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Alphabet, Meta and Amazon to take half of $1 trillion ad market in 2025

The global ad market has largely weathered the impact of COVID-19, so far, and is on course to reach a value of US$1 trillion in 2025, with more than half of this money paid to just three companies – Alphabet, Meta and Amazon – according to the latest Global Advertising Trends report from WARC Data.

Global Advertising Trends: Where is the money going?

• Following on from a meteoric 23.8% rise to a total of US$771 billion this year – the strongest growth in WARC's four decades of market monitoring – advertising investment is forecast to rise by a further 12.5% and 8.3% in 2022 and 2023 respectively, with e-commerce platforms set to lead this growth.
• A survey of 1,350+ marketing practitioners, carried out recently by WARC (before the emergence of the Omicron variant of COVID-19), shows that two in three marketers already committing budgets to Amazon are intending to increase that spend, while heightened advertiser demand is pushing up the average cost-per-click. 
  
• Two thirds of advertising professionals are planning to up spend on TikTok next year, while YouTube (61% of surveyed practitioners), Instagram (60%) and Google (57%) are also set to benefit from higher spend in 2022.
• All product sectors are projected to top pre-COVID investment next year, while most sectors were able to record a full recovery this year. Notable exceptions include transport & tourism, which led growth with an absolute increase of $12.5bn this year but this is still almost $2.9bn down on pre-pandemic spending levels.

WARC says 

“Despite potential headwinds, market data show that we are currently witnessing a boom in advertising trade like none seen before, led by increased demand for retail media and ancillary publishers such as Google and Instagram, which is now the world’s largest social platform. Our projections show that this trend is set to continue” – James McDonald, Director of Data, Intelligence & Forecasting, WARC.

Details of trends by media, format and product category can be viewed here.

Gamers more likely to trust influencer recommendations

Gaming fans are more likely to trust influencer recommendations, according to research from YouGov.

Globally, 59% of adults who follow influencers say they trust the brand recommendations and advice given by influencers and this rises even higher for those who follow gaming influencers (66%).

Why it matters

Investment in influencer marketing is set to grow strongly in 2022 and gaming creators are proving popular as they can connect with hard-to-reach and diverse audiences. The pandemic has also accelerated a trend towards social gaming and influencers can play a key role with this – YouGov finds that fans enjoy the humour and personality of gaming influencers more than their gaming skills. This research suggests that gaming personalities can offer more potential benefits for brands compared to the average influencer.

Takeaways

• In 13 of the 17 markets surveyed, gaming fans are more trusting of influencers than other fans.
• Adults who follow gaming influencers are most trusting of influencer recommendations in India (91% say they trust), the United Arab Emirates (85%), Indonesia (78%), Singapore (77%) and the United States (76%).

Sourced from YouGov, WARC Data

Platforms find room to manoeuvre around Apple's tracking block

Working flat out, platforms like Facebook and Snapchat that were hit hard by Apple’s Tracking Transparency policy are rebuilding their measurement infrastructure around the little room for manoeuvre available to them.

As reported by the FT, these companies have been allowed to continue sharing user-level information from iPhones on the proviso that it is anonymous and aggregated rather than linked to individual IDs.

Why it matters

Apple’s Tracking Transparency weighed on the platforms that derived a lot of revenue from their links to affluent iOS users, but a loophole suggests they have found ways to rebuild around signals rather than individual IDs.

What’s happening

• Both companies are now telling investors that they are making up for hindrances to performance measurement with new offers that involve sharing anonymous data in aggregate.
• It all hinges on Apple’s ban on “uniquely identifying” a device but finds a loophole in the observation of “signals”. This, says the paper, has led to the creation of cohort-based methodologies that echo a technology Google is working on to replace the third-party cookie, Federated Learning of Cohorts, or FLoCs.
• While Apple hasn’t explicitly assented to this technique, the loophole – which is based on the need for advertisers to know things like screen size and language – suggests there is a way around the block.

