Early hopes of a steady year rebuilding after the shock of the COVID crisis were dashed by Russia’s February invasion of Ukraine, but there is still some growth in the ad sector. Peter Houston rounds up the year in advertising as part of our Media Moments 2022 report.

For the first couple of months of 2022 things looked pretty good for the advertising market. The scale of 2021’s post-pandemic bounceback delighted analysts, with the IAB trumpeting exponential growth for the year. Its full-year Revenue Report put digital advertising revenue for 2021 at almost $190 billion, a YOY increase of $50 billion, the biggest single-year rise since 2006.

This glowing growth picture is skewed by comparisons with 2020’s uniquely bad trading conditions, but in July, despite growing fears of recession, media agency Zenith was still predicting that global advertising spend would grow by 8% in 2022.

Fears for the future started to rise late in the summer. “Conventional wisdom would suggest that next year will be a car crash,” a senior media industry executive told 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 incredible growth – in April it was projecting ad revenues of $12 billion for 2022, up from $4 billion last year.

Podcast advertising is also continuing to climb. Podnews is reporting that Magellan AI’s  Q3/22 Podcast Advertising Benchmark Report shows 2.6% growth, with the top ten podcast advertisers spending $75 million, up 6% since last quarter.

This recession is strange in that employment is holding up and, although consumer spending is down, it hasn’t completely disappeared. There’s no consensus on what is driving the retraction, but Peter Kafka lists a few options:

  • Proactive pessimism that things are inevitably going to get worse
  • The bursting of the tech-crypto bubble
  • Structural problems in digital ad buying, where it’s as easy to not spend as it is to spend
  • Normalisation after a couple of crazy ears.

Big Tech feels the pinch

Whatever the root cause, one sure sign that the digital advertising bounceback is over is that the days of never ending platform growth appear to be over. Digiday, reacting to Big-tech’s Q4 earnings reports, said the end is near for this ‘blockbuster chapter of growth’ in digital advertising.

Google missed forecasts in search ad revenues and YouTube’s ad income contracted for the first time since it started reporting advertising in 2019. Meta had it even worse with net income down by more than half YOY. Posting a 34% drop on the previous quarter of 2022, Meta is in danger of being loss making next year if the rate of decline isn’t reversed.

The only member of the Triopoly to buck the downward trend was Amazon. The online shopping giant turned ad platform posted $9.5 billion in ad revenue over the last quarter, up 25% on the same period a year ago. It’s still a long way behind the other two, but at this rate, it could catch up soon.

Listen: Lara O’Reilly, Insider Inc’s Senior Correspondent 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 big things that we’ve seen over the past two years is the constant kicking down the road of changes around cookies. Google delayed the scheduled phase out of third-party cookies in the Chrome browser for the second time in July, until at least 2024.

One our corresponding 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 can be reached between ad-tech providers, marketers and publishers around what replaces them, she’s likely to be right.

Publishers have been dealing with the continued blacklisting of stories associated with subject matter perceived to be negative to advertising brands. This has impacted coverage of Putin’s war in Ukraine and brought a widespread blackout of advertising activity around the funeral of Queen Elizabeth II.

Lara said: “I wrote earlier this year actually about brands blocking climate content too… everyday CPG brands blocking words like ozone layer and climate change. I just don’t see the logic in that.”

Ad blocking is back too, returning to levels last seen at the peak of the phenomenon in 2018. Over the last two years ad blocking has started to rise again, with 290 million web users actively blocking ads worldwide in 2021 according to the 2022 PageFair Adblock report.

Privacy play or power play?

This was the year Apple set out to build its own ad empire, capitalising on privacy changes it introduced that coincidentally limited third-party advertising on its devices. With Meta complaining that the changes could cost it $10 billion in lost ad revenue, Apple is reported to be targeting $4 billion annually in ad revenue. Initial reaction to Apple allowing users to block third-party tracking on its devices were welcomed, but user acceptance of more Apple ads on their premium iPhones has yet to be seen. 

The introduction of advertising to once ad-free platforms is something of 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 evaporated in the face of the commercial realities of its acquisition by the New York Times – Times management announced they would start selling ads on the site in September.

This chapter is an extract from our Media Moments 2022 report, sponsored by Poool and published in partnership with What’s New in Publishing. To read the full report including case studies, key facts and more, please fill in the form below:

Your details will be used to send you the Media Moments 2022 report, as well as future Media Moments reports and Poool communications. Please note Poool and Media Voices are joint data controllers for Media Moments 2022 activities.

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