Several advertising agencies and analysts say marketing expenditures are on the rise, which may imply a change in the way businesses acquire customers.
Ecommerce retailers and direct-to-consumer brands have come to rely on advertising that targets shopper behavior to drive customer acquisition.
This advertising often took the form of Facebook and Instagram ads. The Meta ads channel became so powerful that some sellers placed all their budgets there. And why not? A marketing team should double down on a channel producing an exceptional return on advertising spend. This was the case with the Meta Ads platform.
However, a change in Apple’s software may prompt a wholesale shift in digital marketing.
Apple Crushes Facebook
When it allowed iPhone users in May 2021 to opt out of disclosing the apps they visit, Apple impaired Meta’s behavioral tracking capabilities. “Crushed” is the word Nathan Baugh, a freelance writer, used in an August 18, 2022, tweet describing Apple’s move to grow advertising revenue.
“Apple surpassed $3.5B in annual revenue from its ad network,” Baugh wrote, “But it crushed FB, Snap, and 1000s of small businesses in the process. How? By nailing the narrative that big tech threatens consumer privacy.”
Baugh’s tweet eventually points you to a Young Money article, “Apple’s Diabolical Plan to Control the Ads.” The article details a theory of how Apple is muscling its way into the ad space.
Perhaps Apple’s collective leadership cares about individual privacy. So its move could have been altruistic.
Regardless of the motive, Meta and other platforms, such as Snapchat, have experienced revenue declines, which might indicate they are marginally less effective.
On August 16, 2022, Shopify announced Collabs, a two-sided influencer marketing platform to connect ecommerce brands with social media influencers.
Influencers can earn money promoting products for ecommerce businesses using Shopify. The businesses receive access to a new marketing channel.
Collabs helps Shopify enter the creator space. Shopify is almost certainly looking to find ways to grow its own revenue and shareholder value.
There’s no better example in the ecommerce industry of an emerging advertising channel than Amazon. In August 2022, Amazon’s ad revenue reportedly passed $31 billion, making it the third-largest digital ad platform, behind Google and Meta.
Amazon’s core promotional product is retail media advertising. This too is an alternative to social media and Google search for ecommerce brands or, for that matter, consumer packaged goods generally.
A February 2022 CMO Survey (in collaboration with Duke University and Deloitte) and more than a few large ad agencies have all predicted growth in marketing expenditures in 2022 and 2023.
On the surface, this is not unusual. Marketing investments have generally been growing for decades. But some of that growth could be attributable to Apple’s iOS 14-induced tracking signal loss and the need to find alternatives to behavioral targeting.
The CMO Survey occurs twice annually, querying roughly 2,500 marketers at leading for-profit U.S. companies. Respondents in February 2022 projected growth in 2022 and 2023, indicating the highest sustained marketing spend in years.
If this were just growth in digital channels, we once again might think it’s not unusual. But even traditional media — newspapers, radio, television, direct mail — is enjoying growth, according to the survey. Some of these have not experienced increases in a couple of decades.
One could argue that it is more of a return to pre-Covid levels than real growth, but it doesn’t explain the interest in traditional media. What may explain the growth, however, is less effective behavioral targeting.