Shulou(Shulou.com)11/24 Report--

On the morning of October 31, Beijing time, it is reported that social media advertising in the United States has come to an abrupt end after a decade of rapid growth. Who killed the industry?

As the blame game kicks off in Silicon Valley, Meta founders Mark Zuckerberg and Alphabet CEO Sandal Sundar Pichai both pointed out on conference calls last week that it was clear that the global economy had been clouded.

Today, however, the weakest signs are concentrated on social media platforms.

According to market research firm eMarketer, American advertisers will spend $65.3 billion on social networks such as Facebook, Snap and Twitter this year, up just 3.6% from a year earlier and 1/10 of 2021.

To what extent will social media growth slow down in 2022? It has been reduced to almost the same level as television and radio, which, as representatives of traditional media, have shrunk for many years.

At the same time, large advertising agencies were unaffected by the turmoil: WPP, Omnicom, Publicis and Interpublic all raised their full-year forecasts. "Snap said the advertising industry was in recession in the first quarter." "We haven't seen this so far," said WPP CEO Mark Reed (Mark Read).

So who is stifling the rapid growth of social media?

Big advertiser

With the US economy turning, high inflation and supply chain congestion, some big advertisers have adopted cautious strategies. Meta CFO David Wiener (David Wehner) told analysts that growth from big advertisers "still faces challenges".

Phil Smith, director-general of ISBA, a trade association that represents UK advertisers, said marketers were "thinking twice" about everything from financial services to consumer goods. "some things are hard to sell right away," he said. "

Colgate said on Friday that it would cut back on marketing spending. But Coca-Cola and Nestl é are doing the opposite. Martin Sorrell (Martin Sorrell), CEO of S4 Capital, points out that the digital advertising market is still expected to grow significantly in the coming year. "rumors that digital advertising is dead are exaggerated." He said.

Social media platforms may be hit by their mix of advertisers. Mr Reid of WPP says digital platforms rely more on aggressive promotional campaigns by venture capital-backed companies to grab market share. "A lot of this kind of financing has dried up."

Apple

Apple's privacy policy has also had an impact on the digital advertising industry.

Tim Cook, CEO of the company, said last week that the new App Store advertising business was "relatively small". However, its rapid growth comes at a time when new iOS privacy rules cost Meta $10 billion in revenue last year.

Just last week, Meta accused Apple of "cracking down on other companies in the digital economy." expand your own business.

However, Meta executives insisted on a conference call on Wednesday that the impact of Apple's app tracking policy changes had "diminished" in the third quarter after they developed a new tool to measure advertising effectiveness.

Games

With the development of interactive entertainment in the past decade, game publishers have also become big advertisers of digital platforms. Mobile game developers are particularly good at calculating ad returns on Instagram or YouTube.

But Apple's privacy policy changes have made it difficult for them to continue to calculate the returns, while many people have returned to reality from the gaming world after two years of outbreaks.

In August, EA CEO Andrew Wilson (Andre Wilson) pointed out that from a macro point of view, mobile games are showing some signs of slowing down. Although the gaming industry has shown enough resilience in past recessions, this was before the rise of free mobile games.

The impact of this trend has been reflected in Apple and Google's app store revenue, many of which are driven by social media advertising.

Luca Maestri, CFO of Apple, said there were "some signs of weakness" in the gaming industry because of the adverse macroeconomic situation, which he expected to continue. Philipp Schindleer, Google's chief business officer, believes that "reduced interaction among game users" is the reason for the decline in Play Store sales: "this puts downward pressure on our advertising revenue."

e-Buniness

Retailers, including Wal-Mart and Target, are quietly building their own digital marketing businesses to keep pace with Amazon. This clearly poses a threat to social media platforms.

All of a sudden, advertisers have more opportunities to reach consumers. Search and banner ads can also reach customers closer to the point of purchase, a factor that some marketers value.

So-called retail media have also been relatively unaffected by the recent storm of privacy policy changes because they do not rely on "third-party" data to track users across the network.

Analysts believe that some of Facebook's advertising revenue goes to Amazon, Wal-Mart and Target. Amazon said this week that its advertising revenue rose 25% in the third quarter to $9.5 billion.

Zuckerberg

Despite the decline in advertising revenue, Meta still refuses to reduce its investment in meta-universe. This bothers Wall Street, and some investors and analysts even believe that the founder is now the biggest threat to the longevity of Facebook.

MoffettNathanson analysts even believe that Meta is no different from the traditional media that has been subverted by tech giants over the past decade. "every past quarter, it becomes more and more credible that Meta has lost the competition forever." They wrote.

Mark Mahaney, an Evercore analyst, questioned on a conference call on Wednesday that Meta executives had been slow to redevelop advertising targeting tools that were curbed by Apple's privacy policy. "the financial impact is very significant." "but after the conference call, I didn't realize that they saw it as a major investment direction," he said. "

Meta executives insist they have improved their advertising technology. But Zuckerberg himself has no intention of apologizing. It is worth mentioning that he is the last tech giant founder in Silicon Valley to have absolute control over the company, making it immune to investor anger.

"I just want to say that there is a difference between one thing being experimental and not knowing how good it will be in the end." "I think people who are patient with us and continue to invest in us will eventually pay off," he said. "

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