One of the ironies of increasingly stringent digital privacy controls: they might result in a consumer online experience in which advertising is much more prominent, conspicuous, and disruptive. Last week, Meta announced the introduction of two new ad placements to Instagram, including an ad unit in the profile feed:
Meta is not alone: YouTube has also recently increased ad load through the introduction of new ad placements as that property navigates the challenging digital advertising environment, which I’ve dubbed the Mobile Marketing Winter in a three-part series (parts one, two, and three). I believe this adverse environment has been catalyzed by three forces, which I outline in the original post:
This combination of forces has engendered a challenging operating environment and a deteriorating outlook for the digital advertising market: both for the platforms that sell ad inventory and the firms that are dependent on direct response digital advertising for growth. In response to this market dislocation, ad platforms, or the companies that sell owned-and-operated ad inventory, have pursued a shared playbook for improving advertising revenue. That playbook contains four tactics, as I describe in a piece about Meta’s transition to an open social graph and short-form video:
It’s worth noting that increasing ad load is likely the least preferable of these tactics. Ad load as a metric is captured by the proportion of user engagement that is represented by advertising. When more time or feed surface area is filled with advertising content, by definition, the less genuine, native content a user consumes. It’s understandable, then, that increasing ad load can lead to increased user churn.
Ostensibly, Meta’s original goal in completely transforming the content composition of its apps was to augment user engagement such that increased ad load wasn’t necessary: if users spend more time in Meta’s apps, then they’ll engage with more ads even if ad load remains constant. From the piece:
Meta’s goal with the open graph — and in prioritizing short-form video, which is generally more engaging and entrancing than short-form text-based content — is to expand the pool of content available to be exposed to each user. And with more content available to be shown to a given user, Meta benefits from more opportunities to score relevance and personalize the experience to that user: the user is exposed to the best and most relevant content from a larger pool of possibilities.
That Meta has chosen to increase ad load as it pursues a new content strategy designed to improve engagement is a testament to just how disruptive the forces I outline above have been to digital advertising, broadly. Reels, which is Meta’s short-form video product, experienced lower average monetization through ads than other formats as of the company’s last earnings call. An increase to ad load would suggest that this continues to be the case.
Note that YouTube is pursuing exactly this same remedy: it has tested increased ad load in its CTV client while also introducing a TikTok-style short-form video product, Shorts. And it seems inevitable that other platforms will follow suit: of the four approaches to improving ad revenue identified above, only ad load can be adjusted quickly to react to market shocks and other operating headwinds.
Recent