For our latest season of the Media Voices Podcast, kindly sponsored by Poool, we’ll be publishing ten episodes exploring the biggest trends of 2022 and how they affect publishers; from subscriptions and membership to local news, platforms, emerging technology and more. Our second episode explores how the advertising market has had its post-pandemic recovery dented by economic uncertainty, and how publishers, platforms and brands are adapting.

The advertising market has been on a rollercoaster ride over the past 12 months. Initial hopes of a more stable year to continue rebuilding from the pandemic were dashed as Russia began its invasion of Ukraine, exacerbating global economic pressures. Digital advertising growth this year has slowed – unsurprising given its unsustainable growth during Covid – but has still been growing at a much faster pace than other platforms across most segments. It is expected to account for 67% of global ad spend by the end of 2022.

The outlook is mixed. The cost of living crisis is likely to force households to drastically cut back on spending. However, the World Cup is forecast to keep growth at 8.4% this year, and although the 6.4% global forecast for 2023 is lower, it is still nonetheless positive.

To discuss this year’s advertising trends and what they mean for publishers going into 2023, we’re joined by Lara O’Reilly, senior correspondent at Insider (formerly known as Business Insider). Lara has covered the media and advertising industries at publications including the Wall Street Journal, Digiday, and Marketing Week for more than a decade.

Here are some highlights from the conversation:

A market right-sizing

Esther: There have been some big doom and gloom headlines in the latter half of this year, because people have said, “Oh, [the digital ad market] has all slowed down.” Well, yes, it was going to because the growth [during Covid] was mental. There was a big Wall Street Journal headline that said, “It’s crunch time for the for the tech giants,” because Google only grew by 22% in the first three months of this year. To me, that’s insane. Why are we pitching that as a slowdown?

Lara: The 30,000 foot view is like the advertising world’s just coming back down to Earth after these really odd pandemic trends that put everything off-kilter, really. The issue that some of the tech giants are having – well, there’s lots of issues that have all compounded at once – they’re still growing, but growth is slowing. Why is that? Because some of them have have reached their ceilings, and there’s only so many years you can continue growing at 20% or 30%. It’s just a natural evolution really.

There’s all these things that are still happening; post-pandemic lags, but you’ve got things like lockdowns that are still persisting in China and the war in Ukraine that’s causing supply chain bottlenecks. Add to that you’ve got rising inflation, particularly around essentials like food and energy, and that’s putting strains on people’s spending habits. You’ve got interest rates increases.

The reason things are looking gloomy is the in the past, in tough times, rightly or wrongly, marketing’s usually the first thing that gets cut. So that’s why a lot of the industry forecasters are revising down there that estimates for the global ad market in 2022. But to be sure, it’s still growing.

Another delay for the cookie phaseout

Lara: I just think cookies are like the cockroach of digital advertising, and they’re just going to stick around forever. So we broke the news, actually, that Google was once again delaying its phase out of cookies in the Chrome browser to at least 2024. That’s the second time it’s it’s delayed that and there still isn’t any consensus on the alternative, because there’s lots of differing opinions. And no matter which side you’re on, Google’s seen as the bogeyman no matter what.

Esther: Peter you were speaking to a couple of publishers in Cannes, and there’s some frustration. Publishers are very much ready for this. This change, for the most part benefits them. But it kicks the can down the road for the advertisers they work with who are then saying, “Oh, it’s fine. We can just use this old technology for a little while longer.”

Peter: think there was a mix of frustration and relief. I don’t think it was all just frustration. I think they were thinking “Oh, okay, we don’t actually have to pull the trigger on this yet.” But the big conversation that I was hearing – I had a drink with some guys that had been on a boat with some Google people… The conversation was, will this ever happen? Will Google ever actually do this? Because there’s no viable alternative right now that everyone’s getting behind.

Differing economic impacts on the ad market

Lara: So CPG advertisers – or FMCG, as we call them here – they’re all actually raising their marketing spend at the moment. And part of the reason is because they’re putting up their prices, they need to communicate why their products have better value, or they have some better features, or whatever it might be than others. Because when you’re in this tight spending market, people trade down in categories that have weaker brands. So it’s up, it’s up to FMCG marketers to really display their strengths.

Have you heard of the lipstick index? So it’s this theory – now it was apparently coined by the former chairman of Estee Lauder, so make of that what you will – but it’s the theory that sales of affordable luxuries rise during economic downturns because we can’t splurge on cars and jewellery, but we can treat ourselves with the odd lipstick or nice coffee from Starbucks or something like that.

Chris: Tech has been such an interesting one to look out for. We’re seeing shortages of components, as a result of which we’ve seen completely unprecedented stuff like Facebook putting up theprice of its Meta Quest to Sony raising the price of its PlayStation 5 without introducing any new features. So the advertising around that has gone into less around the actual product themselves and more about their exclusive capabilities.

But it does seem there’s going to be this huge crunch coming down. And I wonder if that’s why we saw vast swathes of of editorial jobs lost across some of those quality gaming titles. So Fanbyte, Future, G4 all cut headcount. I wonder if that’s in part because of fear of what’s coming down the pipe just in terms of marketing spend.

Waking the sleeping giant of Apple

Lara: Apple is really the sleeping giant of the ad industry. And it’s just beginning to wake up. Last year, they rolled out some privacy changes that forced developers to ask users before they tracked them. And lo and behold, most people say that they don’t want to be tracked, which means that it’s more difficult to target ads at specific types of people and measure whether your campaigns are working.

It’s really had so many ripple effects on the ad industry, Facebook probably felt the brunt of the changes. But what I’m just really interested in is the growth of Apple as as an advertising business. You’ve got all sorts of estimates out there that it could grow to something like $20 billion if it extended ads to its other services.

Chris: They’re going for a proper scorched earth approach on that. They’re not actually changing the map to a scorched earth. But they’re just going all in on ads. And if people don’t like it, they can feel free to walk off and go elsewhere, apparently.

This topic will be one of the chapters we explore in detail as part of our Media Moments 2022 report, launching on November 30th. Find out more and pre-register here to receive the report.

This season of Media Voices is sponsored by Poool, the Membership and Subscription Suite used by over 120 publishers from around the world. The team behind Poool are industry experts who have put everything they know into the product, ready to respond to your ‘how’ of launching & developing a reader revenue strategy. | @PooolTech

, ,
Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *