report of March 2020[5] showed 81% of respondents in Spain to cut their budgets off).

Interestingly, the decrease in Digital Marketing services volume has not affected the actual amounts spent on paid advertising: Google revenue from the paid ads[6] shows sustainable 10% yearly growth during the last 5 years.


Change in digital advertising spending worldwide from 2016 to 2022, by format. Source: Dentsu Aegis Network, Global Ad Spend Report January 2021, page 15

The Dentsu Aegis Network Global Ad Spend Report[7] (January 2021) states the COVID impact on the Online Video and Social Media digital advertisement was stronger compared to that of Paid Search. However, the Social Media Ad budget managed to keep a positive growth rate.

Thus, the vast majority of companies continued to collect paid search traffic: it is reasonable since this kind of acquisition allows marketer to select users with an explicit demand (and therefore to avoid unprofitable investments into other groups of audience given the overall decrease of demand).

The Paid Social traffic is usually harder to convert. Nevertheless, the Facebook reported[8] $85,966 mln. revenue in 2020 versus $70,697 mln. in 2019, which is conceivable taking into account the lockdown-driven Facebook active user number growth rate, which in Q1-Q2 of 2020 was 101,5 millions of users per month compared to 44,5 millions per month during 2019.

Apparently, a lot of businesses kept their investments to the Paid Search and Paid Social channels to generate leads, but decreased the budget for external providers, consultants and outsourcing companies.

Appendix

For this report we used Qualified.One stats for more than 1860 deals reported in first quarter of 2020 with total revenue of $198,715,000, and 10,186 deals reported in 2019 with total revenue of $1,029,190,000.

The absolute values (revenue and number of deals) were normalized.


Structure of Qualified.One data as of Q1 2020. Fractions calculated by the number of tracked deals. Sum of the unlabelled parts: 24,59%


www.Qualified.One infographics: change in digital marketing investments in 2020


www.Qualified.One infographics: Web Development project sizes in 2020


www.Qualified.One infographics: winners and losers of 2020 - change in the number of projects

References

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