Timothy A. Koonce: Advertisers are getting squeezed every way. What is the answer?

Advertisers are getting squeezed

By Mark Schaefer

With the decline of traditional ad channels such as newspapers, magazines and network TV, brands have been pouring money into the digital realm — primarily Google, Facebook and now Amazon.

But a new report from Digiday shows that even these digital alternatives are problematic:

Costs for paid video distribution on Facebook has more than doubled year over year, stemming from Facebook’s decision to prioritize user posts as well as more buyers in Facebook’s marketplace.
This has been tough for publishers as Facebook has largely been “the only game in town” when it came to buying reach in a quick and efficient manner.
Rising costs naturally mean lower margins for publishers, which have pivoted to other options including: sponsorships on existing editorial; owned marketing channels such as websites and email; and other platforms such as Instagram.
Other platforms, especially Instagram, are short-term opportunities before they, too, push prices up.

Here is the weird part — Facebook usage is in decline. Data from Edison’s Infinite Dial report:

Source: Infinite Dial

In fact, every platform is stagnant or declining except Instagram.

It is remarkable that Facebook has 15 million fewer users and yet the advertising feeding frenzy to find anything that works is still driving up ad prices! Doesn’t this suggest an opening for new business models?

The opportunity

This signals an enormous business opportunity — it was actually something I predicted in 2017. As Facebook ad rates go up, those brand dollars have to go somewhere. Here are some observations about this

The great middle — Young people are leaving Facebook so advertisers will have to seek them on Snapchat, Twitch, and Instagram. Elderly people still watch TV so there is a chance — for a while longer — to reach them there. Also, Facebook usage for those 55 and over is increasing, so this will remain a viable advertising channel.

The most significant advertising gap is with Baby Boomers. Boomers are using more streaming services and increasingly unreachable on Facebook (due to lower use and rising ad costs). How do we reach this gigantic demographic that is becoming increasingly unreachable?

Squeezing to the sides — Eventually, Facebook ad prices will drive marketers to reconsider platforms like Twitter, Pinterest, and LinkedIn — places where Baby Boomers are known to congregate. We’re already seeing this happen

Twitter’s 2018 revenue represented a 29 percent increase year-over-year.
Advertising increased 53 percent year-over-year for Pinterest.
LinkedIn’s revenue rose 28 percent last year.

New platforms — I think the real opportunity is an entirely new ad-driven content streams. One to watch is Quibi (short for quick bites), a new company formed by Jeffery Katzenberg and Meg Whitman. The company has attracted massive investment dollars and creative talent to produce a new channel of high-quality, short-form video content. Another platform gathering steam is TikTok.

I’ll also include podcasts in this category. Although not exactly new, it is still a category still largely ignored by advertisers.

Source: Infinite Dial

New marketing approaches — Probably the best long-term alternative is to abandon interruptive advertising altogether and create more human-centered approaches to marketing. These are the ideas I outline in my book Marketing Rebellion. I predict a rise in investment in:

Immersive experiences/activations
Live events and conferences
Word of mouth marketing
User generated content
Influencer marketing
Social media and content that is more human, less automated

Brands are looking into an absolute advertising storm. They have huge budgets and a story to be told … with fewer and fewer places to tell that story. The need to spend ad dollars will drive a period of rapid platform innovation and create a mini-boom for side channels like Twitter and Pinterest as well as investment in human-centered approaches like experiential marketing and word of mouth.

It’s a scary time. It’s an exciting time. What are your thoughts?

Keynote speaker Mark Schaefer Mark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant. The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon.