What the Heck is Going On with Social Media, and How Does it Affect Advertisers?

Social media—a medium that’s shaped politics, reunited friends from across the globe, and transformed the digital advertising landscape—is in a moment of crisis.

No, not because of the misinformation and hate speech thriving on its pages. And not because of the new regulations popping up in Europe that will limit some of the hyper-granular targeting that has made social media such an appealing medium for advertisers. (Well, maybe not only because of that…)

In fact, it’s a deadly cocktail of factors that’s sent stocks plummeting and is causing social companies to miss revenue expectations. Among them: inflation, war, rising interest rates, supply chain crises, fluctuating consumer confidence, increasing privacy concerns, stunted growth on established platforms, a billionaire who can’t stop criticizing the company he’s trying to buy, and a pandemic that just won’t seem to end. It’s a list so long that it can’t all fit into a single Tweet (though maybe Elon has some ideas there as well...)

Let’s take a quick look at the latest from the wild world of social media and consider what it all means for digital advertisers: 

Oh Snap

The current panic began with Snap (the company behind Snapchat) announcing they would fall short of earnings and profit goals for Q2, leading to a huge stock selloff that drove the company’s value down by 30%. 

The cause of both the revenue miss and the fears around the future—both for Snap and the social media market in general—is ongoing economic uncertainty. While tech behemoths like Microsoft, Apple and Google have the luxury of cash stockpiles that allow them to continue to spend on everything from talent to tech, many social platforms that rely heavily on digital advertising may not be so fortunate. That includes Snap as well as the world’s largest social media company: Meta.

Meta Misses the Mark

Privacy-related measures—specifically, Apple’s App Tracking Transparency—have hit Meta especially hard, with CEO Mark Zuckerberg saying the feature will likely cost the social media giant $10 billion in earnings this year. However, that may only be a part of the story when it comes to the company’s struggles. In truth, Meta’s losses seem to be other platforms’ gains, with one platform in particular appearing to benefit: TikTok (more on that later...)

The outlook for Meta is far from rosy, with eMarketer reporting that the Facebook and Instagram owner’s YoY growth could potentially be in the low single digits or, worse yet, negative. Add in stagnant user growth, increased regulation, and scrutiny over the company’s metaverse ambitions—which cost Meta over $10 billion in 2021 while generating little-to-no revenue, and which Zuckerberg says will lose “significant” amounts of money over the next five years—and it’s clear that 2022 could be a tipping point for Meta.

Twitter Atwitter with Takeover Buzz

Then, of course, there’s Twitter. Much of site’s future depends on the result of Elon Musk’s bid to buy the company. At present, Twitter relies principally on advertising revenue, but Musk’s plans reportedly include an increase in focus on revenue from subscriptions and data. However, he’s also stated a desire to make the platform a home for maximalist free speech with less content moderation—something that could make Twitter a far less hospitable destination for digital advertisers who are interested in prioritizing brand safety. For that reason—not to mention the risks that could arise if the deal falls through (due to, say, too many bots on the platform, or Musk’s fortune shrinking after a fall in Tesla’s stock price)—Twitter may too be in for a bumpy ride in the months ahead.

The TikTok of it All

Looking for a silver lining? Look no further than TikTok, the micro-video sensation that’s seeing explosive growth. The app is already the third-largest social network in the world, and it’s expected to see $11.64 billion in global ad revenue in 2022—more than Twitter and Snapchat combined. With US adults spending an average of 46 minutes per day on the platform, TikTok appears to have ascended to YouTube levels of engagement and, coupled with some new branded content opportunities for marketers and creators and soaring popularity with Gen Z, may make it a safe landing space for digital advertisers.

What it All Means for Digital Advertisers

While advertising spend typically goes down in the face of economic tumult, social media is a critical part of any digital ad campaign. With advertisers looking to optimize their spend, now might be a perfect time to focus on (and invest in) video. US digital video ad spend is projected to rise by over 25% this year to more than $76 billion and will surpass $100 billion by 2024. Creating effective digital video ads can help your brand stand out in social feeds and make the most of your ad budget.

Whatever your strategy, it’s going to be critical that brands stay agile in the months ahead. The world is changing quickly, with economic, political, and social shifts fostering a continuously evolving advertising landscape—particularly in the ephemeral world of social media. Marketers that can pivot with the needs of the environment (and the needs of their customers) will be the ones that are best set up for success. 

Embracing solutions like workflow automation, which can save media buyers valuable time that they can subsequently re-allocate to strategy, and artificial intelligence (AI) tools that can help generate better campaign outcomes by using predictive modeling to find and optimize audiences and placements for KPIs, will help advertisers keep up with the changing times and trends. 

Curious? Our guide, Meeting the Moment with Advertising Automation, details how intelligent automation systems can empower marketers to move quickly and feel more confident in their digital advertising strategy.