Sourced from the FT, WARC

Ubisoft's in-game NFTs bring interoperable virtual goods closer to reality

The French video game publisher Ubisoft that makes Assassin’s Creed and Far Cry has moved beyond exploratory investments into crypto startups by allowing PC players of Tom Clancy’s Ghost Recon Breakpoint to buy in-game non-fungible tokens (NFTs), providing a mainstream use case for the technology.

Users will be able to buy in-game items on Ubisoft Quartz, the buying platform, through which they can have their proof of ownership ‘tokenized’ on the Tezos blockchain.

Why it matters

Outside of crypto’s esoteric hype circles, the use cases for NFTs are simply not very compelling for most people. Their inclusion in mainstream video games will bring them to many more people. It is also a development in which a token might actually be useful, given an in-game item is impossible to copy and paste in the way image files are.

What to know

• An NFT, or non-fungible token, is a way of proving ownership of a demonstrably scarce digital, or even physical, asset on a distributed ledger known as a blockchain. Here’s an explainer, if needed.
• Players of Ubisoft’s game will be able to buy new clothes or weapons for their characters and be able to show they own them. While this is something of a gimmick as those items remain useful only in one game, it points to a future where items like clothing will be transferable across different apps on the metaverse – an internet-like network of virtual worlds.
• The Tezos blockchain on which these in-game NFTs will be minted is also worth thinking about. The best-known blockchains like Ethereum 1.0 and Bitcoin are an older generation that operate on an ecologically unfriendly, power-intensive proof of work basis. A computer has to do a lot of work, or lots of complex calculations in order to add to the network.
• Proof of stake blockchains, like Tezos, are a newer generation that realised that their predecessors had a limit on their scalability, and instead use a network of ‘validators’ – senior users for want of a better term – who will stake their own cryptocurrency in exchange for the ability to validate a transaction and receive a reward should they win. 
• This is far less power-intensive, and brands considering entering the space must consider this aspect.

Quote

“Energy-efficiency is a key requirement to propel blockchain technology into a future where it can be widely used by millions of players,” notes Nicolas Pouard, VP strategic innovation lab, Ubisoft, in a statement.

Sourced from Decrypt, Coinbase, WARC

The pressures forcing Alibaba's structural changes

Alibaba, the China-headquartered internet giant, has announced that it will restructure into two e-commerce business units – international digital commerce and China digital commerce – in a move that the firm hopes will set it up to better deal with new regulatory pressures and greater competition as the company matures.

Why it matters

Alibaba is a huge company, listed on both the New York Stock Exchange and the Stock Exchange of Hong Kong. Different investors worry about different things, but both sets now worry about Chinese regulators’ further moves after clamping down on the company’s size and breaking down its walled garden by forcing interoperability with other providers, especially in finance and payments.

The bigger issue, however, is growth. Not too long ago, Chinese economic momentum was practically guaranteed, and the company is now adapting to its own competition-inducing maturity – even upstarts can become the incumbent.

There is plenty of headroom to grow around the world, the company believes, but that is better accessed separately.

International aims

• In order to become more agile – and to answer the very different kinds of questions asked of it inside and outside China – Alibaba is reshaping to find growth in globalisation, according to a company release.
• The international unit will comprise some of its largest outward-facing brands like AliExpress, which enjoys significant business in Europe and LatAm, and Lazada, which is a major player in Southeast Asian e-commerce.

Chinese operations

• As ever, the China unit will focus on the two core marketplaces, Tmall (big brands) and Taobao (big and small merchants), in addition to Taocaicai (community-level e-commerce) and Lingshoutong (back-end retail platform for very small retailers).

Key quote

The move to globalisation “helps Alibaba to get new traffic volume externally [and] seek new growth potential while China has been increasing supervision,” Danny Law, an analyst at Guotai Junan tells Reuters.

