Online Advertising Could See Declines This Holiday Season

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.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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