Alex Song
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Every day, the advertising world faces new challenges and opportunities. New platforms, mediums, M&A activity, privacy rules and ever-changing consumer behavior can all wreak havoc on the digital landscape. However, companies that are prepared to seek out these moments of change will be well positioned to capitalize on the opportunities produced by dynamic shifts.
Most recently, media technology stocks have become highly volatile for a host of reasons. While many marketers are reallocating budget away from these platforms, and prioritizing more stable channels like Google Adwords and Amazon Marketing, there are always new opportunities born of shifts in the market.
For example, the dip in Meta’s customer acquisition performance has enabled ad sales on TikTok to be expected to triple to more than $11 billion in 2022, which exceeds the combined sales of Snapchat and Twitter.
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For CMOs and early-stage tech founders, all this upheaval may feel like a shock, but the truth is that the digital advertising world has always been evolving and changing, often in unpredictable ways. This constant change is an opportunity to create value, but only if you take calculated risks, stay agile and be prepared to act.
As the major platforms are forced to innovate, advertisers who are willing to “be like water” and flow with change are going to come out ahead.
The short and long-term impact of stock price volatility
Stock price volatility applies pressure on publicly traded social media ad platforms, which motivates them to build new features, lower their rates to attract spend and experiment with new business models. For example, Twitter is contemplating a subscription model.
In the short term, this means that CMOs and tech founders will need to hustle hard, and experiment with many platforms in order to maximize return on ad spend.
In the long run, this volatility is better for founders, because forced innovation makes for a more competitive environment — one where everyone is committed to winning advertising dollars.
Here are five tactics for capitalizing on the turbulent advertising environment:
Get in early
Whenever new advertising platforms arise, they attract testing budgets because there is typically a lot of untapped media with minimal knowledge in navigating the channel. This provides a huge opportunity for early movers that are able to “hack the system” before the masses.
That’s why TikTok is currently exploding with advertising revenue. But how can founders predict which platform or business model will be the next best investment? The answer, of course, is that they can’t. That’s why it’s important to diversify advertising dollars and always be testing.
Regardless of the specific disruptions happening in the space at any given moment, advertisers should always be proactively testing new platforms and be adaptive in their approach to finding the next golden vein of growth.
Rely on proven channels while testing new platforms
There will always be some choppy waters when new business models are tested and emerging. To counteract the risk associated with testing new platforms or implementing unproven strategies, advertisers should still allocate the majority of their budgets towards proven channels, even if it means accepting slightly diminishing returns.
They should also diversify aggressively in as many productive channels as possible, since few of us can predict when the next wave of change might shake up the system.
Invest in first-party data insights
First-party data is the only true source of information that advertisers can rely on. When applied correctly, first-party data is still the best means of accessing targeting in a post-iOS 14 world.
Although it’s hard to get, once you have first-party data, you can accurately rely on the insights that come from it. Accessing first-party data gives you a huge advantage for approaching long-term customer acquisition strategies and digital growth.
This Deloitte article explains the value, and necessity, of establishing your ecosystem of first-party data. The research concludes that “first-party data offers extensive opportunities to strengthen client relationships and can serve as an identifier for activation across platform[s].”
While a company’s first-party data is reliable, it is also limited in scope and can only provide insight into a company’s own customers. Through advances in data analytics, it is now possible for advertisers to access aggregated pools of first-party data across a network of digital companies, allowing them to recreate some of the insights lost with iOS privacy changes while still remaining compliant with privacy regulations.
Diversify your ad platforms
Since the iOS 14 privacy change, Meta has struggled to remain precise and accurate in tracking and targeting, since a large percentage of users continue to opt out of being tracked. (Current data suggests that somewhere between 54% to 63% of users opt out, but that number was as high as 80% in October 2021). As a result, the company is shifting tactics.
By lowering ad rates and pushing for a broader advertising approach to monetize more impressions, Meta can increase its chances of hitting its mark using probabilistic modeling. For Meta, this has cushioned the blow of the iOS 14 changes. In the first quarter of 2022, the company’s ad impressions rose 15% in the quarter, while price per ad fell 8%.
This shift has left advertisers, however, feeling frustrated and helpless. It seems like just when they had become reliant on a trusted source of efficient customer acquisition, it was quickly taken away from them by the larger ecosystem, or even removed by Meta so that it can control how advertisers use its platform.
Now, many companies are moving their Facebook ad budget to other platforms like Google AdWords, since they are not impacted by App Tracking Transparency (ATT), as the source of data acquisition comes from self-prompted search.
They are also moving more of their ad budget to Amazon, which has benefited significantly from the lack of trust and confidence in advertising on Meta. Amazon’s closed loop garden — where it can see, manage, analyze and keep all of its consumer data within the system for themselves — allows them to produce better performance.
Protect your brand against unchecked content
Twitter’s potential focus on free speech over content monitoring may result in an influx of new users seeking access to such unchecked content. It’s still unclear whether other content platforms will follow suit.
Each content platform has its own marketplace dynamics, and they all need to balance their supply of content with the demand for that content. Regardless of where unchecked content resides, the internet is filled with it. Platforms must ask themselves if unchecked content hurts the quality of the existing user experience, and if so, what they will do about it.
Whatever the outcome, founders must protect their brand at all costs. The old advice still rings true: Treat every piece of content, post or email like it could end up on the front page of the New York Times tomorrow. Be diligent about managing online reviews. Maintain your website, blog and other IP so that you keep control over the content, and in turn, over your search engine results.
Build trust with your consumers, so that if unchecked content does appear in the complex, muddy waters of the internet, your consumer will ultimately have a reliable source of information about your brand and what you stand for.
Although it may seem like the world of digital advertising is in constant crisis, these crises can become opportunities to make inroads with consumers and maximize advertising spend, especially for leaders who can move quickly and remain flexible.
But to turn disruption into progress, founders and CMOs must be willing to ride the wave of continuous innovation and change. They must be diligent in their evaluation of new business models, create an agile, multifaceted strategy that can keep up with the ebbs and flows of consumer behavior and always be on the lookout for the next opportunity to maximize the moment.
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