Sourced from Alibaba, SCMP, Reuters

New consumer behaviours having greatest impact on 2022 marketing strategy

Almost two years on from the start of the pandemic and changing consumer behaviours are still presenting a challenge for marketers, according to WARC's global survey of marketing executives.

Why it matters

COVID-19 caused a surge of audience activity in 2020 and this caused significant disruption to advertising investment. While stay-at-home orders have since eased for many consumers, to what extent pandemic behaviours will continue in 2022 and beyond remains to be seen. Brands will also have to tackle these changes alongside growing economic, social and environmental concerns from consumers.

Takeaways

• Among brand owners, nearly three-quarters (73%) say post-pandemic changes in consumer behaviour will have a significant impact on their marketing strategy in 2022.
• An economic recession and greater consumer concern for the environment are also expected to be significant priorities for brands next year.

WARC's 2022 Marketer's Toolkit consists of six reports designed to help marketers make more effective decisions in 2022. Combining big-picture themes, key investment data and decision-making tools, it will help you adapt at speed to disruption. Find out more here.

Sourced from WARC Data

Sustainable media isn’t a thing for consumers – yet

Within the next year, three in five people could start to boycott brands that don’t act on climate change, new research says, but the effect of media delivery and consumption of advertising on carbon emissions has so far largely escaped public attention. 

Key findings

A global study covering 24,000 people from 19 countries, by media company dentsu international and Microsoft Advertising, looked at consumer awareness and engagement with issues linked to sustainable consumption and media use. Some of the findings are as follows:

• 91% want brands to demonstrate they are making positive choices about the planet and environment more explicitly.
• More than three quarters (77%) of people globally say that, within five years, they only want to be spending money with brands who are practising green and sustainable advertising.
• 45% of boomers believe consuming ads to be negative for the environment, compared with 71% of Gen Z and 73% of millennials. 
• Just 17% perceive watching TV as contributing to carbon emissions, while 15% of people think browsing the web contributes negatively to climate change; 14% say the same about gaming and 11% in regard to streaming music.

Why it matters

The key to ensuring meaningful progress, the The Rise of Sustainable Media study argues, is to bring the entire media ecosystem together to ensure accurate and transparent measurement and reporting of the real carbon impact of media content throughout the lifecycle of a campaign. That will provide businesses a clear carbon-positive choice for media advertising within their supply chain.

Sourced from dentsu international, Microsoft Advertising

Adidas and the new wave of first-party data plays in the digital landscape

With the ‘Creators Club’ membership programme to drive participation and connection with the brand and bring in all-important first-party data, the German sportswear and fashion giant Adidas typifies the new wave of methods being adopted to reduce the growing cost of reaching customers online.

Why it matters

Following strict privacy changes, like Apple’s App Tracking Transparency policy – which saw just 26% of global users and 16% of lucrative US users allow advertisers to track them – in addition to the pandemic-induced shift online, reaching people online is getting harder and more expensive.

One option is to go for brand building through traditional means like billboards, TV, and sponsorship around the kinds of content and events that your target audience tends toward. The other is to build your own first-party data set rather than expecting others to tell you, which is what we have seen from Adidas.

What’s happening

The rush to e-commerce meant that doing business online was far from a silver bullet; it became, instead, table stakes. Now, meeting those stakes and having the data that can tell you who to speak to and whether it’s working is much harder to find.

Conversions on Facebook and Instagram have been hit particularly hard, according to industry insiders, dropping by as much as 30% in Q3. For the luxury segment, the kinds of higher-income individuals that favour Apple devices mean that online advertising has become particularly difficult.

It comes at a bleak and difficult time for companies that are watching the costs of their tangible operations – making and moving goods – increasing.

Bottom line

You can’t rely on one ad company anymore, be that Meta or Alphabet. It is increasingly crucial to build your own data and to learn how to use it to inform your ads across channels.

Sourced from WARC, Business of Fashion

Why brands and media owners should invest in content that reflects diversity

With data from the 2020 US Census showing less than 60% of the country’s population now identifies as “white, non-Hispanic,” media owners need to create content that reflects diverse audiences, and brands need to make media buys that support that content. 

