The impact of inflation on advertising spending is described in detail inside the Merkle document

Leading technology and data-based customer experience company Merkle released its quarterly Performance Media report last week.

Research in the last quarter shows valuable insights into the priorities, challenges and performance of marketers.

As more than 57% of respondents indicated an increase in spending on paid search on an annual basis, these findings are particularly important as we face economic challenges and uncertainty.

I met with Matt Mierzejewski, Vice President of Search at Merkle, where he presented me with some of the most obvious statistics from the performance report.

Prioritizing privacy and measurement

According to the Merkle report, 45% of respondents stated that accurate reporting, taking into account privacy rules, is the main priority in measurement.

Many companies are probably in the same boat, but may not know where to start.

Mierzejewski says: “Brands are big when it comes to measuring between devices. Apple interfered with the measurement game. Many companies want to build their data warehouses for several reasons:

• Too much reliance on individual platforms. The more conversions are modeled in the platform, the less complete the individual measurement of the company.
• They are tired of black box solutions. Brands want to be able to own or change the way they model conversions.

Mierzejewski also noted that with more brands looking to build their own reporting solutions, the dependence on the platform’s conversion truth to their own conversion truth is changing.

Prioritization of target groups and own data

Threatening privacy regulations have triggered the need for brands to create and manage their own first person data.

However, only 35% of respondents prefer audience management and their own data.

I asked Mierzejewski, “What do you see as the macro consequences of so many companies waiting for this?”

He answered with a few points:

“From a digital perspective, they are moving in the direction of shaping their creativity and messages properly.” If you’ve worked with a brand, you’ll notice how consumer expectations have changed.

“Classification of audiences and first-person data results in a poor user experience.” Failure to prioritize these key aspects of marketing will accelerate the slowdown or further remove the feeling that the customer is connected to that brand.

“You need to use these unknown audience signals to your advantage to meet consumer expectations and beat the competition.” For example, an audience of active consumers from Google releases more signals and intentions to buy. They allow these signals to be in the open market.

Mierzejewski summarized: “It misses the opportunity for the best customers. You will compete for the worst customers! ”

Paid social growth in 2023

The predominant 67% of respondents preferred paid social networks this year as in 2021.

The growing number of social platforms with ad options is partly a factor in the increased prioritization.

To the question of which social platform would experience the greatest growth in 2023?

“If we talk about raw dollars, Facebook and Instagram will still win,” Mierzejewski said.

He goes on to say: “If we look at the growth rate and who to look out for, it is Tik Tok. ” Matt has highlighted user projections as TikTok’s growth is expected to surpass Snapchat next year.

Inflation encourages faster adoption of machine learning

With inflationary costs, automation and machine learning can be phased out.

Regardless of the Merkle Performance Report.

• 41% of respondents begin to take action in the field of automation and machine learning strategies
• 38% of respondents have made significant progress in their ML strategies

So why is inflation encouraging faster adoption of automation?

“Inflation is just one element. It goes hand in hand with recent years. COVID has accelerated e-commerce and the digital world for many businesses, ”said Mierzejewski. He continued with the words:

“There is more control over investment in companies. They are trying to beat the market and the competition. There is pressure to link managers to data and marketing measurement. “

Let’s not forget one of the most critical aspects: resources.

Mierzejewski concluded by noting that if companies have difficulty recruiting individuals, they try to do more with less. They need to rely on automation to supplement the workload.

The impact of inflation on advertisers’ strategies

We’ve seen statistics on advertisers ’increased costs on an annual basis.

We better understand what marketers will prioritize in the future.

Amid economic factors that companies cannot control, advertisers may not know how and where to target their strategy. When Mierzejewski asked this question, he gave his expert opinions.

“Expect double-digit changes in advertising spend.”

Whether the above statement refers to an increase or decrease in advertising spending, this change is based on a mixed strategy, cash flow, inventory positions, and verticals.

“Economic pressure reminds me of 2008 – the decline of the digital sphere. Some customers will reduce their advertising spend. Others can take advantage of the downturn and have double-digit growth, ”Matt commented.

CPCs are likely to decrease.

In these environments, CPCs are likely to decline. This could allow advertisers to shuffle dollars depending on what works best for them.

Matt notes, “If you can be bold, it’s time to do it.” Reduced CPCs become a buying opportunity for advertisers with the financial ability to spend more.

“Don’t pat yourself too hard on the back.”

Mierzejewski stressed: “Be careful with the data.” He explained that with inflation and rising costs, you can also see a natural increase in revenue.

For example, if you notice a 10% increase in sales, but have spent 15% more on advertising or COGS, this may be a misrepresentation of growth. The 10% increase in revenue can be attributed to the cost of inflation and in this case indicates a decline in profitability.

Summary

The third quarter performance report provides invaluable data for unpacking.

If you haven’t taken action on privacy regulations yet, you’re not the only one.

And while inflation, privacy and other economic impacts can cause shifts in performance trends, they are not the only factors.

The paid media landscape is changing every day. Use this to understand how others in the space are changing priorities and strategies and what this means for you.

You can download your copy of the marketing performance report here.

Special thanks to Matt Mierzejewski, Vice President of Search at Merkle, for taking the time to review these statistics and provide additional insights.

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