Ad Spend Slowdown: The Sequel (2023)

AdMonsters Wrapper: The weekly ad tech news wrap up
This Week
December 20, 2022
2023 Global Ad Spend Slowdown
Behavioral Targeting to Teens Is Not Cool
Microsoft’s EU Data Boundary Launches Jan. 1
Around the Water Cooler: Ad Spend Diversifying, CCBA Is a Sale, Beyond Web3 Buzz, and more...
New Day, Same Story: Global Ad Spend Slowdown Predicted for 2023
Of no surprise to anyone with a pulse, marketers will continue to tighten their belts in 2023. According to Dentsu’s biannual Global Ad Spend Forecast, global advertising spend will grow at a decreasing rate in 2023. Based on the 58 Markets examined in the study, the growth rate is expected to be 3.8% reaching $740.9 billion.

On the other hand, the news for 2024 is looking up. The ad spend growth rate is projected to increase to 4.8% because of the flourishing retail media business. In fact, IAB Lab research in Europe highlighted that marketers are strengthening their partnerships with retailers to assist with consumer reach and increased access to first-party data with third-party cookie depreciation looming.

Over half of the markets’ — 30 out of 58 —metrics were changed from the initial report in July. Macroeconomic challenges — such as the rise of inflation around costs for energy, food, fuel and interest rates — are expected to contribute to the ad spend slowdown.

The Global ad spend year-over-year growth rate has decreased for the past couple of years, but if all things go as planned next year, 2024 is set to bring good news. Peter Huijboom, Global CEO, Media, and Global Clients at Dentsu International suggests the industry needs to be realistic about how it moves forward this year.

“With the increased business focus on immediate gains to help ride out this temporary economic slowdown, we should expect to see more performance campaigns prioritized, which in turn will impact the channel mix. This is likely to be one of the main reasons we are seeing such strong growth in digital in the short term, taking it up to 57.1% of all spend in 2023,” added Huijboom.
Why This Matters
This news is not shocking. We have reported on the ad spend slowdown over the course of the year in the Wrapper. There was the long-rumored recession and massive media layoffs that signaled dark times ahead for the industry. Overall, ad agencies predict global ad spend to increase YOY, but the growth will be lower and much slower than originally predicted. And as we've reported a few times, retail media and CTV will continue to see significant increases.

While some downsizing is set to continue in 2023, it is imperative that publishers work to make themselves stand out amongst the crowd. You need to:

Gain understanding from your consumers to see how you can create new ventures to diversify your revenue and increase audience engagement.
  • Make your audience unique to sell properly to advertisers.
  • Sell them on new KPI metrics such as engagement or audience vs. reach.

Right now the odds are stacked against you. Spray-and-pray tactics are old news because of signal loss and changing consumer behaviors. Using the same tactics will leave you in the dust far behind your competitors.

“We need to be realistic on how this will impact the industry, the inventory, and the returns we should expect from available budgets,” said Hujiboom.

Publishers’ success — and the hopes of projected growth in 2024 — is dependent upon it.
Privacy Regulations are In, Behavioral Targeting to Teens Is Out…Potentially
A group of Senators advocated to lawmakers to move forward with a proposal to restrict companies from using teens’ data in ad targeting.

Senators Ed Markey (D-Massachusetts), Cynthia Lummis (R-Wyoming), Bill Cassidy (R-Louisiana), and Richard Blumenthal (D-Connecticut) wrote to the House urging them to pass this stipulation.

“As Congress works to finalize legislation before the end of this session, we write to request the inclusion of critical privacy protections for young online users that have already garnered bipartisan and bicameral support,” the Senators wrote. “Children and teens are uniquely vulnerable populations in today’s digital ecosystem, yet our privacy laws have failed to keep up with online harms.”

President Joe Biden announced a similar call to action in his State of The Union address earlier this year, but does that mean this will be taken more seriously?

The lawmakers asked for a ban on targeted advertising to anyone under the age of 17. They argued that targeted advertising is inherently manipulative to young consumers because they are unable to discern the difference between a piece of content and advertising. In addition, they urged the House to pass a law requiring companies to gain consent from teenagers ages 13-15 to acquire data that can be linked to them or their devices.
Why This Matters
U.S. lawmakers have been working overtime for the past couple of years to pass consumer privacy laws.

States such as California, Virginia, Colorado, Connecticut, and Utah found success with passing local legislation. Yet, the federal government has not achieved the same goal.

For example, the ADPPA and the proposed Children's and Teens’ Online Privacy Protection Act — both included stipulations of the proposed actions mentioned above — have not passed the checks and balances to be created into law. Will the outcome be different this time around?

