2022 was the first year since 2014 that Google and Meta’s combined market share in digital advertising dropped below 50%.
This change is a result of a number of factors in the digital marketing ecosystem, including the rise of TikTok and Apple as digital marketing channels; Amazon turning the duopoly into a triopoly; and the continued impact of the end of Apple’s IDFA app tracking and privacy-driven changes in regulations like GDPR in Europe and CCPA, et al in the US. These changes have forced marketers to go beyond Google and Meta.
People inherently prefer things that are simpler. That’s one reason why so many marketers relied on the duopoly. It was simpler to work with two platforms than to also include Snapchat, Twitter, and Pinterest. And with the reach, ad options, and performance delivered by the duopoly, there wasn’t much reason to look further. So, for some product categories in some markets, agencies and advertisers turned to the other platforms, but the lion’s share of ad budgets were spent with the duopoly.
But that has started to change.
Driven by the end of IDFA, many marketers experienced significant increases in costs per acquisition on Meta, as well as other platforms. At the same time, marketers couldn’t ignore the growth of TikTok as an entertainment platform. Unencumbered by the loss of data hurting the other platforms on iOS, Apple was able to significantly increase ad revenue, also aided by new ad units. And, based on its unrivaled treasure trove of first-party data as it acquired and integrated Sizmek’s Ad Server and Sizmek Dynamic Creative Optimization, Amazon accounted for 11.7% of digital ad spend in 2022.
One trend that’s grown over the past few years has been working with creators to produce content marketing to appeal to the creator’s (and marketer’s) target audience. Marketers have worked with celebrities and athletes on marketing campaigns for decades, but more recently, marketers have succeeded by turning to micro-influencers – creators with thousands (instead of millions) of followers.
Thanks to technology that enables them to easily find and hire relevant micro-influencers, marketers can benefit from lots of marketer-friendly videos to engage prospective customers. And these videos cost a fraction of what a professional agency would charge for videos that make up in authenticity for what they lack in polish. Though these creators will not replace ad agencies, they do provide a new and cost-effective way to generate fresh video content quickly and cost-effectively.
Unless you’ve been living under a rock, you’re aware of the tremendous growth TikTok has experienced in the last few years, providing marketers with a global reach of more than one billion users. TikTok’s growth has prompted many marketers to look at the platform as they venture beyond the duopoly. According to research uncovered by the Financial Times, TikTok ad rates are 50% less expensive than Instagram Reels, 62% less than Snapchat, and 33% less than Twitter. But a renewed push by US regulators to potentially ban TikTok due to Chinese ownership might impact the future of TikTok as an app and a marketing channel.
The rise of digital marketing in the 1990s was driven in part by the hope that marketers could finally answer John Wanamaker’s question by tracking the ad viewer’s customer journey from click to purchase. Unfortunately, digital marketing didn’t solve the ad industry’s measurement challenges. With customer purchase journeys influenced by multiple touchpoints, it’s difficult to assign attribution. And users erasing cookies and browsing anonymously made measurement difficult even before the current privacy-driven changes.
Media mix modeling is effective at measurement and attribution but relies on years of data which makes it expensive and ineffective at analysing a new campaign or marketing strategy. To overcome this challenge, new models have emerged which add data available on a daily basis and derived from the company’s KPIs to the mix model, like Google searches. Then, machine learning algorithms enable providing live metrics that deliver the benefits of marketing mix modelling without its drawbacks.
Another marketing measurement tactic gaining traction is incrementality, which measures the increase in a marketing KPI – such as awareness, conversions, or revenue – generated by marketing actions. Incrementality is measured by randomly segmenting a test and a control group.
The difference in the KPI performance between the two groups is the incremental lift of the KPI being measured. In recent years, incrementality has become more sophisticated thanks to advancements in technology, enabling marketers to calculate the incremental value of each marketing tactic tested.
To address the challenges marketers are facing, both Google and Meta have rolled out new, platform-wide offerings. Meta Advantage+ and Google Performance Max are providing strong initial results, but because these offerings are black boxes, marketers are unable to see which ads or ad units are delivering the results. So a marketer won’t know if branded search ads, which could have delivered results organically, are driving the conversions versus video or display ads.
Despite these new offerings from Meta and Google, marketers are still broadening their arsenal of marketing tactics to engage with and sell to prospects. This openness to new offerings should bode well for agencies, marketers, and vendors in the advertising ecosystem.