Shingi Rice- Unsplash
What's going on with digital advertising?
It's been a turbulent time for digital advertising. We speak to industry experts about whether this is more than just a wobble
It’s been a brutal time for the big tech giants.
Big brands are bailing on Twitter, Google search ad revenues are weakening, Meta ad dollars are slipping, YouTube’s ad business is shrinking, TikTok slashed its revenue targets- is this an ominous sign for a battered online ad market? The growth rate of Microsoft’s search and advertising business has been shrinking too, coinciding with the general downward trajectory of the entire online advertising market. Even Amazon shocked the market with a weak revenue forecast for its all-important fourth quarter of the year, when holiday shopping normally buoys its revenues.
With inflation and high costs of living impacting consumers- how long before the online advertising market is set for a rebound?
Christiaan Lette, Chief Data Officer at Wunderman Thompson
At a macro level, inflation, market downturn and an imminent recession is having a direct impact on marketing spend. Whilst digital advertising has the benefit of being fast and reactive, it is also the most immediate line item that can be cut under mounting pressure from CFOs to reduce marketing budgets.
Regulatory constraints, dynamic, unpredictable, fast evolving, and complex platform changes aren’t helping client confidence as brands scramble to get their house in order. Traditional channels have also caught up and are offering compelling digital products, providing more options for brands to consider.
Whilst digital advertising is the first thing you can cut, it’s also easy to switch back on, and data can help brands identify the best time to do that. Navigating the choppy marketing months ahead will require future-proofed data strategies, smart audience planning and continuous optimisation to squeeze out every penny.
Dave Carpenter, Head of Digital, Goodstuff
When considering whether the digital advertising economy has taken a battering, we need to remember, digital predominantly operates in the short term. Some industries rely on digital (and only digital!) ‘Hand to mouth’ to generate conversions, so digital will naturally be impacted by economic fluctuations, whereas other media may see the impact over a longer term.
The truth is there has never been a more exciting time to work in digital advertising. Over the last few years, we've seen the unprecedented growth of Tik Tok, we've seen digital advertising demonstrate its resiliency when all other media suffered during the pandemic, and we've also seen the development of new technologies as each race to replace the cookie – not to mention a potential glimpse into the future (depending on what side of the fence you sit on) when it comes to the Metaverse.
But can anyone really define what digital is these days? All media for the most part is somewhat ‘digital’ in nature.
With Netflix arriving in the market in Q4, it signifies the importance of advertising to global businesses (and the pace that they can move at!) and is the biggest shake-up in the AV marketplace since the introduction of Sky TV in the early 90s. It’s exactly what the market has been crying out for in the face of audiences migrating from linear TV.
More complexity isn’t always great for advertisers, but greater choice certainly is. The opportunity to test and learn whilst being creative in this ‘digital’ sandbox is greater now than ever before and brave brands are more likely to reap the rewards when adopting this stance.
Ben Silcox, chief product officer, Publicis Groupe UK
There’s no doubt it’s been a tough time for businesses hit by rising costs and consumers’ tightening their belts, and the tech giants have not been immune. Supply chain issues have meant that brands in some sectors have struggled to get products onto shelves and have had to allocate budgets differently as a result. That’s the short-term picture. The long-term picture is rosier. All the businesses that have invested in tech and first party data capabilities, will be leveraging that investment and spending with the platforms that offer connected measurement. Outside online advertising, in our commerce practice, we’re seeing more clients accelerating their retail media plans and that’s something that’s set to continue.
Ben Richards, chief experience officer, VMLY&R
Answer this honestly, when was the last time you clicked on a digital display ad? Do you find yourself hovering over the skip ad button on YouTube, automatically scan past the blue links in search to get to the organic good stuff, or want to throw your phone to the other side of the room when an ad interrupts your mobile game? Well, you are not alone. Root around online and you’ll quickly see that click through rates are nowhere near what they once were. Adblockers are more popular than ever before, as are click bots.
So, with culture fast outgrowing these commoditised formats, now is the opportunity and time for brands to innovate. Big emotive ideas need to deliver goosebumps, but alongside these, we need to deliver connected experiences that harness messaging, personalisation and sequencing. It’s finding ways to make content that people enjoy watching while also creating more meaningful encounters for consumers to actually engage with a product.
When it comes to the digital advertising market, it’s not necessarily a rebound that’s needed, but a reframe. A reframe that prioritises content that provides true value to the consumer.