Social media engagement has hit a plateau. Google has serious competition for the first time. Gen-Zers have gone from digital natives to digital detoxers. The years of seemingly infinite growth for the web’s walled gardens are coming to a close, along with the received wisdom that they are the safest bet for ad budgets.
Social Media’s Best Years Are Behind It
Continued growth in social media ad spend is predicated on there being concomitant growth in user engagement. This is not the case, and hasn’t been for years. Social media use peaked in 2022 and has since been in decline (paywall), with the biggest drop in the developed world occurring among Gen-Z and Millennial users—those very audiences that advertisers turn to social media to reach.
Younger generations pulling back from social media is no surprise, as they’re pulling back from the digital realm as a whole. Four-fifths of Gen-Z and Millennial adults in the U.S. wish they could easily “disconnect,” with many swapping touching screens for touching grass, and nearly half of the global Gen-Z population proactively limiting screen time.
Gen Alpha, meanwhile, may have their usage limited whether they like it or not. Australia’s teen social media ban is likely to be emulated in the U.K, and there is bipartisan support for similar measures in the U.S. In fact, in today’s increasingly fractious political climate, social media bans are one of the rare issues that inspire political unity.
If habitual social media use is prevented from developing early, then it will never develop for an as-yet unknown proportion of the population. Even those who do use social media once they come of age will do so knowing such platforms have a reputation for causing harm and, due to AI, does not reliably reflect reality.
Judging from spend forecasts, social media passing its peak has not been noticed by advertisers. Predicted growth in social media ad spend remains in double digits, with big-name brands like Unilever pledging at least 50% of their budgets to these platforms. This strategy may hold water for now, but brands competing for social media mindshare will become squashed shoulder-to-shoulder as long-term engagement declines.
Google’s Heavy Crown is Starting to Slip
Social media’s not the only Big Tech cash cow on a downswing. Google’s market share fell below 90% for the first time in a decade through competition with chatbots for quick queries and content discovery. Brands will follow the traffic and, should ChatGPT’s advertising flirtations hold, search budget chunks may soon be carved from the lion’s share that defaults to Google.
On the DSP side, Amazon is making aggressive inroads into display advertising, unifying it with its retail and streaming offerings to create a one-stop shop and encroach on DV360’s long-held territory. With 24% year-on-year growth under Amazon Advertising’s wings, the company that serves as the load bearer for web infrastructure is making a natural claim on the ads that flow through it.
Alphabet, though challenged, is unlikely to be sweating. It may have mounting competition in search and display, but YouTube is the de facto cross-channel video distribution platform with no serious alternative and, at an infrastructure level, it is the most likely large language model (LLM) fighter to still be standing should the AI bubble burst.
What recent years have shown, however, is that the power balance that has remained steady for the better part of a generation is seeing its first wobble. Old assumptions for who is most worthy of their place in the media mix can no longer be treated as gospel.
Outcomes Prediction Could Redress Channel Imbalance
Advertisers seeking underleveraged advertising space will find no better digital real estate than the open web. Despite U.S. internet users spending 59% of their time online on the open web (registration required), the channel only attracts 48% of advertiser dollars.
Blame for open web underinvestment can be placed on the buying experience, which trails behind Big Tech’s simple and slick interfaces. AI is set to change this, however, with machine learning becoming deeply integrated into once unwieldy programmatic pipes to intelligently automate everything from brand safety to fraud prevention and outcomes optimization.
Outcomes optimization has the potential to be a particularly powerful equalizing force in advertising. Thanks to constantly improving machine learning models, it is now possible to predict which supply paths are most likely to deliver a range of buyer-defined outcomes all the way through to in-store sales, finally disrupting shallow key performance indicators (KPIs) such as clicks.
Clicks alone cannot gauge campaign success in the modern market. All they represent are initial interest, not whether that interest translates into meaningful action. Did the user make a purchase? Fill out a form? Subscribe to a service? Come back later and convert? Those are the outcomes that drive business results and the metrics by which campaigns should be valued.
For advertisers, going cold turkey on clicks means shifting strategy from traffic quantity to conversion quality. This means adjusting bidding strategies to aim for a cost-per-acquisition (CPA) target, reallocating budgets to audiences with proven post-click engagement or refreshing creatives that fail to convert—all with a little help from AI.
This Will Determine the Best Media Mix
When all channels are judged purely for their ability to drive outcomes and simplified buying interfaces simplify multichannel orchestration, the best media mix will be determined by the real consumer behavior rather than whichever platform offers the path of least resistance.
When exploring new or underutilized channels, define phased markers for success in advance. Otherwise, it's easy to get dazzled by short-term spikes that may not be replicable in the long term. Budget allocation must also be based on clear signals, not habit: If a channel consistently delivers meaningful outcomes, increase investment; If it does not show results, trim it. This forms the basis of an adaptable media mix that evolves alongside consumers.
What was true yesterday will not be true tomorrow, and agencies that are willing to break old habits and refresh stale media mixes will be first to seize new opportunities.
