Three trends disrupting the marketing and advertising industry in 2022

  • The economic uncertainty that has dominated news cycles in recent months is hitting the advertising industry.
  • We look at three main factors influencing the challenging advertising outlook for 2022.
  • Do you work in the advertising, media and marketing industry? Get business insights on the latest technology innovations, market trends, and your competitors through data-driven research.

By the end of 2021, the effects of the pandemic were waning, stock markets were booming, and digital acceleration was moving full speed ahead. Today, the future seems much less predictable. Rising inflation, the threat of a recession, the war in Ukraine and persistent supply chain challenges are reshaping the buying journey and, therefore, the way companies communicate with their consumers.

Tech giants, ad agencies and brands are all bracing for an industry-wide downturn, but its severity is unclear. Drawing insights and statistics from Insider Intelligence’s latest series of reports, “The Age of Uncertainty”, we explore three key factors influencing the advertising and marketing industry as it prepares for a H2 difficult.

1. Consumer spending fluctuates

Accelerating inflation is causing consumers to reevaluate their spending. Although we expect U.S. consumers to continue spending despite rising costs of goods – retail sales are expected to rise 6.4% this year, mostly due to inflation – a closer look at habits buying and shopping reveals a more nuanced story.

The erosion of purchasing power is forcing consumers to make tougher choices about what they buy and how they buy, especially when it comes to non-essentials and splurges. Spending on durable goods fell 3.2% as consumers retreated from big-ticket items like furniture. Moreover, to cover costs, consumers are increasingly drawing on savings. The savings rate edged up to 5.4% after falling to 5.2% in April, its lowest level in more than a decade.

Even Amazon has felt the impact of inflation. Although Prime Day 2022 was Amazon’s biggest ever – with total US online spending hitting $11.90 billion, up 8.5% year-over-year (YoY ) – the rise in prices has had a clear impact on consumers’ purchasing decisions. Shoppers turned to deals on essentials over last year’s most frivolous bestsellers: health and beauty and consumer electronics.

“These buying trends and insights will be a crucial signal for advertisers looking to adjust their spending. If consumer spending continues to falter over the next few months, it would suggest there is no market to sustain current levels of ad spend,” says Peter Newman, senior forecast analyst at Insider Intelligence.

2. The battle between advertisers and Big Tech continues

The turn of the economy has only worsened the difficult relationship between Big Tech and advertisers.

Big Tech’s ad outlook was already reeling from widespread privacy changes, such as Apple’s AppTrackingTransparency (ATT) policy. Under ATT, all applications distributed through the App Store must invite users to register and allow advertisers to follow them on other sites or applications. The rollout of ATT in April 2021 effectively eliminated the primary way publishers and advertisers track users on iOS and changed the way the mobile advertising industry approaches monetization and measurement.

As a result, advertisers no longer receive insights into off-platform actions, making it difficult to effectively target ads, track engagement, and measure conversions. In fact, Meta said the changes could cost it up to $10 billion in 2022, and its failure to create a reliable replacement has caused advertisers to flee Facebook. It’s also why Insider Intelligence predicts that Meta will experience its lowest annual ad revenue growth rate, growing just 12.4%.

Facebook isn’t the only platform to be hit hard. Snap said it would miss second-quarter revenue targets, dragging down stocks of other ad-dependent social media giants. Following this announcement, a domino effect of layoffs, hiring freezes and abandonment of new projects in the industry took place.

Now, more than a year after Apple’s privacy changes, companies are still struggling to develop advertising solutions, and revenue has dropped dramatically. Fortunately, advertisers using Facebook and Instagram are in a stronger bargaining position than ever. Meta will fight hard to keep its advertisers in the fold, but there’s no better time than now for marketers to spread their social budgets across other platforms, especially when TikTok hits the spot. door with new performance-based advertising products.

Besides social channels, there are still several proven and growing areas where advertising dollars can flow. US search ad spending will grow 14.5% this year to around $99 billion. More direct channels have also shown resilience. Email marketing remains a go-to tool for marketers to build personal relationships with consumers and increase the effectiveness of their campaigns at a time when other channels are plagued by uncertainty.

The consumer spending numbers will be a crucial signal for advertisers looking to adjust their spending.

3. Agencies and brands are shrinking

The woes of technology are only a small part of the general downturn in the advertising industry. The layoffs have affected several advertising agencies and major advertisers are beginning to control their spending.

With the US economy adding 390,000 jobs in May this year, the country’s employment outlook is generally positive. Yet at the same time, advertising and public relations lost another 2,400 jobs, according to the US Bureau of Labor Statistics. This is the first decline in employment in the advertising sector since November 2020, a sign that the boom caused by the pandemic is slowing.

“The Federal Reserve’s interest rate hike coincided with falling stock prices, particularly in the tech sector,” Newman says. “The cuts could include reduced advertising budgets. For now, most of the cuts appear to be on speculative forward-looking businesses or overcapacity due to the pandemic, not advertising budgets, which may have a direct link to revenue.

Other industries just transfer dollars. Automakers, for example, are investing more in customer experience and loyalty programs than in advertising, after seeing declining returns from TV placements in the first half of 2022. Microsoft also halted TV ad spend last month. , citing inflation and interest rates.

Upper funnel campaigns such as Connected Television (CTV), which had previously benefited from the pandemic-induced streaming trend, saw some of the biggest budget cuts. It comes, however, amid criticism of accuracy, with the recent discovery that 17% of ads on CTV devices are shown when TVs are off, costing advertisers $1 billion. If the shaky outlook for the economy continues, advertising channels that were already struggling, like CTV, will be hit the hardest as marketers look to use their tighter wallets on more reliable sources.


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