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OPINION: Marketers will spend less on Facebook in 2020

Oct 21 2019 12:09
Kunal Gupta

Digital advertising spend in South Africa amounted to R36.6 billion in 2018, surpassing print advertising for the first time. With a growth rate of 13%, digital advertising will surpass TV advertising by 2022 to be the largest media channel. In many countries, digital advertising already represents over 50% of total advertising spend by marketers.

All of this growth in digital introduces new ways for marketers to better connect with and engage their customers. Social platforms like Facebook, Instagram and YouTube continue to innovate with digital advertising experiences and offer them at an unprecedented scale, which has led to their businesses growing fast.

Digital advertising globally will be over $300 billion this year with social platforms accounting for over $100 billion of it. The revenue for social platforms as a category is growing at a healthy rate of 25%, almost twice that of the South African digital advertising market.

Social platforms may be experiencing rapid growth - however most of the marketers who spend on their platforms are not enjoying the same growth. The South African economy grew 0.8% in 2018 and is estimated to grow a mere 1.1% this year. By comparison, Facebook grew 28%. Google grew 19%. The data signals an imbalance between how effective advertising is on the platforms and makes it clear that the platforms are benefiting, not the businesses who are spending on them.

While platforms may have reach and audience engagement, it may not be the right environment for marketers to achieve their business growth objectives.

The platforms know this better than anyone, which is why they have all built walled gardens that do not allow marketers to independently verify advertising effectiveness. User privacy has become a convenient cover for both Facebook and Google in the past year to limit how marketers can use audience data for targeting and attribution. The platforms not only mark their own homework by telling marketers how their campaigns performed but also are in a conflicted position to take credit for value they may not have created. 

The good news is that the scrutiny is increasing on the platforms. However, it is coming from an unlikely source: governments and regulators.

These public-run institutions have historically been laggards to come in and clean up bad business practices. But when it comes to holding platforms accountable for brand safety, third-party verification, data portability and user safety, marketers have been the laggards and continue to quietly spend money on Facebook and Google, who may not be actually helping them grow their business. Marketers have the strongest voice and can choose to align with the Trusted Web instead of the Toxic and Dirty Web.

This choice in 2020 may not only help them achieve their business growth objectives but also make a positive impact on the society and culture their customers ultimately expect.

Kunal Gupta is the CEO of Polar, a global technology leader in advertising innovation, based in New York. Follow him on LinkedIn.

Kunal will be in South Africa with The SpaceStation from October 28 to 30 to share global perspectives that will influence how digital advertising will change in 2020. Contact The SpaceStation to learn more.

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