Let’s Warc away from meaningless comparisons
Opinion
Warc forecasts that Meta will reach a dizzying $155bn of global ad revenue in 2024. Fine, but please don’t then compare it to linear TV as though that means something.
Across Facebook, Instagram and WhatsApp (which I didn’t realise ran any advertising), Meta is sweeping up vast amounts of ad revenue. It’s an eye-catching story of phenomenal amounts of money. You can’t but marvel at the growth.
Fair enough.
However, Warc has then written an article setting Meta’s collective ad revenue against a global estimate of linear TV (excluding TV’s growing on-demand revenues) and it has caught a fair bit of attention. The headline is LinkedIn crack: “Meta on track to surpass all linear TV spend.”
Apples to surpass pears
So here I am, unhappily having to question the respected people at Warc and their choice of comparison. But it does offer the opportunity to unpack why the comparison is largely meaningless and hopefully persuade people to refrain from making similar comparisons in the future.
Let’s start with the glaring omission. On-demand accounts for roughly 25% of TV spot ad revenues in the UK. To exclude this, especially when adding together all of Meta’s different platforms, seems like Warc is trying its hardest to find a story.
So Warc is making an unhelpful apples-and-pears comparison. But there’s more…
SMETA
The other worrying aspect of Warc’s comparison is that the make-up of advertisers that fund Meta’s platforms is radically different from those that spend on TV — something discussed in this, er, Warc podcast earlier in the year.
Meta’s platforms are heavily dependent on the long tail of SMEs for ad investment, whereas TV adspend is driven by larger businesses — the types of business that work with media and creative agencies and likely account for 99% of advertisers that read Warc.
I’m not saying that SME spend isn’t advertising or isn’t a valuable revenue stream — Meta has done an incredible job opening up this market. But without the context, it looks binary — like advertisers in general are investing more in Meta than they are in TV or taking spend away from TV to give to Meta.
And when this is published by a leading media news provider whose readers are, in the main, medium-to-large advertisers or media businesses that work on behalf of these advertisers, it paints a false and damaging picture.
The gulf between Meta and TV
To illustrate the vast difference between Meta and TV’s customers, let’s compare the Advertising Association and Warc’s “all” adspend data with the media investment of the Profit Ability 2 data bank. Profit Ability 2 was based on 141 brands that run marketing mix modelling analysis through EssenceMediacom, Ebiquity, Gain Theory, Mindshare and Wavemaker UK. It’s clear that we’re looking at two very distinct sets of advertisers:
In the dataset of bigger advertisers, TV (linear and broadcaster VOD) accounts for 44% of spend. In the AA/Warc dataset of all advertisers, TV accounts for just 15%. For social media, it’s the opposite — accounting for 13% of spend among larger advertisers and 22% among all advertisers.
You could argue that the Profit Ability 2 dataset is biased towards larger businesses (as they spend enough on media to justify MMM analysis) and you’d be right, but it provides some useful context to show that advertisers aren’t just pulling all their investment out of TV and piling it into Meta’s platforms.
All in all, this analysis from Warc is akin to comparing the growth of shopping on Amazon to in-store sales of supermarkets — it’s a loaded comparison. They’re selling different things, serving different customer needs and to exclude the rapidly evolving online shopping part of their businesses creates a false picture of decline.
Maybe it’s just the nature of journalism, but Warc’s approach with this data feels like clickbait – and so it has proved, judging by my LinkedIn feed. It’s an odd and damaging approach from an organisation that’s better known for valuable insights.
Matt Hill is director of research and planning at Thinkbox
Advertising generates profit, but not all media channels are equal