“Cookies are like digital advertising cockroaches”: Advertising market shows signs of resilience | What’s new in the Edition
Another rollercoaster year for advertising, but there are signs of resilience in the face of the recession
Early hopes for a sustained recovery a year after the COVID crisis hit were dashed by the Russian invasion of Ukraine in February, but there is still growth in the advertising sector. Peter Houston finishes the year in advertising as part of our program Media Moments 2022 Report.
For the first two months of 2022, things looked pretty good for the advertising market. The rate of post-pandemic recovery in 2021 pleased analysts, with the IAB trumpeting exponential growth for this year. It is full year Income report put digital ad revenue for 2021 at almost $190 billion, an annual increase of $50 billion, the largest single-year increase since 2006.
This rosy growth picture is skewed by comparisons with 2020’s uniquely poor trading conditions, but in July, despite growing recession fears, media agency Zenith was still predicting that global ad spending would increases by 8% in 2022.
Fears about the future began to grow in late summer. “Conventional wisdom would suggest that next year will be a car crash,” a senior media industry executive said. said the Guardian in August. That wisdom expects that the first thing to be cut in a recession will be marketing budgets, but TikTok, for example, is still seeing tremendous growth — in April it was projecting ad revenue of $12 billion by 2022from $4 billion last year.
Podcast advertising is also continuing to grow. Podnews reports that the Magellan AI Podcast Advertising Benchmark Report 3Q/22 shows 2.6% growth, with the top ten podcast advertisers spending $75 million, up 6% from last quarter.
This recession is strange because employment is stagnating and, although consumer spending is down, it hasn’t completely disappeared. There is no consensus on what drives withdrawal, but Peter Kafka lists several options:
- Proactive pessimism that things will inevitably get worse
- The bursting of the crypto-tech bubble
- Structural problems in digital ad buying, where it’s just as easy not to spend as it is to spend
- Normalization after a couple of crazy ears.
Big Tech feels the pinch
Whatever the root cause, a sure sign that the digital advertising comeback is over is that the days of endless platform growth seem to be over. Digiday, reacting to Big-tech’s Q4 earnings reports, said The end is near for this ‘growth chapter’ in digital advertising.
Google missed forecasts for search ad revenue, and YouTube’s ad revenue shrank for the first time since it began reporting ads in 2019. Meta fared even worse, with net revenue down by more than half year. With a decline of 34% in the previous quarter of 2022, the Meta risks being loss-making next year if the rate of decline does not reverse.
The only Triopolis member to buck the downtrend was Amazon. The online shopping giant turned ad platform posted $9.5 billion in ad revenue last quarter, up 25% from the same period a year ago. It’s still a long way from the other two, but at this rate, it could catch up soon.
Listen: Lara O’Reilly, Senior Correspondent for Insider Inc. joined Media Voices to discuss the mixed outlook for the advertising market and which areas are expected to see growth in 2023.
Cookies, blacklists and blocking
One of the biggest things we’ve seen over the last couple of years is the constant change in the way cookies change. Google was late planned phase-out of third-party cookies in the Chrome browser for the second time in July, at least until 2024.
In ours the relevant advertising episode, Lara O’Reilly, senior correspondent at Insider, said: “I just think cookies are like the cockroaches of digital advertising and they’re just going to stick around forever.” Unless a consensus is reached among ad technology providers, marketers and publishers about what replaces them, she’s likely to be right.
Publishers have dealt with continuation of the blacklist of stories related to the topic perceived to be negative for advertising brands. This has affected coverage of Putin’s war in Ukraine and brought about a widespread disruption of advertising activity around Queen Elizabeth II’s funeral.
Lara said: “I wrote earlier this year actually about brands blocking climate content as well… everyday CPG brands blocking words like ozone layer and climate change. I just don’t see the logic in that.”
Ad blocking has also made a comeback, returning to levels last seen at the peak of the phenomenon in 2018. Over the past two years ad blocking has started to rise again, with 290 million internet users blocking active advertising worldwide in 2021 according to 2022 PageFair Adblock Report.
Privacy game or power game?
This was the year Apple decided to build its own advertising empire, taking advantage of privacy changes, it introduced to randomly restrict third-party ads on its devices. With Meta complaining that changes can cost him $10 billion Apple has reportedly lost ad revenue targeting $4 billion annually in advertising revenue. The initial reaction to Apple allowing users to block third-party tracking on its devices was welcomed, but Apple’s acceptance of more advertising on its premium iPhones has yet to be seen by users.
Introducing ads to once ad-free platforms is a trend this year. both Netflix and Disney+ have introduced cheaper ad-supported membership tiers in the face of tightening subscription sales. And the Athletic’s anti-advertising stance disappeared in the face of the commercial realities of its purchase by the New York Times—Times management announced that it would start selling ads on site in September.
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