Recent history warns that this fight will be a long uphill battle as some states believe that federal privacy regulations will override their own robust laws. For example, Senator Nancy Pelosi was a vocal opponent of the ADDPA because of its potential to supersede California’s existing privacy laws, which are very comprehensive and set to go into effect January 1, 2023 (are you ready?).

The outcome is uncertain, but we will keep a close eye on the results.
Phase 1 of Microsoft’s Data Boundary to Launch in EU Jan. 1
Microsoft announced that beginning January 1 European Union cloud customers will be able to store parts of their data in a data boundary.

Three phases of the process were recently announced. Phase 1 includes customer data and the next two phases will integrate logging data, service data, and other kinds of data into the boundary. It will apply to all of Microsoft’s core cloud services which encompasses Azure, Microsoft 365, Dynamics 365, and Power BI platform.

"As we dived deeper into this project, we learned that we needed to take a more phased approach," Julie Brill, Microsoft’s Chief Privacy Officer. "We are creating this solution to make our customers feel more confident and to be able to have clear conversations with their regulators on where their data is being processed as well as stored."
Why This Matters
In 2018, the EU passed GDPR which extended consumer data protection in Europe and had major implications for publishers globally. And big tech is shaking in their boots as more of their standard procedures are being restricted in Europe. The EU has worked to protect consumers' rights over the past couple of years, but that has not always been good for big tech.

For instance, Austria’s data sheriff announced that Google Analytics violates GDPR because it can potentially expose users' data to U.S. intelligence agencies. Since many publishers (and advertisers) use Analytics, Google’s violation impacts their data intelligence operations. But big G isn’t the only one to come under fire, the entire triopoly, including Meta and Amazon, have all been issued GDPR fines.

It is important that the U.S. ad tech ecosystem pays attention to international data privacy laws. In the digital age, data is distributed across so many locations that publishers have massive international audiences. Understanding global ad tech law is a major shield from litigation and massive fines.

In addition, global laws have influenced state and federal privacy legislation that is being pushed in the U.S. Five states — California, Colorado, Connecticut, Utah, and Virginia — have enacted comprehensive consumer data privacy laws that all look like they took a page out of GDPR’s playbook.
Around the Water Cooler: Ad Spend Diversifying, CCBA IS a Sale, Beyond Web3 Buzz, and more...
Just in case you missed these stories...

Ad Spend Slow But Diversifying For years now, ad spend has been concentrated among the duopoly. In fact, the triopoly — Google, Meta, and Amazon — maintain roughly 85% of all ad spend. But now, as big tech has been reporting slow ad revenue growth the last couple of quarters, small pubs and traditional media should be seeing some of those ad dollars. "It's good news for small publishers," says Magna's Luke Stillman, adding: "The concentration of the ad market paused for the first time in 2022." (MediaPost)

Cross-context Behavioral Advertising Is a ‘Sale’ CPRA goes into effect January 1, 2023, but what's a 'sale' and what's a 'share' couldn't be any more confusing than when CCPA first came to ad land. For all intents and purposes, think of it this way: ... "all “shares” are “sales,” but not all “sales” are “shares.” For example, if an industry participant engages in CCBA, it is both a “share” and a “sale.” But there are certain measurement and reporting functions that can support CCBA, or other forms of advertising such as contextual, that are likely “sales” but not “shares.” (IAPP)

There's a Plan for the Blue Bird's Sub Model After All With all of the Hullabaloo surrounding Elon Musk's Twitter takeover, how the entrepreneur planned to make up for advertisers jumping ship with a pay-for-verification model has been mostly fuzzy. Well, until now that is. “Twitter has been working on a plan that executives hope will make Blue profitable – forcing all Twitter users to opt into personalized ads in order to keep using the app.” If you're thinking that all sounds like one big privacy violation waiting to happen, you're probably right. Ad Tech Twitter thought so too. (Platformer)

Beyond the Web3 Buzz Have we reached peak Web3 yet? Maybe not but marketers are ready to leave all the Web3 terminology out of their marketing schemes as they all get kind of muddled. Besides, who of you knows the actual difference between crypto, NFTs, and the metaverse? That's what we thought. Anyway, marketers plan to still invest in this area, they're just making things more approachable. (Marketing Brew)
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Ah, ha, ha, ha, Stayin' Alive: Subscriptions for the W
For me, two takeaways from the incredibly tragic news this week:

If you're a reader, support the publications you want to continue to exist (either by subscribing or, if they're nonprofits, donating).

If you're running a small publication, do your best to remain independent.
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