We began writing this article in the middle of February and the opening sentences were: “In terms of digital advertising, 2021 was amazing! Will 2022 be like that?” And then the war broke...
It just so happens that most of the opinions presented in this article are from Ukrainian companies. In the past few weeks, they have demonstrated remarkable resilience and have started a trend that we would not have predicted a month ago: cutting off all business ties with Russia.
Apart from that, we will look at the size of the global digital market, the fastest-growing digital ad budget categories, the elimination of third-party cookies, and perspectives on content monetization. So, “stay tuned” and continue reading.
Insight #0: Cutting Ties With the Russian Market
On the 24th of March, Russia launched a full-scale war against Ukraine, which has already resulted in devastating losses. Fortunately, it is no longer 1939, and lies cannot be swept under the rug of propaganda. In today's world, it only takes about a minute for a person in Kolkata to read about a bomb strike in Kyiv.
Initially, Ukrainian agencies stopped working with the Russian market, and from then on, many companies followed. Thousands of businesses across the globe ceased partnerships with the Russian market and stopped running any campaigns aimed at Russians except for awareness-raising. Eventually, it turned into a global initiative to stop financing the terrorist acts committed by Russia.
Today hundreds of companies in all fields, from aviation and retail to advertising, are no longer present in Russia. Moreover, Meta, Google, and YouTube have canceled monetization for Russian users. All this pushes the Russian economy into further depression, leaving less money for sponsoring the army, and hopefully eventually pushing people out on the streets to protest the current administration.
Thus, what was supposed to be a triumph for Vladimir Putin has turned into a collapse of the Russian economy. As a company with Ukrainian roots, we are eternally grateful to each and every company that has contributed to this!
Insight #1: The Market Will Keep Growing
According to eMarketer, due to pent-up demand in 2020, in 2021 the size of the digital advertising market increased by 29% instead of the 20% that was forecasted. This is the highest growth the digital advertising category has seen since the launch of the measurements.
“In 2021, we realized that the world, and with it all its foundations and habits, had changed forever. Likewise, our work processes and approaches have changed as well. A completely new set of technological and social aspects has emerged.”
When the pandemic started in 2020, many businesses weren't sure what to do and froze their assets awaiting what was to come. As the situation didn't change, we have witnessed a major shift towards digitalization. Businesses that hadn't contemplated going online ended up adopting digital. This resulted in increased competition and the growth of digital budgets.
The trend will continue through 2022, but the increase will be less pronounced. It is predicted that we will witness a 16% growth. Moreover, according to Zenith Media digital advertising will exceed 60% of global ad spend in 2022, reaching 61.5%. Now, this is something!
Insight #2: Programmatic Is Changing Its Course
Programmatic has probably been the most searched term related to digital advertising in the last couple of years. Not without good reason. This media of ad buying/selling keeps growing.
Currently, programmatic accounts for 89% of digital ad spending in the US, 73% in China, and a little over 50% in Ukraine.
Usually, when we think about programmatic, we think about RTB. Digital agencies agree that in 2022 the share of programmatic will keep growing, but this time not only due to the convenience of RTB but also because of the growing percentage of direct deals. This tendency is blossoming in the West (in 2021 in the US programmatic direct accounted for 67% of all programmatic digital display ad spend) and is eventually coming to the less developed markets.
Direct deals are responsible for a higher quality of formats and placements, thus guaranteeing better quality and visibility of ads — something we are all looking for in a hyper-competitive market. And with the nearing abolition of 3rd party cookies, direct deals will be a safer and more accurate way of targeting and performance tracking.
“More and more publishers are starting to sell premium inventory through programmatic direct deals. This allows them to automate and optimize the process of monetizing their sites and applications.”
Insight #3: Here is Where You Should Invest in 2022
Over the past years, budgets have been slowly flowing from traditional media categories to digital, but 2021 has accelerated this process. E-commerce gave a huge boost to the whole industry and created opportunities for many businesses that otherwise would have closed in 2020-2021. Therefore, retail remains the number one category for ad spending in most countries.
Increasing coverage of the internet, the rise of programmatic has also boosted more digital categories: DOOH, CTV, and more tangibly social media. Social media is predicted to overtake television as the leading source of digital advertising growth this year.
Zenith Media estimates that between 2021 and 2024 worldwide:
- social media advertising will grow at an average rate of 14.8% per year, making it the fastest-growing channel;
- video advertising will be close behind at 14.0%;
- outdoor advertising will grow at a solid 7.4% annually;
- radio and television will grow marginally, by 2.2% and 1.4% respectively;
- print will decline by 4.7%.
“After Facebook became Meta, I received the most memorable question from a client: “Tell me what's in store for Metaverse in the near future? And is there a place for our brands there?”
