More Evidence Online Advertising Finished Strong

When Tinuiti released its Digital Ads Benchmark Report for Q4 2023 on Jan. 25, the findings offered still more proof that the year finished strong, at least for online advertising.

 “While we did expect stronger growth in Q4 2023 as the ad market continues to recover from 2022, there were still questions heading into the final quarter surrounding the state of the American consumer and whether demand might be softer this Q4 than in prior years,” said Andy Taylor, VP of Research at Tinuiti. “Seeing the strong growth our advertisers observed in the sales attributed to online advertising on key days of the holiday shopping season, made it clear that consumers are still spending, and demand hasn’t yet fallen off as had been feared prior to the holidays.”

Tinuiti is the largest independent performance-marketing firm across Streaming TV and the “triopoly” of Google, Facebook, and Amazon. It has $4 billion in digital media under management and more than 1,000 employees.

To put together the findings for the Tinuiti Digital Ads Benchmark Report, the company used anonymized performance data from online advertising programs under its own management. One caveat: These trends and figures are not meant to represent the official performance of any advertising platform or the experiences of every advertiser.

Nevertheless, the report found that Facebook, Instagram, Amazon Sponsored Products, Google search, and YouTube experienced significant ad growth throughout 2023. And while Facebook was the only platform to see slower growth between the third and fourth quarters, it still experienced the highest increase in growth from the beginning to the end of the year.

The report uncovered some key findings:

• Across the major digital ad platforms of Facebook, Instagram, Amazon Sponsored Products, Google search, and YouTube, spending growth closed out 2023 on much stronger footing than it began the year. While Facebook was the only one of these platforms to see a deceleration in growth between Q3 and Q4, it still saw the biggest lift in growth from the first quarter of the year to the last.
• Across both Google and Amazon ads, Q4 growth in the sales attributed to ads was strongest during the period from Thanksgiving through Cyber Monday, commonly known as the Cyber Five. For Amazon ads, sales growth peaked on Black Friday at nearly 40% YoY, and Google saw its strongest sales growth for retailers the very next day at 18% YoY.
• YouTube ad spend grows about 17% YoY. The share of YouTube ad spending devoted to television screens increased from 20% in Q4 2022 to 25% in Q4 2023. All device types did see an increase in spending from year to year, but TV saw the fastest spending growth at 44% YoY.
• Advertisers ramped up Walmart Sponsored Products spend 62% YoY in Q4. CPC growth topped 30% in each of the last two quarters of the year, following five straight quarters of year-over-year declines in CPC following Walmart’s June 2022 switch from a first-price auction to a second-price auction.
• Advantage+ shopping campaign spend share continues to climb for Meta retail advertisers. Many retail advertisers have quickly adopted Meta’s AI-powered campaign type Advantage+ shopping, and in Q4 2023 27% of all Tinuiti retail spend across Meta properties went to Advantage+. That’s up from 23% in Q3 and 19% in Q2.

Even though Facebook saw slower growth between the quarters, Meta had an overall better 2023 than 2022. Taylor knows why.

He said, “In addition to the impact of softer year-ago comparisons stemming from weaker 2022 growth, two major factors that stand out are the growth of new inventory sources like Reels, both on Facebook and Instagram, and growth in the adoption of Advantage+ shopping campaigns, which many retail advertisers have had success with.”

Now that Google has finally removed cookies from tracking a portion of its Chrome browser users, Taylor said tracking won’t go away but evolve.

“While Google’s cookie deprecation is a pivotal moment in the continued evolution of tracking and targeting methods, the major platforms we study have many first-party signals that won’t be interrupted by the change,” he said. “We expect to continue to be able to target online advertising effectively across the digital ecosystem even with the update.”