What were cracks across the digital advertising landscape last year have become full-on ruptures this year. Between Apple iOS 14 muddying targeting and attribution, and Twitter’s turbulent takeover, digital advertisers say they are feeling the squeeze on all sides. Add in economic uncertainty and the latest earnings update from Google, Facebook et al, it’s a pretty grim picture, advertisers say.
In this edition of Digiday’s Confessions series, in which we exchange anonymity for candor, the CEO of an advertising agency talks about challenges across the digital landscape and why advertising in the space is harder than ever.
This interview has been lightly edited for clarity.
What’s the current landscape for digital marketing?
The volatility is really interesting because there’s volatility on three fronts and it’s affecting everybody badly, actually. The media ecosystem is extremely volatile right now. Paid is so up and down day-to-day and week-to-week right now.
One day the CPM on Facebook ads will be $22, the next day $41. Week-over-week, it’s just getting worse and worse right now. Everything is in the gutter and then the performance is also in the gutter. Every business I talk to, minus five to 10%, is hardcore struggling. Everyone’s having retention issues across the board. Everyone’s having consumer retention issues. Media efficiency is [tolerable] at best. CPA [cost per action] and CAC [customer acquisition cost] are rising consistently. For the last three to four weeks, CPM [cost per mile] is going down. So that means that people, in theory, are lowering spend. It’s a very unpredictable ecosystem and we’re seeing companies get hurt by it right now, badly. I just had a call with a client. He’s like, ‘Man, you’re our fourth agency and everybody before us could not get customer acquisition down, and you did in a week.’ But, I’m burning money here. I don’t know if I can do this.
Recently, a Meta investor criticized Facebook’s push into the metaverse. Meanwhile, there’s no standard resolve on the platform for Apple’s iOS 14 data privacy changes. What do you make of that?
The moment iOS came out, [Meta CEO Mark Zuckerburg] turned the other way and freaked out. There’s so many ways they could have solved it. The moment that this stuff happens, and you know that you can pull hundreds of millions of dollars in people’s livelihood and you don’t solve it. You go into something that people aren’t even adopting right now, or talking about adopting, into the metaverse. How much are they even investing in their ad platform?
The whole ecosystem, this whole macro environment that’s going on right now, from [Facebook’s] earnings, to the letter and then all the Twitter stuff and [Snapchat shares are down]. Some [marketers] are really taking a hit right now. It makes us question, what are any of [the platforms] doing to solve this? Brands, agencies, hybrid in between whatever you want to call it, just advertisers in general on any side are all in this weird, middle, floating space. We’re all kind of scratching our heads, saying, what’s going to come out of this?
What does it mean for ad agencies?
Unless there is a large innovation in regards to those three buckets of iOS 14 [targeting, attribution and third to first-party data], we better be ready for a very different landscape in regards to how we operate.
Is there light at the end of the tunnel here?
Every industry goes through an evolution. This one’s a little bit forced. DTC is not dead. Amazon is not dead. Retail is not dead. Is it harder than ever right now? Absolutely. But I’m a big believer that there’s always light at the end of the tunnel. The agency industry is well overdue for an amended model.
The platforms, from an ad platform perspective, have gotten really greedy over time and really comfortable. And all it takes is one little data change, and their company went from a trillion dollar company to now $200 billion in less than two years. At the end of the day, people are a little scared because there’s a lot of unknown. Just do what you do best, which is make smart decisions, don’t overspend [and] be really cautious about how you run your business right now.