Warc: Social Media Ad Growth Halves Amid Growing Public Hostility

A growing list of problems including poor brand safety, potentially exploitative data practices and the prominence of fake news has led to increased consumer hostility towards social media platforms and a halving in global ad spend growth year-on-year, according to a new Warc report.

The Global Ad Trends report found that ad revenue growth for the six main global social platforms had dropped from 51.6 per cent in Q1 2018 to 26.2 per cent in Q1 2019, with growth forecast to “grind to a halt” in 2021.

Audiences across the platforms had “flatlined,” the report found and, globally, 50 per cent of consumers believe social media and tech companies have too much power.

The report also highlighted the rapidly growing issue of fake accounts on Facebook, stating that 16 per cent of Facebook accounts “are worthless to advertisers because they are either fake or duplicates.”

“In Q1 2019, Facebook removed 2.19 billion accounts that it considered fake compared to almost half the number in Q4 2018,”  the report said. “This adds to the list of Facebook’s issues including poor brand safety, potentially exploitative data practices and the prominence of fake news. However, ad money continues to be poured into the platform – over half of internet advertising spend went to Facebook and Google last year.” 

Globally, the British public is the most mistrustful of social media, according to the report. Great Britain came top out of a list of 23 countries, with 82 per cent of people saying they don’t trust the information that comes from social media sites. 

The report found that, globally, the average price of a paywalled news website had gone up as publishers move to combat the challenge of digital ad money being “hoarded by the Google/Facebook duopoly.”

Launching the report, James McDonald, managing editor, data, Warc, said: “Last year, six social media companies – Facebook, Tencent (WeChat/Weixin and QQ), Twitter, Weibo, Snap and Pinterest – made $67.1 billion from advertising. This is equivalent to a quarter of all online advertising expenditure, 11 cents in every ad dollar worldwide, and the economic output of Luxembourg.

“The 2018 haul represented a huge 39.3 per cent annual rise from a total of $48.2 billion in 2017 (itself a 47.1 per cent rise from 2016). Some 82 per cent of this money was paid to Facebook alone, including for ads across its Instagram and WhatsApp services.

“But then something remarkable happened. At the start of 2019, ad growth, which had gradually slowed over the preceding months, halved when compared to a year earlier. All six companies recorded a cooling.

“This easing in ad revenue growth can, in part, be explained by the law of large numbers. But a rudimentary forward projection shows that, on the current trajectory, social media ad growth will grind to a halt during 2021. Here, then, are some of the nuances that a statistical model can’t tell you.

“Data from GlobalWebIndex show that daily social media consumption has flatlined in most regions. This comes at a time when consumer perception of social media companies is becoming more hostile: 58 per cent of American users believe social and tech companies have too much power and influence, while just under half (47 per cent) believe they should be better-regulated. The global averages are 50 per cent and 51 per cent respectively.

“Ancillary research from Dentsu suggests that the primary cause of distrust is the industry’s misuse of personal data, and that this has commonly led users to limit their online footprint, mostly by sharing less data. But 14 per cent have gone so far as to deactivate a social media account.”