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The State of Digital Advertising in 2022

January 12, 2022
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The past year was one for the history books when it comes to digital advertising. Ad costs went sky-high for many marketers, the landscape got more crowded, and companies took full advantage of the lingering effects of consumers’ shift to online shopping. There was a lot to learn and unpack from a business economy still reeling from the pandemic. But ending 2021 with the right takeaways can help us prepare ourselves and our clients for digital advertising in 2022.

We did the research for you and discovered three key trends that are most likely to define digital advertising in 2022. Here they are, in no particular order. 

Digital Advertising in 2022 is on a $300B Trajectory

A recent eMarketer report made a bold prediction: The US digital ad market will surpass $300 billion by 2025, making up more than three-quarters of all media spending.

Digital ad spend will grow by nearly 50% from now through 2025, and that’s just in the US. It’s taking over all other forms of advertising and has even outperformed our own expectations for the industry.

This underscores what we’ve known for years: The present and future of effective advertising is digital. 

Spending in the digital ad arena is increasing for a number of reasons. For starters, the world saw a major startup boom during the pandemic as more people quit their jobs in favor of entrepreneurship. 

Another important factor is the increasing saturation of the market. As more businesses started catering to a digital audience to align with consumer shifts, competition for ad space and bidding wars shortly followed. Advertisers are now having to spend more to win bids and cut through the clutter.

Code3 has a deep understanding of how to succeed in this fresh landscape. It’s not about out-spending your competitors but rather outsmarting them by optimizing your media and budget. Tailoring your ads to a variety of platforms, user journeys, and experiences will be key in maintaining an edge over your competitors while also keeping your budget in check. 

This takes a high level of creativity, strategy, and knowledge of the landscape at any given moment. Knowing how to allocate your budget between channels and cater to different audience segments requires more than guesswork. We use our knowledge to create strategies that position our clients in a way that takes all of these unique aspects into account and allows them to achieve their goals. 

Ad Spending Is Skewing Toward Video, CTV, and Retail Media

According to eMarketer research, video is gaining share thanks to a Connected TV (CTV) ad spending surge. Experts predict that CTV’s share of video will make impressive gains from 24% in 2021 to 32.7% by 2025. Also by the 2025 marker, video will continue closing the gap with search ads, with a respective 33.5% to 38.8% ratio. 

Retail media spending is also gaining steam, with estimates believing it will more than double during this time ($28.25 billion in 2021 to $63.81 billion in 2025). 

When viewing these numbers holistically, it’s clear that advertisers are seeing dollar signs in upper-funnel video ads. Consumers are largely in the driver’s seat as they increase expectations for personalization and choice in what and how they purchase. The natural next step for companies is to meet customers wherever they are in their journey, especially when that journey is seeing a shorter gap between awareness and action. 

We expect this trend to continue reaching new heights in the coming years and are already preparing our clients for the shift. As brand stewards, the Code3 team is in a unique position to help clients navigate media, creative, and commerce to stay ahead and win in this space.

Big Gains in Programmatic Display Get Even Bigger

Programmatic display has been trending for the past two years, and it hasn’t yet hit its peak. According to eMarketer, more than 86% of US display ad spending took a programmatic approach in 2019. That percentage will exceed 91% in 2023. The dollar figure of programmatic display spending will also more than double in that time, moving from slightly more than $61 billion to close to $142 billion.

That should tell you everything you need to know to make a “yes” decision on programmatic display ads.

Just how powerful is programmatic advertising? For starters, it’s designed to reach buyers and prospects at every stage of the funnel. By targeting both on- and off-platform shoppers, such as with Amazon DSP, brands can create lifestyle audiences based on top-of-funnel behaviors. Later, it can push your prospects further down the funnel by re-engaging previous visitors as well as steering your competitors’ traffic to you if they align with the behaviors and actions of your previously created audiences. And when they’re ready to buy, programmatic ads can keep your audience hooked, provide consistent experiences, and turn buyers into loyal customers.

In other words, programmatic advertising targets customers based on trends in behavior. Actions speak louder than words, after all, and programmatic strategies can help keep your prospects engaged throughout their journey to purchase.

Leveraging These Trends to Set Digital Advertising Records

Simply keeping pace with the trends is not going to be enough to win big in 2022. With digital ad prices increasing, CMOs expect their spending to increase as much as 13% next year. But instead of rolling with the trends, we help brands to become forward-thinking in how they can get ahead of the curve. To reinforce a previous point, it’s not about increasing your spending to keep pace with everyone else but rather maximizing and optimizing what you’re already spending and doing.

If you’re ready to trade in-the-moment planning and doing for a forward-thinking approach, we invite you to reach out to Code3 and set up a time to talk. We’re available to discuss how we can help your brand take advantage of trends and strategically maximize your potential. Get in touch today!

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