‘Weirdly’ Priced Out of Advertising Deals: ‘We Could Have Made a Lot of Money’
Bloomberg: We could have made a lot of money selling advertising on social media platforms like Twitter.
That’s the conclusion that many ad buyers have reached, but it is also a stark reminder of the challenge of navigating a new industry, where brands are increasingly struggling to sell their products.
The challenge is even greater for companies that have long sought to monetize their digital presence, such as the music streaming service Spotify, the travel site Expedia and the food delivery company DoorDash.
These companies also face pressure to maintain a steady revenue stream even as the number of users on their platforms continues to rise.
But it is a challenge that few are taking seriously.
Advertisers are starting to realize they can’t expect to get rich selling ads on Twitter or Facebook, said Jim Rennie, a former chief executive of ad agency DoubleVell and co-founder of Rennies Group.
“The reality is they’re doing the math and they’re starting to think about the fact that the average advertiser on Twitter and Facebook is not going to make any money,” Renni said.
That has been one of the most telling insights of the past year: The number of people who visit an advertiser’s Facebook page on a given day on average has grown by 25 percent since 2014.
That number is nearly twice what it was a decade ago, according to a study from the research firm Kantar Media.
The trend has been fueled by two key factors: a rise in the popularity of mobile devices and the rise of online marketing platforms like YouTube and Facebook, which have enabled marketers to leverage the power of their networks and create content for users to view on their devices.
While it’s unclear exactly how many people are using these platforms, the growth has led to an unprecedented surge in ad spend, which now accounts for about half of online ad spending, according the Digital Advertising Alliance, a trade group.
That money has helped drive the digital ad market to new heights, driven in part by the proliferation of social media advertising.
The total value of all the social media ads sold last year was $2.8 billion, up 22 percent from the same period a year ago, the industry’s biggest year-over-year gain in the history of online advertising, according of Kantar’s latest report.
Social media has allowed advertisers to reach an unprecedented share of the $3.7 trillion market for media in the United States, up from $2 trillion a year earlier, the association reported.
The growth is fueled by an explosion in online ad spend and, increasingly, the popularity and accessibility of mobile apps, which are increasingly used by millions of people.
“This is the first time we’ve ever seen that kind of growth,” said Rob Parnas, chief marketing officer at digital advertising company Avis Budgeting, which represents about 40 major advertising agencies.
“That is a lot more than just advertising, that is a way of life.”
The growth has come at a price, as the amount of money marketers are paying for digital ads has grown more than threefold since 2014, according and estimates by research firm comScore.
The median total revenue per user for digital marketers in 2016, a year that includes the social ad growth, was $1,542, according data from comScore from August through October.
That figure is up by about 40 percent from 2015, according ComScore.
Averages in 2018 were nearly $3,000 per user.
Ad dollars are on the rise at nearly the same rate.
In 2018, the average brand spent $10.85 on digital ads, up 13 percent from 2016.
“We’ve been paying more for content and for social media for years, but now we’re seeing it pay off,” said Jim Stahl, a partner at DoubleVells.
“They’re doing more and more digital ads on platforms that they can monetize, and now they’re paying the bills.”
The big winners, in a word: advertisers.
According to a report by market research firm Fulfillment.com, which tracks digital advertising revenue, brands are seeing the largest return on investment in digital ads ever, growing an average of 6 percent in 2017 and 6 percent last year.
That makes them the top-performing digital advertising advertisers in the U.S. They’re also the ones who have the highest overall returns on investment, with an average return of 9.8 percent, Fulfilment said.
“It’s a new revenue stream for brands and it’s going to help them continue to invest in new ways to reach new audiences,” said Chris Ries, an analyst at Fulfilled, who noted that social ads are now the fastest growing form of advertising.
That growth has helped advertisers generate a net gain of $1.6 billion in ad dollars in 2017, according Fulfills data.
That is a 15 percent gain from the previous year, which Fulfiller attributed to an uptick in online advertising spending