Online Advertising Could See Declines This Holiday Season
Apple and Meta’s Policies Cause Changes for Online Advertising
With Apple (AAPL) changing its privacy rules, and Meta Platforms’ (FB) Facebook in trouble with lawmakers and privacy advocates, brands and marketers are overhauling their strategies for reaching customers this holiday season. For some companies this means pulling back advertising dollars earmarked for Facebook and Instagram and turning to rivals like TikTok.
During the height of the pandemic, brands curbed online advertising to conserve cash amidst uncertainty. The market quickly recovered once vaccines became widespread. Then Apple changed its privacy terms, making it harder for brands and marketers to send targeted ads to specific consumers. Brands are now worried that despite the added costs for online ads this year, they won’t reach the right customers—or worse, will alienate potential customers.
Brands Overhaul How They Market Online
Online secondhand goods marketplace operator Poshmark (POSH) is making big changes to its advertising strategy. The company is overhauling how it advertises due to Apple’s privacy changes. The online merchant is spending more on TV ads and with influencers in a bid to reach more customers. Poshmark lowered its outlook for the holiday quarter, pointing to the fact that Apple’s changes have impacted its ability to tailor ads to different types of shoppers.
Meanwhile Patagonia, the sporting goods retailer, said in late October that its boycott of Facebook remains in effect. The company pulled its ads from the social media giant in June. Patagonia acknowledged that the decision impacted its business, but said it has since learned to adapt. Snap (SNAP), the parent company of the messaging app Snapchat, said last month some retailers are pulling back advertising to cut costs or because they have low inventories of products.
A Lack of Inventory Causes a Drop in Advertising Spending for Automakers
For the auto industry, it is a lack of inventory which is causing vehicle makers to rethink their holiday advertising plans. Historically, auto companies pull out all the stops when it comes to advertising ahead of the holidays, offering generous lease deals and incentives to purchase new cars. There will be less of that this year as supply-chain complications and semiconductor shortgages hurt vehicle makers’ ability to produce cars.
GM (GM) is among the companies reining in ad spending this year. Lexus is keeping its famous “December to Remember” advertising blitz for the holidays, but offers won’t be as enticing as in holidays past. Heading into this December, the auto industry has a much smaller inventory than it typically does. If it goes all-in on advertising, it may face disgruntled customers who can’t buy the products they are looking for.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.