Why it matters

The 2020 US Census data reaffirms rapid demographic change in the US, but many brands and media companies need to realise the business imperative to connect with an ever more diverse array of consumers.

Takeaways

• Progress is uneven; a Nielsen report from December 2020 found that people of diverse groups were more likely to be found on streaming platforms than in broadcast or cable TV. 
• Brand investment is lacking is Spanish-language TV, and another recent report from Nielsen and Univision actually showed it was declining.
• That report also showed that CPG (consumer packaged goods) brands who invested heavily in Spanish language networks had a 70% higher return on ad spend than brands with low investment.
• One promising recent development is the commitment by some companies to invest a dedicated percentage of ad spend into diverse and minority-owned media, but lack of inventory can hold back these efforts. 

The big idea

Better addressing inequities in the marketing and media ecosystems is about overwhelming demographic shifts, in addition to doing the right thing.

E-commerce advertising growth to overtake search and social

Excluding cinema, which was forced to shutter in 2020 but rebounded strongly, it was the largest online formats – search and social media – which saw the strongest advertising growth in 2021, according to WARC Data's latest Global Advertising Trends report.

Why it matters

COVID caused a severe disruption to advertising budgets but strong online growth in 2021 drove the total ad market to its strongest rise (+23.8%) in WARC’s four decades of monitoring.

E-commerce advertising grew rapidly during 2020 and this shows no signs of slowing. It is set to lead growth in the next two years and the market should be worth $137bn in 2023 – double the level in 2020.

WARC Data's latest report provides advertising investment forecasts for 2022 and 2023, additional insights include:

• Most product categories had a full advertising recovery this year but there are notable exceptions, like transport & tourism.
• Shortfalls of varying degrees were also recorded among a number of CPG sectors this year, including toiletries and cosmetics, tobacco, food and alcoholic drinks.
• Post-pandemic changes in consumer behaviour and data privacy will be the most significant challenges for marketers in 2022.

The full report is available to WARC Data clients while a free sample is available here.

Sourced from WARC Data

India's ad industry recovers, but it's a mixed picture

India’s traditional media sectors are showing signs of recovery, but new filings from Facebook and Google highlight the inroads the tech giants have been making into the advertising industry – and it’s a trend unlikely to be reversed.

What’s happening

• Print ad volume was up 93% quarter-on-quarter in the July-September period, according to India’s ad analysis powerhouse AdEx India, and 37% up on the same period a year ago. 
• The OOH (out-of-home) industry reports a renewal of outdoor campaigns as the number of vaccinations grow and traffic returns to the roads during the festival season.
• October saw the highest TV advertising volumes in 2021, with regional language channels performing especially well, IndianTelevision.com notes.
• The combined gross advertising revenue of Facebook India and Google India rose 29% for the fiscal year to March 2021; experts tell Exchange4Media that most of this growth has come at the expense of print, radio and outdoor.

Why it matters

Those same experts point to the scale and reach of the duopoly, the detailed level of consumer information they gather – via search, mail, social media, instant messages, video – and the constant evolution of new products for advertisers.

Sourced from IndianTelevision.com, Exchange4Media

NBA taps attention metric for game ads

The National Basketball Association (NBA) is using the “attention unit” (AU) as its main optimisation metric and claims an increased tune-in rate for live games from high-attention ad slots.

What is an attention unit? 

It’s an attention-based ad currency developed by attention metric start-up Adelaide, which uses a mix of algorithms, depending on the channel, to analyse which signals are likeliest predictors of quality and attention, and score them accordingly. In the context of the web, signals might include the position of a media placement, the duration of exposure, and the amount of clutter on a page. On CTV (connected TV), however, these become the ad pod, the genre and the time of day when an ad runs.

