Several ad agencies and analysts say marketing spend is on the rise, which may imply a change in the way businesses acquire customers.
E-commerce retailers and direct-to-consumer brands have come to rely on advertising that targets buyer behavior to drive customer acquisition.
This publicity often took the form of Facebook and Instagram ads. The Meta ads channel has become so powerful that some sellers have put all their budgets there. And why not? A marketing team needs to double down on a channel that delivers exceptional advertising ROI. This was the case with the Meta Ads platform.
However, a change in Apple’s software can lead to a sea change in digital marketing.
Apple crushes Facebook
When it allowed iPhone users in May 2021 to opt out of disclosing which apps they visit, Apple tampered with Meta’s behavioral tracking capabilities. “Crushed” is the word Nathan Baugh, a freelance writer, used in an August 18, 2022 tweet describing Apple’s decision to increase ad revenue.
“Apple surpassed $3.5 billion in annual ad network revenue,” Baugh wrote, “But it crushed FB, Snap, and thousands of small businesses in the process. How? By nailing the narrative that big tech threatens consumer privacy.
Baugh’s tweet finally points you to a Young Money article, “Apple’s Diabolical Plan to Control Ads.” The article details a theory on how Apple is forging its way into the advertising space.
Perhaps the collective management of Apple cares about the privacy of individuals. His gesture could therefore have been altruistic.
Whatever the reason, Meta and other platforms, such as Snapchat, have seen a drop in revenue, which could indicate that they are slightly less efficient.
Advertising opportunities
On August 16, 2022, Shopify announced Collabs, a two-way influencer marketing platform to connect e-commerce brands with social media influencers.
Shopify has announced a new influencer marketing service.
Influencers can earn money by promoting products for e-commerce businesses using Shopify. Businesses have access to a new marketing channel.
Collabs helps Shopify enter the creator space. Shopify is almost certainly looking to find ways to increase its own revenue and shareholder value.
There is no better example in the e-commerce industry of an emerging advertising channel than Amazon. In August 2022, Amazon’s advertising revenue would have exceeded $31 billion, making it the third largest digital advertising platform, behind Google and Meta.
Amazon’s primary promotional product is retail media advertising. It’s also an alternative to social media and Google search for e-commerce brands or, for that matter, consumer packaged goods in general.
Expenses
A February 2022 CMO survey (in conjunction with Gartner) and several major advertising agencies all predicted growth in marketing spend in 2022 and 2023.
On the surface, this is not unusual. Marketing investments have generally been increasing for decades. But some of that growth could be attributed to Apple’s iOS 14-induced loss of tracking signal and the need to find alternatives to behavioral targeting.
The CMO survey takes place twice a year and polls approximately 2,500 marketers at top for-profit US companies. Respondents in February 2022 predicted growth in 2022 and 2023, indicating the highest sustained marketing spend in years.
If it were just the growth of digital channels, we might again think this is not unusual. But even traditional media – newspapers, radio, television, direct mail – are seeing growth, according to the survey. Some of these channels have not seen growth for a few decades.
One could argue, as Gartner does, that this is more of a return to pre-Covid levels than real growth, but that doesn’t explain the interest in traditional media. However, what may explain the growth is less effective behavioral targeting.
