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Advertising industry’s global media models in a state of extreme flux
By our News Team | 2023
The decades-old relationship between content, audiences and advertising is being eroded by data-rich performance channels like retail media.
It is becoming harder for global content-creating publishers to remain competitive against data-rich performance channels such as retail media, and to sustain publishing businesses through online display revenue alone.
These are among the findings of the latest Global Ad Trends: Media models in flux report from the World Advertising Research Centre (Warc).
Image by Megan Rexazin from Pixabay
“The very notion of what constitutes a media owner is being challenged by structural shifts in the advertising market. The decades-old relationship between content, audiences and advertising is being eroded by data-rich performance channels like retail media,” Warc observes.
As an example, Amazon earned US$37.7-billion from advertising services in 2022, almost the exact amount global print advertising was worth last year.
However, advertising remains an attractive, high-margin source of revenue, meaning existing media owners are aggressively evolving their operating models to survive. Netflix, the streaming service for movies and TV shows, is one of those that has made a recent move into paid advertising.
So too has Spotify, which specialises in digital music and podcasts and has an audience of around 500-million monthly users.
Publishing print advertising revenue has halved in six years
“For news brands and magazines, modest increases in digital ad revenue have been insufficient to compensate for print ad income losses,” says Alex Brownsell, Head of Content at Warc Media and the author of the report. “Global publishing print advertising revenue has halved in the last six years, from $75.9-billion in 2016 to $37.3-billion in 2022.”
The study emphasises that in a programmatically-traded, data-driven digital advertising market, it is becoming harder for content-creating publishers to remain competitive. Currently, more than $4 in every $10 spent on advertising in any format globally now goes to Alphabet (Google’s), Amazon or Meta (Owner of Facebook, Instagram and other platforms.
But even that seemingly high proportion of global advertising revenue may not be enough for the ‘big three’ companies listed above. Meta, for example, is launching a paid verification service reducing its reliance on ad revenues. Twitter has already done so.
Much of the ad revenue that previously went to media publishers with a content-related offering is now going instead to retail media because of retailers’ intimate knowledge of the customer.
Explains Brian Morrissey, media analyst and founder of The Rebooting, a publishing industry website, said: “The reality of the publishing industry is that you really cannot have an original content model that is mostly or solely reliant on display advertising revenue. Ad money is being eaten by retailers because they have really good data of what people purchase.”
All of which points to a global advertising sector that is currently in a state of extreme flux. You can download a copy of the full Global Ad Trends: Media models in flux report here.
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