2023 has been a year of many things for Elon Musk. A look back at the top five news in the advertising industry.
Although 2023 has been a difficult year for the advertising industry, it has also opened up many new possibilities and opportunities.
While advertising costs continue to be cut due to economic fluctuations, major tech companies such as Meta and Google, whose advertising businesses were sluggish in 2022, recovered in 2023.
But the recovery has not been evenly spread across the advertising industry. The bankruptcy of ad tech company MediaMath and the flat performance of Snap over several quarters are evidence of this.
On the other hand, the explosive spread of generative AI has brought new possibilities to advertisers, and many start-up companies centered on this technology have emerged.
Below, we’ll introduce five major trends that will shake up the advertising industry in 2023, as well as predictions for 2024.
Meta and Google’s advertising business is back.However, some advertisers are skeptical about the future.
Meta and Google, whose ad spending dropped significantly in 2022, returned in 2023. Both companies are touting how their heavy investments in AI-based advertising products have delivered impressive results for advertisers. The AI tool automatically determines where to place ads most effectively, leaving advertisers largely left to their own devices.
But these algorithms leave largely a black box about how the technology works and where ads actually appear.
“It’s a big deal,” said Lou Paskalis, former head of global media at Bank of America and now CEO of marketing consultancy AJL Advisory.
“For some marketers, these tools can be a godsend. But for big brands, it can be difficult.”
Pascalis predicts that Meta and Google’s tools will next drive advertising dollars from small and medium-sized brands that want to grow sales quickly and efficiently. But the lack of transparency is a concern for big brands that want to scrutinize where their ads appear. Some advertisers are also skeptical of Meta and Google’s claims that these tools improve ad performance.
Still, AI remains a big focus for Meta and Google as they grow their advertising businesses.
Google’s recent decision to replace Jerry Dischler as head of advertising with Vidhya Srinivasan is evidence that the company is betting big on AI. Srinivasan previously worked on the company’s AI-based advertising product Performance Max (P-MAX).
X is losing advertisers due to Elon Musk
In May 2023, Elon Musk created a huge shock in the advertising world by appointing advertising sales expert Linda Yaccarino as CEO.
According to data from marketing consulting firm Ebiquity, since the company changed its name from Twitter to X in July, Musk’s continued ownership of X has steadily driven away advertisers. I can say it.
Big brands like Walmart and Disney have cut ad spending, citing concerns about X’s content, Musk’s own comments, and the poor performance of X’s advertising tools.
According to a report from Bloomberg, X’s advertising revenue in 2023 will be $2.5 billion (approximately 355 billion yen, equivalent to 1 dollar = 142 yen), which is expected to fall short of internal advertising targets.
The data also shows that advertising on X is declining and advertisers continue to leave the platform.
X’s average CPM (the cost an advertiser pays to reach 1,000 people) went from $1.75 in January to $1.27 in December, according to data from marketing agency Gupta Media. has decreased to.
Additionally, according to data from ad tracking company MediaRadar, 86% of advertisers who spent more than $1 million on X in 2022 It is clear that spending has been reduced.
Gogi Gupta, founder of Gupta Media, says:
“I think the question is whether platforms can find a home for advertisers, and whether advertisers can bring richness to the advertising ecosystem. If the relationship is solely about revenue, advertisers will be alienated. However, as long as the added value of the brand is recognized, I think there is a way forward.”
Musk has said he wants to secure another source of revenue through subscriptions, but X is hoping to increase advertising revenue by targeting political ad spend as the U.S. presidential election approaches. “X has been promoting low-cost perks and other benefits to political advertisers and has hosted events for political advertisers in Washington, D.C.,” the Financial Times reports.
Pascalis said X is likely to benefit from political ad spending because political advertisers can promote messages that raise money or encourage users to vote.
Streaming companies also need ad revenue to grow
Netflix’s launch of ad-supported plans proves that advertising models are essential for streaming companies to grow revenue.
But advertisers still struggle to reach viewers on streaming platforms as large as linear TV.
For example, Netflix announced that its global monthly user base rose from 5 million in May 2023 to 15 million in November. Amazon Prime Video’s monthly user base is expected to exceed 115 million in 2024, and advertisers are hoping Amazon will open its doors to them. By comparison, the last Super Bowl alone drew 113 million viewers, according to Nielsen.
Although linear TV viewership is declining, it still accounts for 49.6% of people’s viewing time, Nielsen reported in August.
Kevin Krim, president and CEO of TV ad measurement company EDO, predicts that by 2024, streaming companies aiming to attract advertisers will use bundling to reduce subscription costs and increase subscriber numbers. I predict that it will.
Verizon, for example, is offering a Netflix and HBO bundle, and Apple and Paramount are also said to be considering bundling their streaming services.
Krim also expects streaming and linear TV ad prices to rise due to the 2024 U.S. presidential election and the Summer Olympics in Paris. Higher ad prices mean advertisers won’t be able to allocate their budgets to smaller, emerging streaming platforms. As a result, Krim expects advertisers to focus their advertising dollars on established, big-name streamers that offer higher returns.
Retail media is on the rise.The challenge is whether we can prove how effective it is.
Retail media revenue will reach $130 billion by 2024, making it one of the fastest-growing areas of advertising, Morgan Stanley predicts.
It’s been several years since retail media outlets such as Walmart, Best Buy, and Kroger began investing in advertising, and marketers are seeing positive results by placing ads on retail media’s e-commerce sites. They’re looking for evidence that there is, said Talia Arnold, managing director at advertising agency Exverus Media.
In 2024, Arnold expects to see data from these retail media networks proving that advertising purchased using retail data led to increased sales.
Arnold points out that the recent growth of multiple retail media networks has made it difficult for advertisers to buy ads across multiple retail media outlets.
Criteo and others, which help run retail media programs, are trying to address this problem by developing ways to buy across multiple networks.
The problem with buying ads across different media networks, Arnold says, is that they measure effectiveness differently.
Generative AI is increasingly being used in advertising tools
2023 was the year that generative AI opened up new opportunities for advertising. Big companies like Microsoft and Google can incorporate generative AI into their ad-buying software. Other initiatives ranged from art production tools to new ad tech startups marketing generative AI products.
George Popstefanov, founder and CEO of advertising agency PMG, predicts that by 2024, advertisers will be able to use AI to deliver thousands of types of ads that are personalized to people’s specific interests. The company expects it will be cheaper to produce and can be created within minutes.
Postefanov also expects AI to automate basic tasks in digital advertising, such as campaign trading and vetting content for potential brand safety issues.
For example, generative AI startup Typeface has raised a total of $165 million and is partnering with Salesforce, Microsoft, and Google to become part of the marketing tools of major tech companies. is supported.
“These solutions are already taking shape and are starting to be integrated directly into all advertising products,” Postefanov said.
[Original text]
(Edited by Ayuko Tokiwa)
Source: BusinessInsider
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