Magna, which is owned by IPG Mediabrands, this week cut its 2022 outlook for social media ad growth worldwide from 18% to 11%, according to a revised estimate.
The reach and time spent with social media apps are reaching their limits in more advanced Western economies and China, and some platforms have reported usage declines in their mature markets.
Apple’s privacy changes last year have made it more difficult for brands to reach target audiences on social media. The effect was gradual, but was apparent by the end of last year as social media advertising became less attractive, especially for Meta Platforms and Snap, according to Magna.
Magna’s revised forecast for social media ad growth comes as marketers face growing economic uncertainties that have tarnished an otherwise strong outlook for the advertising market. While the media agency reduced its forecast for global ad growth from 12% to 9%, it identified two hurdles that are most pronounced for social media advertising: audience saturation and targeting restrictions.
Signs of market saturation had become more evident last year, when higher ad prices drove the growth in ad spending more than an expansion of ad impressions, Magna said. The maturation of social media is increasingly evident for companies such as Meta Platforms, which runs Facebook, Instagram and WhatsApp. Facebook’s daily active users (DAUs) in the United States and Canada have hovered at 195 million to 196 million for the past two years, and similar stagnation has been seen in Europe. The social network’s global DAUs edged up by 4% from a year earlier to 1.96 billion in the first quarter of 2022, according to its quarterly results. As Facebook’s user growth slows, marketers can’t expect the platform to help them reach new audiences.
Apple’s stricter privacy policies also have become a more significant impediment to reaching target audiences. The tech giant last year added a feature call App Transparency Tracking (ATT) to the software that runs devices including the iPhone, giving customers a way to opt out of sharing identifier data with apps and websites. The greater anonymity made it more difficult for marketers to attribute consumer purchases to campaigns among different social media platforms, according to Magna.
Marketers face the prospect of additional privacy restrictions next year. Those limitations include Google’s change to its popular Chrome browser that will prevent the use of tracking cookies as a digital identifier of consumers. The search giant is among the companies that are developing alternative identifiers that allow for greater anonymity while also giving advertisers an idea of their audience reach. Magna foresees the possibility that social media companies will become more attractive to advertisers with the expansion of in-app commerce and partnerships with media networks run by retailers, among other innovations.