Volatile? Transition? Leaders pick one word to describe the digital market
Digital advertising appears at first glance to be in an uncomfortable cooling period.
After years of intense growth, digital adspend is receding amid high inflation, rising interest rates, and fears of a worldwide recession. At least, that is according to several digital companies’ Q2 earnings reports, including Alphabet (Google), Meta (Facebook), Twitter, and Snap.
But there have also been signs of resiliency in the digital ad market. Amazon Advertising, for instance, surpassed expectations this quarter even as social media companies disappointed, and though YouTube’s ad revenue growth slowed to just 5% year-over-year, Google Ads nevertheless reported double-digit growth.
How should marketers consider the state of digital advertising amid worry after a quarter of mixed results?
The Media Leader asked various digital advertising experts for one word they would use to describe the current state of the digital advertising industry. Here’s how they answered:
“Flux”
“Ongoing structural changes to the digital advertising ecosystem resulting from increased regulation, combined with macro-economic factors like rising inflation, soaring energy prices and the Ukrainian conflict, means the wider impact depends on which part of the market you operate in and your own strategy.
“While the current volatility could easily paint a picture of chaos or a downturn, our view is increasingly a multi-dimensional one; whether that’s seeing new advertisers leaning in while others dial down or brands making more considered, premium media choices to address structural industry issues.”
Damon Reeve, CEO of The Ozone Project
“Overlap”
“Thinking of pure audience and potential, a viral TikTok as a general rule has an average volume of views of 250,000. The new episodes of Stranger Things Season 4 brought in over 1.15 billion hours viewed in total since Volume 1 premiered on 27 May. But what about the direct commercial gains regarding channel selection for product placement to where the latest drop from a hot artist will be featured? Unless you count second-screen activity, the ROI for leading with a TikTok for most typical consumer goods (beauty, gadgets, etc.) will most likely be stronger than a TV spot.
“On the other hand, does it build long term brand equity? Will someone remember a viral TikTok 10 years from now, or that SuperBowl spot that was so hilarious or pulled at your heartstrings so hard you needed an IV from the tears you cried? The bigger the brand, portfolio, and current need for marketing (new products hitting the market, rebranding, slow sales), the more channel dependency there is.”
Tara Nolan, chief global growth officer, BeenThereDoneThat
“Volatile”
Digital advertising looks to be under pressure. That is the evidence of Q2 22 earnings report from across the board. In fact, it is more complex than that.
In reality most Media and Social companies are lapping very difficult year on year trading comparatives. Q2 21 was very hot due to the original Covid bounce back recovery. Hence % growth is now hard to come by. Additionally, inflation concerns are weighing on consumers everywhere, which will affect many ad categories. And their agencies and platforms.
Alex DeGroote, TMT analyst and investor
“Complicated”
There are a number of factors to consider today, with regard to digital marketing investment, and across a broad range of topics – privacy, measurement, innovation, consumer behavior, transparency, and data.
The decision making process around where and how to make meaningful marketing investments is more complicated and complex than ever.
Donnie Williams, EVP and chief digital officer of Horizon Media
“Exciting”
“We’ve never had access to so many tools, platforms, creators, stories, as well as ways of delivering utility in tangible formats to consumers. There are a lot of unknowns dramatically impacting our industry at its core—privacy, data, legislation, tech adaption, etc.—uncovering new ways of working, as well as new ways of disrupting the status quo. This uncertainty is, certainly, quite scary… terrifying even.
“However, the one thing we know is that the only guarantee is change is coming, with or without you. Leaning into learning, testing, and evolving for not only survival, but for thriving, requires a mindset shift towards embracing the excitement of the unknown. Embrace being a student of excitement, and the education will come.”
Whitney Fishman, group client director, media innovation and consumer technology at Wavemaker US
“Transition”
“Digital advertising is transitioning from a swelling tide that raises all ships, to a slower moving stream with reduced levers to drive performance. With Google revenue growing only 13%, Meta revenues declining, automation peaking with Google’s Performance Max, and many digital channels hitting their peak, digital advertising, as a whole, is now reaching full maturity. This will create big opportunities for those ready and willing to shift their methods and models while the wide turning radius of legacy brands and agencies may mean they struggle to quickly transition into the new reality.”
Jeff Allen, COO, North America at Brainlabs
“Complex”
“I’d describe the current state of digital advertising right now as complex, given the amount of digital advertising avenues and opportunities.
From where we sit within the ever-evolving world of social media, we know firsthand how important it is that brands take a listening stance—and listen to consumers before creating an ad strategy as opposed to ‘optimizing’ a strategy for social.“