Video accounts for more than half of all social network advertising revenue, marketing and research firm Insider Intelligence says. It is an upgrade from the company’s earlier forecast when video was not expected to reach 50% until after 2024. With advertisers preserving more of their social video budgets during the downturn, this trend was accelerated, the company says.
“Social video is still growing—fast. In fact, its 21.2% growth rate in 2023 will outpace that of retail media networks (20.5%). But social video is no longer the biggest growth driver in digital video ad spending. That title belongs to connected TV (CTV), which will grow 27.2% in 2023.”
The company says mobile dominates social video ad spending. Mobile will account for 95.5% of social network video ad spending this year, with desktop/laptop spending responsible for the remainder.
“But CTV may become more prominent in social video as TikTok strives to make inroads.”
The company says social media will be the channel hit hardest by the digital advertising downturn. It has downgraded the 2023 US social network ad spending forecast by $16.21 billion—the biggest reduction of any channel.
“The impact of Apple’s and other privacy changes has shocked the system. Digital ad targeting and measurement have been changed, permanently. Since the majority of time spent with social media occurs on mobile apps, AppTrackingTransparency has been especially debilitating for social networks, which now have a lot less data to work with.”
“Macroeconomic headwinds aren’t easing. Some advertisers are pulling back on spending as they face inflation, a potential recession, ongoing supply chain disruption, and geopolitical instability. Meta, Snap, Pinterest, and Microsoft, which owns LinkedIn, all cited difficult economic conditions in their most recent earnings calls.”
“Normalization is here after a radical rebound. Advertisers boosted spend big-time in 2021 as they recovered from the pandemic slump. But 2021 was an outlier, and ad spending has come back down to earth.”
The development of US video advertising’s percentage of social network ad revenue, according to Insider Intelligence: 2019 it was, 30.3%, in 2021 it has increased to 38.2% to reach 50.9% in 2023 and forecasted to have 53.4% next year.