Tinuiti Sees Real Bright Spots in the Digital Ad Landscape

Tinuiti, the largest independent performance-marketing firm that measures across Streaming TV as well as Google, Facebook, and Amazon, has published “Q1 2023 Digital Ads Benchmark Report”. This report looks at trends across the digital ad landscape of paid search, paid social, digital marketplaces, and video and display advertising. Tinuiti has nearly $4 billion in digital media under management and 1,200+ employees.

Some of its quarterly comparative findings were as follows:

• Instagram Reels. The video platform’s share of impressions rose upwards of four times compared to the same time last year.
• Meta Ads. Media spend growth rebounded after three straight quarters of declines to hold steady year-over-year in Q1. The rise of Reels and strong performance from Advantage+ shopping campaigns are helping advertisers maintain spend levels from last year.
• TikTok ad spend soared 26% year-over-year as advertisers expanded investment in the Chinese platform.
• Amazon Sponsored Products spend grew 12% year-over-year in Q1 without a major Prime member event since Q2 2022.
• Over the second half of Q1, Amazon’s share of Google Shopping impressions was up by an average of 20 points compared to a year earlier.
• Walmart Sponsored Products return-on-ad spend (ROAS) increased throughout Q1, as the January rollout of variant bidding allowed advertisers to shift budget to the best-performing product variants.

StreetFight sat down with Mark Ballard, Research Director at Tinuiti, to go deeper into more of the findings.

Google AOV growth AOV growth spiked to 14% Y/Y in Q2 2021. Why In Q1 2023, has Google search ad AOV gone up just 2% Y/Y?
Google’s average order value growth spiked around early Q2 2021 as advertisers faced weak AOV comps from the early months of the pandemic a year earlier. Over 2021 and 2022 AOV growth slowed but remained relatively strong as inflation put pressure on product prices. As inflation has begun to cool, search AOV growth is losing that additional support.

What are brands thinking when they think of advertising across Google?
First and foremost, Google is the world’s largest search engine, and search remains one of the best-performing channels for direct response online. Couple that with the additional breadth Google offers in the display and video worlds along its targeting and measurement tools, Google is pivotal to reaching a large and cost-effective audience online.

Will ChatGPT take advertising market share at some point?
While large language models like ChatGPT have shown disruptive potential in many areas, it’s too early to say whether they will shift advertising market share in a meaningful way anytime soon. When Amazon’s Alexa was gaining popularity years ago, there was a lot of hype around voice search and how that was going to become the new search paradigm. It turned out that the use cases for voice assistants were largely different and incremental to those for traditional search. It’s unlikely that the chat paradigm will replace traditional search either, but the power of large language models is going to be important behind the scenes of traditional search. It’s not clear whether anyone has a particular advantage in that sense yet, but Google has certainly touted its use of AI for years now.

Google’s late 2022 transition from Smart Shopping to Performance Max campaigns was an important milestone but hasn’t led to a significant change in trending for Shopping ads yet. What must Google do to change this?
With so many moving pieces at Google and in the macroeconomic picture, it’s hard to judge Performance Max just based on the overall trending for Shopping. The fact that Performance Max has been able to deliver an average sale per click comparable to standard Shopping ads, while generating 15-20% of its spending from non-Shopping inventory is a good sign. This inventory would generally be considered a higher funnel and not be expected to convert as well as search traffic. If Google is able to maintain these levels of incremental inventory or even increase them at a similar ROI while improving adoption of Performance Max, that would be a success for them.

Can you explain what advertisers are thinking when we see that YouTube spending grew 8% from Q1 2022 to Q1 2023, up from 3% Y/Y growth in Q4 2022? What is driving that?
Google’s YouTube revenue growth historically outpaced its search revenue growth until late 2021, and as the macroeconomic picture became even more uncertain in 2022, YouTube and other typically higher funnel channels took a particularly big hit to growth. We’re in the early stages of a reversal of those trends, with YouTube now accelerating faster than search. YouTube is also seeing strong results from connected TV and has some runway to improve the monetization of Shorts.

The report finds that mobile remains the dominant device for YouTube ad spending, with 55% in Q1. Why do you think ad on YouTube for TV screens jumped from 18% in Q1 2022 to 26% in Q1 2023?
The strength of connected TV trends for YouTube ads largely reflects changes in user behavior. In just a year, desktop and TV share of YouTube spending has essentially flipped as users have increasingly turned to CTV to watch YouTube content.

Overall, what do you see happening with digital ads for the rest of 2023 in terms of growth or declines in ad spends?
As some of the worst-case scenarios for the economic picture become less and less likely and year-ago performance comps continue to weaken, digital ad growth trends appear to be turning a corner in early 2023, with many segments already seeing accelerated growth. Short of any new adverse factors that come into the picture, trending for digital ads should continue to improve over the rest of 2023.