Toward the end of 2021, the effects of the pandemic were easing, stock markets were booming, and digital acceleration was moving full speed ahead.
\nTech giants, ad agencies, and brands are all preparing for an industry-wide downturn—but how severe it will be is unclear. Drawing insights and statistics from Insider Intelligence’s latest report series, “The Era of Uncertainty,” we explore three main factors influencing the advertising and marketing industry. <\/p>\n
1. Consumer spending is in flux <\/strong> Eroding spending power is forcing consumers to make tougher choices about what and how they buy, especially when it comes to non-essentials and splurge items. Spending on durable goods fell 3.2%, as consumers pull back from big-ticket products such as furniture. In addition, to cover the costs, consumers are increasingly tapping into savings. The savings rate inched up to 5.4% after falling to 5.2% in April, its lowest level in more than a decade.<\/p>\n Even Amazon felt inflation’s impact. Although Prime Day 2022 was Amazon’s biggest ever—with total US online spending reaching $11.90 billion, up 8.5% year-over-year (YoY)—higher prices had clear reverberations on consumers’ purchase decisions. Shoppers gravitated toward deals on essentials versus last year’s more frivolous top sellers: health and beauty and consumer electronics.<\/p>\n “These buying trends and insights will be a crucial signal for advertisers looking to adjust their spending. If consumer spending continues to lose steam over the next several months, it would suggest there isn’t a market to support current levels of ad spending,” says Peter Newman, senior forecasting analyst at Insider Intelligence.<\/p>\n 2. The battle between advertisers and Big Tech carries on <\/strong> As a result, advertisers no longer receive information about off-platform actions, making it difficult to target ads effectively, track engagement, and measure conversions. In fact, Meta said the changes could cost it as much as $10 billion in 2022, and its failure to create a reliable replacement has caused advertisers to flee Facebook. That’s also why Insider Intelligence predicts Meta will see its lowest ever annual growth rate of ad revenues, increasing just 12.4%. <\/p>\n Now, more than a year after Apple’s privacy changes, companies are still struggling to develop ad solutions, and revenues have dropped significantly. Luckily, advertisers using Facebook and Instagram are in a stronger negotiating position than ever before. Meta is going to fight hard to keep its advertisers in the fold, but there’s no better time than now for marketers to spread their social budgets around to other platforms—especially when TikTok is knocking on the door with new performance-focused ad products.<\/p>\n
\nAccelerated inflation is causing consumers to reevaluate their spending. Although we expect US consumers to continue spending despite the rising costs of goods—with retail sales set to grow 6.4% this year, primarily due to inflation—a closer look at shopping habits and purchases tell a more nuanced story. <\/p>\n
\nBig Tech’s advertising outlook was already reeling from widespread privacy changes, such as Apple’s AppTrackingTransparency policy (ATT). Under ATT, all apps distributed through the App Store must prompt users to opt in and allow advertisers to track them across other sites or apps. The rollout of ATT in April 2021 effectively eliminated the primary way publishers and advertisers track users on iOS and changed how the mobile ad industry approaches monetization and measurement. <\/p>\n