Online Media Spend is Growing Despite Economic Headwinds

The world is witnessing a period of unprecedented uncertainty right now with inflation on the rise, valuations on decline and other global events but what is surprising is that the online media industry’s future seems bright. The online media industry has been able to grow because of two factors:

Internet penetration rates are increasing.

Brands are finding new ways to reach consumers.

Social media giants; Meta and Snap were seen continuously telling their investors that the online advertising market is going through a difficult time due to the economic slowdown. On the other hand, Amazon was highly optimistic.

Amazon is one of the most popular online retailers in the world. They provide a wide range of products and services, including media, clothing, groceries and more. Having the major part of its business in the e-commerce industry and cloud computing, Amazon built a robust online ad division. Amazon is able to charge premium prices for ad placement from brands because of visitor intent. The platform is transactional and brands are happy paying the premium as long as they are able to influence consumers towards their brand. Amazon is capitalizing on “Active Seeker” marketing for products. Amazon has a 54% search marketing share for product based searches. 

What the world recently witnessed is how Amazon literally beat Facebook or Meta and Google when it came to online ads revenue growth. By the end of last year, Amazon commanded 14.6% of the U.S. digital ad market, third to Google at 26.4% and Facebook at 24.1%. Its ad revenue rose to 18% from an earlier year to $8.76 billion. This was a moment of bewilderment for all the analysts because their expectations and underscoring about the brands were contrary to the results. Google grew by 12% while Snap 13%, Pinterest 9%, Twitter 2% and Facebook 1.5%.

This shows that spending on engaging with “Active Seekers” is still increasing while “Brand Awareness” spending might be on a decline. The key sector that will continue to push “Brand Awareness” budgets is the CPG (Consumer Packaged Goods). In today’s world, brand awareness is achieved through multiple channels and platforms such as social media, display advertising and even word-of-mouth marketing. However, you need to constantly monitor brand’s reputation on these channels and statements by executives can throw curve balls to growth aspirations. CPG brands typically have a different distribution channel (via retailers) and want to stay top of mind when the consumer is making the decision to buy. 

This revenue race for “Brand Awareness” budgets; was not just amongst the social media companies but others as well. For example, streaming services platform, Roku also revealed some unfortunate second-quarter results. It stated in the media that the current ad market is still living the aftermath of the Covid-19 pandemic. Marketers are prepared for the macro uncertainties by readily cutting short the ad expenditure towards all platforms. In declining marketing budgets; brands typically move their spending towards the last touchpoints instead of generic brand awareness. (Meaning remaining news papers are in for some tight couple of years). 

Amazon in its recent encounter, assured Wall Street that they are expecting a revenue growth of 13% to 17% in the third quarter, further proving our thesis of where the marketing budgets are moving towards. Amazon has moved fast is capturing the marketing budgets which are either stagnant this year or declining. 

Calculating attribution is difficult considering the number of channels where consumers are at and complex distribution channels. It is easier to attribute your revenues to last touch; and this is where Google and Amazon (and other search based advertising) will continue to thrive. Google is also gearing up for competition with Google Product searches. Walmart on the other hand is doubling down on eCommerce by utilizing its “Store in every neighborhood” strategy to deliver quicker with lower costs. Pinterest is also investing millions to add eCommerce functionality into its site.

In conclusion, digital is here to stay and more transactions are moving online because of comfort. So it is time to ensure that your Brands online journeys are slick and not dropping customers. We do understand that brands put a lot of emphasis on creativity; but for calculated ROI; similar focus on usability needs to be put. Afterall; the traffic that you are bringing to your brand by using any of the platforms is becoming expensive day by day. A single percentage change in conversions using usability sciences would be enough (in most cases) to justify the budgets. 

Centric is a Digital Transformation Agency, building enterprise websites and portals. With key focus on Strategy, Design, Usability, Development and Marketing. Centric is partners with Adobe and PimCore to serve persona based dynamic content enabling higher conversion rates. To reach out to us; please send an email to [email protected]


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Usman Khalid

About the Author Usman Khalid

Usman Khalid is the founder & CEO of Centric DXB. He excels in taking the point of view of both our clients and our internal teams - expressing those perspectives, concerns and requirements to the other side. Aspiring clients & partners can reach him on [email protected]