|Ad Tech Industry Experts Theorize the Cause of Ad Spend Slump|
|There have been varying opinions in the ad tech space about whether or not ad spend is increasing or decreasing. Whether a looming recession is coming and if that is the cause of why ad spend may be decreasing. A Vox article that argues for the side of an ad spend decrease offers four reasons why this might be the case.
Of course, the first is the recession. They harken back to the Great Recession of 2008, when ad spend dropped in double digits by the following year. Ad tech experts who subscribe to this argument believe that ad spend is in turmoil and will only get worse from here. The recession has affected the supply of major publishers' products and their ability to sell them. Thus, there is no reason to spend as much money on ad spend because there are fewer products available or fewer people buying the products.
The second reason stems from Big Tech companies' influences on the ad tech ecosystem. For example, Apple's Tracking Transparency (ATT) which completely upended digital ad tracking rules, or Tik Tok who, has taken the bulk of many people's ad revenue because of its popularity.
The third reason is a structural problem within the industry's ad buying. Over the last decade, the way people buy ads has dramatically changed. Vox argues that this "makes the ad business much more susceptible to quick reversals." In times before, ad advertising was bought well in advance, where they would buy a year worth of ad spend. Since ad buying is mostly digital, it gives buyers the chance to purchase ads with much more ease, giving buyers plenty of opportunities not to invest. "Now you buy it quarterly or monthly. And you buy Facebook and Google campaign by campaign — which can run for even shorter periods," says former Complex Networks CEO Rich Antoniello.
The fourth and final reason is much more optimistic. Kate Scott-Dawkins, the global director of business intelligence for GroupM, argues that ad spend is dropping because it is following such a big boom. She thinks that ad spend is normalizing back to its average rate.
|As you can see above, even if many industry experts agree that we are in an ad spend slump, many cannot agree on why. Ad tech professionals are probably tired of hearing that we are in "unprecedented times", but the cliched term still rings true.
Some are even arguing the complete opposite of Vox's theories. Last week, Magna asserted that U.S ad spend is shifting towards a positive trajectory. According to their stats, U.S. ad spend will reach $300 billion in ad spend for the first time. On the other hand, this year's high ad spend rates were due to three major events–Fifa World Cup, the Winter Olympics, and the midterm elections. The article admitted that there wouldn't be as many of these major events the following year. On top of the fact that their ad spend projections for the end of the year are still low. There was a 9.8% year-over growth for the year so far instead of the projected 12%.
Regardless of which side you stand on the argument, the industry must continue to prepare for the new standards set by these unprecedented times. Whether you try to diversify your revenue or cut back on ad spend, you cannot deny that national and global ad spend trends are in a new and strange era.
|Meta’s Ad Spend Decline May Mark a Grim Turn For the Publisher|
|Many people speculate whether the grim reaper is knocking on Meta’s door. A year ago, before Facebook evolved into Meta, the social media giant was sporting a market cap of $1 trillion. Currently, the company’s projections are looking much grimmer. Meta lost about two-thirds of its value after peaking in September 2021. This is the company’s lowest projection since 2019 and will mark its third quarter of double percentage losses.
It seems like users are jumping ship and therefore, so are advertisers. While Facebook has been a major player in social media for over a decade, natural selection is finally letting the media conglomerate sink from the top of the food chain.
Instagram has begun to take on Meta’s ad load as its revenue continues declining. Since Meta saw marketers pulling away their ad spend, Meta launched two new ad slots for Instagram. This will allow advertisers to run ads on the explore page and feeds and new post loop ads on Instagram reels.
Whether this will be Meta’s saving grace is still up for debate. As they recently announced that Meta would be closing one of its New York offices.
|Some have predicted that Meta might be on its downward spiral. Many have pointed out that Apple has been trying to monopolize Meta's ad business for quite some time. For example, industry experts suggested that Apple's ATT has cost Meta about $10 billion in revenue. While this feud has been years in the making, Apple has recently created jobs that seem to be an outright attack on Meta's advertising business.
There seem to be tons of factors that are affecting Meta's ad spend and business overall. However, what does this say for the ad tech industry if a major player like Meta is struggling with ad spend right now. Even though industry-wide projections assert that every company's ad spend is in decline, publishers and advertisers should prepare for this new trend unless you are Tik Tok.
While Meta has strategies that could help it turn the tide around, only time will tell how well it can bounce back or if this is the beginning of the end.
|Out of the Drought: Peacock's Paid Subscribers Increases by 2 Million|
|After a paid subscriber standstill during the first half of 2022, Peacock now has 15 million paid subscribers, meaning the streaming service added 2 million paid subscribers in the third quarter of 2022 alone. It is no surprise that content was the main factor driving this increase, according to NBCUniversal CEO Jeff Shell.
Peacock currently has next-day streaming of shows like Saturday Night Live, Law & Order, and One Chicago, all exclusive to the service. In an interview with CNBC, Shell also emphasized that the platform "has the best sports offering of any streaming service," with programs like Sunday Night Football, Premier League, WWE, and the upcoming FIFA World Cup.
"As of this quarter, we have 30 million active accounts watching us monthly," Shell revealed. "Of those 30 million, we're actually up over 15 million now paid... it's 70 percent more than we started the year with."
|This is interesting because, with this growth spurt, NBC ended its content-sharing deal with Hulu in September. We are curious to see how this paid subscriber increase continues to pan out.
When asked whether or not NBCUniversal would want to go from owning 33 percent of Hulu to buying the whole thing, Shell replied, "We, like a lot of other people, would want to own Hulu. It's not what we anticipate, but it's a valuable asset." Disney is preparing to buy out Comcast's stake in Hulu in 2024.
Will their subscribers continue to grow even without the Hulu content-sharing deal? Only time will tell.
With all this being said, we see that content is still king, which will not change any time soon. It reminds us of Sharon Harris's keynote address at our last Publisher Forum in Montreal, where she encouraged the audience to leverage their first-party data and reminded them that content is the key to revenue. Publishers, as long as you publish compelling premiere content, the revenue will continue.
We predict that Peacock will continue to expand its catalog of exclusive content and offerings, thus keeping the paid subscriber revenue coming.
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