Digital promoting growth tapered off last yr after breaking records in 2021 amid the pandemic rebound, in line with the most recent annual report from the Interactive Advertising Bureau (IAB) and PwC. While gains for digital remained within the double digits in 2022, pushing the sector past $200 billion in revenue for the primary time, a raft of ongoing challenges related to data privacy, measurement, geopolitical strife and economic uncertainty have reset the playing field, with incumbent platforms more vulnerable than ever.
“Looking ahead, there is unquestionably still growth available, but it’ll be harder to realize and certain lower than we now have develop into accustomed to,” said IAB CEO David Cohen in a press release attached to the report.
The research is the most recent to point that digital marketing is popping a page following years on a blazing upward trajectory that looked as if it would reach its zenith earlier within the pandemic, when people spent more time indoors glued to their screens. A separate report from PQ Media recently found that the common consumer’s time spent with media reverted closer to pre-pandemic levels last yr after skyrocketing in 2020, while once-hot categories like mobile are forecast to see their engagement growth rate shrink as smartphone adoption nears saturation.
Some of 2022’s most vital headwinds, like inflation, could ultimately be viewed as short-term for marketers. But there are clear signs that recent regulations, including an outpouring of state-level privacy laws, and policy changes from firms like Apple are shifting the ability balance of selling for the long haul and in a way that will require a considerable revaluation of strategy. Much of 2022’s growth stemmed from a “diversification into recent ad formats,” in line with representatives from the IAB.
“For the primary time since 2016, we’re seeing a decline in market share for the highest 10 ad revenue-generating firms,” said Jack Koch, senior vp of research and insights on the IAB, during a livestreamed webinar discussing the 2022 findings Wednesday afternoon.
An uneven picture
Breaking out the IAB numbers, total web promoting revenues were up 10.8% year-on-year in 2022 to achieve $209.7 billion. Those are relatively healthy figures, though they pale as compared to 2021’s take, when growth was greater than 35% YoY. Much of the momentum also weighted toward the primary half of 2022, before the economic fallout from the Ukraine war and soaring inflation roiled the markets.
Growth was 21.1% versus the year-ago period in the primary quarter, before dropping to 11.8% YoY growth in Q2, 8.4% YoY growth in Q3 and 4.4% YoY growth in Q4. While researchers were careful to emphasise that the ad industry overall showed resilience in light of myriad obstacles, a pronounced slide within the back half was noteworthy, particularly given the weaknesses around the vacation window.
“[Q4] tends to be considered one of the highest-growth quarters attributable to holiday spend, political spend and other aspects,” said CJ Bangah, a principal in PwC’s marketing strategy and operations practice, throughout the presentation. “This yr really was an outlier.”
As the digital landscape stands at some extent of transition, winners and losers have gotten more apparent. Programmatic held regular in 2022, up 10.5% YoY to a $109.4 billion total. Non-programmatic digital formats got a lift attributable to the seek for cookie alternatives.
Mobile ad revenues climbed 14% YoY to realize a record high of $154.1 billion in 2022, bolstered by podcasts and 5G wireless technology. However, social media — once in mobile’s vanguard — unsurprisingly ended up victim to policy changes implemented by Apple two years ago that make targeting ads at mobile users tougher.
Growth for the social media segment in 2022 was at the bottom levels seen up to now decade, in line with Koch, with gains plateauing within the second half. Firms like Meta Platforms and Snap Inc. are betting on short-form video to hook more users and types, following TikTok’s lead, however the format tends to be less well-monetized than traditional feeds.
Retail media can be stealing more dollars away from social as it guarantees a clearer view into performance and to deal with the signal loss stemming from cookie deprecation. Gauging retail media’s true impact on the ecosystem is an uphill battle, researchers acknowledged, as many retailers don’t disclose the revenue of their networks.
Despite retail media’s strengths, it’s also experienced sharper growing pains and struggles with differentiation. Gap in March pumped the brakes on its retail media network offering, which was only available in the market for a yr.
“We definitely see folks attempting to enter it and attempting to be effective and in addition learning from their very own mistakes along the best way,” said Bangah of retail media.
AI on the mind
Revenues for search promoting, considered one of digital’s more mature channels, were up 7.8% YoY in 2022, but were increasingly “cannibalized” by digital video, the IAB and PwC revealed. Digital video revenues landed around $47.1 billion on the yr, while connected TV (CTV) was positioned as one other potential benefactor of the shift away from third-party cookies in 2023.
“We proceed to see very healthy growth in digital video and audio channels [and] spending flow into media like CTV and podcasts,” said the IAB’s Koch.
Search has received renewed optimism of late as leading platforms like Google and Microsoft upgrade their serps with generative artificial intelligence (AI), which has quickly emerged as the buzziest tech word of 2023. Experts cautioned that the monetization potential of AI-powered search and other formats might be a ways off.
“It’s essential to recollect, every yr for the past decade there’s a recent technology set to revolutionize the promoting ecosystem,” said Luke Stillman, senior vp of worldwide intelligence at Magna Global, on the decision.
Stillman, who presented category-specific findings from Magna to enhance the IAB research, pointed to other fads like blockchain, augmented and virtual reality and the metaverse as points of comparison with generative AI.
“All of those are real and so they are happening, but there’s a giant gap between the hype cycle and budgets moving years later,” Stillman added. “Most brands are, by nature, conservative.”
Read the complete article here
