Snap is down…bad. Blaming the deterioration of the macro-economic environment, Snap’s projections plunge sent shockwaves throughout the tech industry. Snap’s stock took a major dip, and in turn, other tech stocks, including Pinterest, Meta, and Twitter, have seen their numbers follow this trend.
This downward trend feels like a warning – one that has people wondering this: What’s next for the digital ad industry?
Daniel Cobb, CEO and CSO of Daniel Brian Advertising took some time to discuss this question, and more, on Cheddar News.
The first thing he addresses is where these numbers are coming from. He explains that advertising as the sole revenue source is a challenge for these platforms. Right now, with the unemployment factor, many advertisers are being told to pull back or even pull out, as products cannot be made to meet demand. Why advertise for something that you’re already having trouble keeping on the shelves? Plus, he mentions, “If your media cost goes up, there’s an inflation factor that goes into your overall mix.” With higher CPAs on certain platforms, it makes sense that brands may move elsewhere to save themselves some cost.
He goes on to explain that the monetization of these ‘freemium’ platforms has affected the earned media facet of digital marketing. Organic content that brands and influencers post for free is being edged out by paid posts, and these same brands and influencers think “Well, I got so much for free, why would I pay for this?” Adverse to paying for their media, these brands turn to the next free platform, leaving the platforms trying to monetize high and dry.
On top of the habits of users changing, the base of digital advertising, targeted marketing, is also being threatened by privacy laws that are beginning to loom. Digital marketing relies heavily on targeted marketing, and the prospect of losing this ability is adversely affecting these tech platform’s projected advertising revenue.
Cobb does point out a silver lining for the digital ad industry though. “Advertisers will always find a way to get into the entertainment space or media delivery for the sake of selling products…So, the industry will always be in some form, but it’s got to be evolved.” he says, “and we’re seeing platforms, for example, Google is not going to go away…the Meta platform is still a heavy performer. They’re not gonna go away.” He does predict, however, that other players will feel the impact of users abandoning platforms, especially young users, who move to the newest thing. Advertisers can switch platforms just as quickly as user bases move, so the digital landscape remains in a constant state of flux.
To wrap up, Cobb asks these platforms this: “As soon as you start creating revenue, can you keep that audience?” As they figure out how to do this, the digital ad industry will simply have to keep an eye on which platforms are most useful for their goals, and simply wait and see the new ways in which the industry can bounce back.