Here at Skai, we have decades of combined experience in key digital advertising channels across our client, product, sales, and marketing teams. Every year around this time, we check in with our internal experts to hear how they think these channels will evolve. So follow along this week as we share what we believe the future holds for paid search, paid social, retail media, app marketing, and measurement.
Paid social is the second largest digital advertising channel with 2021 US spending predicted to hit $61.5 billion—that’s up 33.8% over 2020’s $46 billion. It is an incredibly versatile and diverse channel with multiple publishers, a variety of ad types & formats, and a highly engaged user base that spends over 70 minutes on average each day with their favorite social networks. In 2020, time spent with social networks jumped 18.5% versus 2019 numbers—of course driven by the pandemic as users tried to fight boredom and stay connected with their friends and family.
The following are some of the paid social predictions the Skai team has identified for 2022.
Paid social spending will be up around 17% in 2022
According to the Skai Q3 2021 Quarterly Trends Report, paid social was up 26% year-over-year in Q3. Based on 2021 data and other factors, our predictions are that paid social spending will experience a year-over-year increase of 17%.
Ad costs won’t spike year-over-year as they did in 2021
At the start of the pandemic, many brands—and even full industries–curbed their spending as they waited to see what would happen in the market. Because of the lack of platform competition, paid social CPMs and CPCs experienced unprecedented drops which offered tremendous deals for social marketers still willing to push through the murky waters. As budget levels returned to pre-pandemic levels in 2021, social ad costs rocketed up and have even surpassed what they were in 2019.
This prediction really isn’t us going out on a limb due to the rebounding ad price spikes in 2021. There’s very little chance for the year-over-year percentage increases to match the 2020 to 2021 numbers. Next year’s CPMs should stabilize in comparison to the jump seen in 2021, with a slight 1-2% increase in CPM is projected.
Tracking issues don’t stop the freight train that is Meta
In the wake of Apple’s big change to iOS in 2021 which dramatically advertisers’ ability to track users across mobile devices, Facebook initially offered some solution ideas for marketers, but there has yet to be any significant fixes to this challenge. One reason may be that it’s not just Facebook that was affected, but all mobile-first publishers. So, while many marketers are concerned about this visibility issue, reallocating budgets doesn’t really solve anything.
Many experts predicted that the publishers most impacted would experience drops in ad spending, but with digital advertising up big this year, it’s been hard to determine if the tracking woes have dissuaded investments. Anecdotally, Skai’s client services team has reported that most of our social clients are focused more on how to make the best of the new circumstances rather than big shifts in Meta spend next year.
We believe that the social advertising train will keep on its meteoric course up and to the right in 2022 and Meta won’t experience any giant drops in marketer spending.
A diversification of campaign objectives
Social advertisers expanded their campaign types to include more Brand Awareness, Reach, and Traffic objectives in 2021. This was likely a reaction to the iOS14 change as advertisers tried to adapt their measurements of success in the shifting landscape. Based on the trends seen in 2021, we recommend marketers invest more in Placement Asset Customization (PAC) and Dynamic Product Ads (DPA) program types as an always-on tactic that allows for a more tailored and customized approach.
In 2022, we expect this diversification to continue as marketers rely less on conversion-driven optimization and more focus on engaging customers better while on social media.
Less reliance on first-party audiences as data challenges continue
In 2021, spend on third-party audiences significantly increased year-over-year by 37%. Again, this is likely attributed to the iOS 14 tracking changes. Before Apple’s switch went into effect, it was the various ways that brands could leverage their first-party that were the gold-standard of social targeting. For example, Facebook custom audiences—and subsequent look-alike audiences made from those seed groups—have been some of the most valuable types of targeting for most brands for years.
Data deprecation is a growing challenge—not just from iOS14 or cookie limitations—but from a variety of factors. As these issues continue in 2022, look for brands to rely more heavily on the targeting options provided by social networks and data providers nestled within their walls. Interest targeting, post/profile engagement, and other intra-social signals will become increasingly a part of the paid social marketers’s mix in 2022.
Social marketers will wrap their heads around the metaverse opportunity
For some, 2021’s Facebook’s rebranding to Meta was a bit of a head scratcher and even a bit silly. Others explained the move as a conveniently planned distraction to divert attention away from the company’s other issues. However, Meta has been thinking about this for some time when it bought Virtual Reality headset maker, Oculus back in 2014 for $2 billion. Anyone who has gone through a company rebranding knows that it takes a lot of planning and effort, which clearly means this wasn’t a quick decision. This was most definitely a multi-year, deliberate plan.
Right now, the metaverse’s evolution is about where the Internet was around 1998. It’s a “discovery of a new world,” and there’s about to be a giant bubble as companies and investors jump in to ensure they don’t miss the boat. For example, just like we saw domain squatters in the late 1990s buying up domain names, we’re seeing investors buying up land “parcels” in metaverse worlds like Decentraland and Sandbox for seemingly outrageous prices.
And because social’s most prominent player is now leading the charge into the metaverse, it means that social marketers will most likely be the tip of the spear in terms of marketers leading the charge to use it as well. In 2022, look for social marketers to get more interested and involved in how best to market in the metaverse.
2022 will be the year marketers are fully ready for TikTok
As we’ve seen throughout the first decade of social advertising, it takes a few years for emerging publishers to garner mainstream marketer attention. In the first few years, most take a wait-and-see approach to ensure that the platform isn’t just a short-term fad— except for the early adopters whose target customers align well with the platform’s audience. Then, because large marketing organizations set budgets annually, the first year of spend is just some initial tests followed by a bigger testing budget in the following year if they experience some success.
It’s the third year where bespoke budgets are planned for the new publisher. That’s about where TikTok is for most brands. TikTok has been beefing up its retail/direct response focus and commerce capabilities such as TikTok’s live stream shopping that launched earlier this year. Look for 2022 to be the first big year of TikTok advertising as bigger brands dedicate true line item budgets on their annual media plans to give the fledgling social network an opportunity to prove itself.
2022 paid social predictions are in, but your 2022 social ad performance is in your hands
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