What it can deliver

After identifying which of the placements it was using were high- or low-attention, the NBA shifted money towards high-attention ones, and reported a 36% higher tune-in rate for live games compared to when it bought against placements with a lower AU score, Ad Exchanger reports.

Why it matters

According to Larisa Johnson, VP of paid and CRM media at the NBA, the use of the attention unit “helped justify that the cost of certain premium placements really are worth the price tag”. 

Sourced from AdExchanger [Image: NBA]

TikTok maker ByteDance ramps up e-commerce expansion plans as algorithm glimpsed

ByteDance is launching an e-commerce platform, Fanno, across Europe using aggressive cash-intensive techniques to do it, adding another string to the firm’s bow separate from the core business and illuminating ByteDance’s growth philosophy.

E-commerce, a business area that core app TikTok is also involved in, is the focus of Fanno as it arrives in France, Germany, Italy, Spain, and the UK, SCMP reports.

Why it matters

Landing on app stores before Black Friday, the expansion of the company into cannibalising its own interests fits with the likely need to spin TikTok out into a separate company in order to balance the demands it faces from Beijing and from Washington D.C.

What’s going on

• Speaking to the South China Morning Post, a company representative explained, “We’re at an early phase of exploring this new e-commerce proposition, aiming to provide cost-effective products to global users”.
• Its introductory tactic lets users choose products discounted to £0.01, free shipping with no minimum, or a discount coupon.

Inside the algorithm

Meanwhile, the New York Times has obtained a memo sent to TikTok’s nontechnical staff to explain how its algorithm works.

Given an ultimate goal of adding daily users, TikTok focusses on a combination of retention and time spent.

However, the document also has details on how individual videos are ranked: a combination of likes, comments, and play time. Little of this will be particularly surprising to people, especially given the way TikTok’s sheer popularity and the speed at which it has reached a billion users would suggest some kind of dark magic.

Instead, it would seem that TikTok’s real difference has been in dropping the pretence that social media is for connection rather than for entertainment. Giving people what they want, and easy ways to join in with memes and trends is at the heart of the viral app. 

Sourced from SCMP, TikTok

US Hispanic culture is now mainstream, and that should shift brand strategy

With the Hispanic market in the US growing by 23% in ten years, according to new US Census data, this one-time minority market is now part of mainstream culture, and that’s a turning point for both the demographic, and brands.

Why it matters

Brands need to reach this growing, young demographic in meaningful and dignified ways; increasingly that means tapping into the market’s mainstream bonafides.

Takeaways

• The Hispanic market is no longer just a piece of the US market: it is the market, with $1.7 trillion in spending power.
• People of Mexican origin are the largest segment of the US Hispanic population (62%), followed by Puerto Ricans, but the fastest-growing Latino populations are those with origins in Venezuela, Guatemala, and Honduras.
• The “Hispanic” market is many different nuanced cultures — intra-connected and with a shared sense of community.
• As Hispanic culture becomes mainstream, some brands are moving away from Hispanic-only campaigns in favor of mainstream ads infused with culturally relevant Latino details.

The big idea 

A sure sign of the mainstreaming of Hispanic culture and marketing is that fewer Hispanic consumers care about brands highlighting Hispanic Heritage Month than do care.

77% of marketers to spend more on online video in 2022

Digital budgets have grown strongly following COVID-19 disruption and marketer enthusiasm for online channels shows no sign of slowing, according to a WARC survey of more than 1,500 practitioners.

Key stats

Online video and social media lead the pack, with 77% and 68% of marketers, respectively, expecting to increase their investment in 2022. Newer channels like podcasts are also attracting higher spend, with 54% reporting a planned increase.

Investment in legacy channels, though, is expected to be largely flat as the pandemic rebound eases – around two in five marketers expect their OOH, linear TV and broadcast radio spend to stay the same in 2022.

WARC Data's latest Global Advertising Trends report provides advertising spend forecasts for 2022 and 2023. The full report is available to WARC Data clients while a free sample is available here.

Sourced from WARC