By Steve Han, VP of Strategy and Operations at Frequence
Media and advertising companies fared surprisingly well during the cascading economic shocks that accompanied the Covid-19 pandemic. While other industries fell completely silent, the number of people stuck at home with extra money to spend translated into huge profits for online retailers, platforms, publishers and advertisers.
The surge in activity was unsustainable and we’re now witnessing the backlash as inflation pressure and belt-tightening is taking place across the broader economy. Just a few short months ago, “quiet quitting” was causing consternation for leadership in numerous industries – especially tech. Now, spreading layoffs and inflation have consumers and businesses tightening their belts wherever they can.
Media companies, publishers and advertisers should go into 2023 with a plan on how to do more with less. Here are some additional considerations for the industry as we look ahead to 2023:
- Market share is the wrong KPI – For the last decade, traditional media companies like local TV, cable and print providers have had to sell digital media along with their owned-and-operated inventory in order to remain competitive. Companies have had to make big investments in technology in order to sell these omnichannel offerings, and they’re likely to find in the coming year that they need to actually turn a profit on their digital extensions in order to maintain their business.
- Everybody will have to do more with less – The demand for digital products remain the growth driver (as audiences continue the long standing trend of moving from traditional media to digital). Media companies will need to continue to grow digital revenue but with less growth to costs.
- The complexity of digital ad and media operations will require bold solutions – The need to sell a range of advertising products across channels, formats and supply sources requires intensive manpower and resources. In the search for performance without crippling outlay, new innovations will inevitably surface that allow publishers and media companies to do more with less.
Many media companies enjoyed a boost in ad spend in 2022 due to spending around the midterm election cycle. With that going away, coupled with signal loss stemming from the depreciation of third-party tracking cookies, local-market media companies are going to find themselves in a position that looks a lot like the early days of programmatic advertising.
For the largest publishers, first-party data will be an essential component of a new advertising system built on logins and authentication rather than surreptitious tracking. For the smaller players, the increased cost per transaction of behavioral targeting without mass scale becomes unworkable.
Instead, media companies and advertisers will need to look at earlier gauges of value and quality for media placement – things like viewability, authenticated traffic and context. This needs to be coupled with omnichannel campaigns and execution that provide real, demonstrable ROI.
True innovation is often born of necessity and in 2023 we’re going to see bold new solutions across a range of functions in our industry. As we begin the new year, digital advertising is poised to renew the dynamism, accessibility and effectiveness that made the industry indispensable to so many businesses.