Insight #4: Optimization Is the New Black
As the competition and the number of savvy online entrepreneurs grew, hitting intended KPIs became insufficient.
“Compared to previous years, when agencies were expected to perform the planned media indicators and a certain price level, starting from 2021, the emphasis began to shift to business efficiency and performance.”
Businesses have become more clear about their final goals and desired results. At the same time, planning became more short-lived. A few years ago, we needed weeks to test if the audience is right, today this period has significantly shortened. Consequently, changes can be made to an ad campaign on the fly, improving the campaign's performance before it ends.
Adaptation of businesses to market conditions and subsequently optimization are becoming more common. Today, what does not bring profit is quickly cut from budgets.
Insight #5: The Cookies Are Crumbling into Something New
“It will be difficult for the advertiser to drastically restructure their thinking, so in the absence of coverage metrics, the problem of reducing the understanding and value of digital in the overall media mix is very likely.”
We are not going to surprise anyone here by saying that the 3rd party cookies are packing their suitcases. In the wake of the news, the world assumed that we would use another tracking method once the 3rd-party data was gone. We have heard about the FLoC then turned into Topics, Unified ID, and so on.
However, the reality is that we are not going to use one single alternative solution. After the abolition of 3rd party cookies, we are going to work with a combination of solutions.
According to major international agencies, the key components are going to be:
- 1st party data
- Unified ID (and similar solutions)
- mobile data
However, as Google itself is postponing the abolition, digital agencies are taking advantage of the delay, gathering accessible data for future targeting and analysis. Still, most agencies are waiting for the perfect solutions from their tech partners.
Insight #6: Content Monetization is On the Rise [Is It?]
Subscribing instead of buying a specific product is much more common in 2022. Netflix, Spotify, Canva, Grammarly, YouTube Premium, Google Drive, you name it! According to some sources, the subscription economy has grown by more than 400% in 2021. However, things are slightly different with the written online content.
Currently, publishers are relying on ads as their main channel of monetization. However, with Apple's new IDFA rules, forthcoming abolition of 3rd party trackers in Chrome, ad blockers, etc., selling ad spots will be more complicated.
Content monetization through subscription is one of the solutions for publishers. Paywall, micropayments, and free trials are viable ways to attract users. And we have all seen these success stories: New York Times, Digiday, Wall Street Journal, etc.
“Many users are willing to pay for information and, for example, sign up for subscriptions to online media. Users are also willing to pay for narrow and niche professional data, such as HR, financial sector, education, etc. At the same time, the number of those who are prepared to spend money on entertainment content is growing, especially if it is exclusive or covers many interests, like Netflix. However, exclusive content comes with a great deal of responsibility for its smooth and continued provision.”
But these are big names that have been around for a while. Smaller publishers may not have as much luck with this. However, niche sites have more chances against the mastodons. According to digital agencies, here are the main factors that may guarantee success with content monetization:
- target niche subjects (this might attract specific niche advertisers);
- provide unique and exclusive content;
- make a partially paid subscription (thus providing some content for free);
- join cohorts to provide 1st party data for advertising.
Insight #7: More Companies are Using White-Label Products
The 2020 report of PwC and ISBA showed how much money is lost on its path from advertiser to publisher, due to various markups and fees, and also highlighted the fact that only a small percentage of impressions can be tracked down to its source. This had the whole industry talking about the fact that the supply path has to be optimized.
Today more companies are switching from self-serve to white-label solutions. These platforms allow gathering all the campaigns in one customizable dashboard, shorten the supply path, and guarantee the quality of the SSPs in the system.
“In 2021, we witnessed an 80% growth in our white-label DSP customers. The reason for this was a combination of factors: clients needing more customizable tools and the ongoing cancellation of third-party trackers. Not only did the number of clients grow, but also they are more satisfied with their performance after switching to a white-label solution.”
Key Takeaways for 2022
If you are that person that starts from the takeaways to see if the article is worth your time.
- 2022 will be almost as awesome in terms of performance growth as 2021, but even more interesting in terms of new opportunities. Take McDonald's in Metaverse for one thing!
- Social media advertising will outperform any other digital ad category.
- Direct deals are taking over programmatic, giving a boost to programmatic direct.
- Performance becomes the number one priority as the competition in the digital field rises.
- Digital agencies agree that there will be no unified solution to substitute 3rd-party cookies, but a combination of a few.
- More publishers are turning to content monetization following the abolition of 3rd party cookies, however, it remains to be seen if it's a viable alternative.
- White-label products are gaining more recognition due to their ability to give more control to the agency's in-house programmatic initiatives.
Special thanks for this article go to:
MixDigital, RAZOM Group, SIGMA, MediaCom, Superheroes.ua, New Line Communication, NCG DIEVO, Media First Ukraine, Publicis Groupe Ukraine & IAB Ukraine.