The New Media Mix, Amazon Losing Share to Walmart, and TikTok Shop Stumbles

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Recent earning reports have been released from major media platforms, and the worst may be behind us. Major tech companies all reported an increase in ad revenue. Meta reported a?3%?increase in overall revenue and a 4.1% increase in advertising revenue. Ad spending on Microsoft grew around?6%, and Google's ad revenue dropped only 1%, but their core search business saw a?1.7%?increase. Even smaller players like Pinterest saw a?5%?increase in revenue. If you live in this space, this is not news and mirrors advertisers continued investment in digital media. According to eMarketer, digital spending will make up two-thirds of total investment, with steady growth over the next few years.?

Despite some slowdown in consumer demand due to inflation, it does not change the fact that brands still need to advertise, and digital is by far the most effective and efficient channel to do so. But where is this growth coming from? Multiple platforms pointed to retail and e-commerce as the large growth areas of their businesses. The other growth area focused on the platform's trackable and direct response offerings. For example, both YouTube and Google's DSP didn't fair as well as their search business.??

So what is the future for digital media giants? Well, they hope to capitalize on some of the growth surrounding retail media.??

Meta is working with retailers like Walgreen and Dollar General to extend their media network inventory and create ads on Meta. Google also pointed to retail media as a clear area of growth. Pinterest, the ultimate inspiration platform, recently?announced?a multi-year partnership with Amazon.?The goal is to bring more brands and relevant products to its platform. While Pinterest has worked to connect product inspiration to purchases for years, the Amazon ads partnership would offer consumers a seamless buying experience.

While media companies are working alongside retail media companies to continue to grow, retail media is also a clear threat. Advertising dollars are flowing into retail media (and away from Google and Meta), with eMarketer predicting that?retail media will have a 17.1% share of US digital ad spending this year.?Amazon alone will make up almost 13% of ad spend and will continue to close in on Google and Meta over the next few years. Especially when brands need to prove return and measurement, retail media networks are an easy place to drive awareness and conversion with relatively uncomplex attribution. Who can say no to that???

Amazon specifically reported a?21%?increase in advertising revenue in Q1. Amazon, which has become increasingly pay-to-play, also recently replaced editorial recommendations with more ad units, increasing the premium ad inventory on the search page.?However, Amazon should tread lightly as balancing revenue and consumer experience is tricky. Increasing the ad load is great from a short-term revenue gain perspective, but it becomes more challenging for consumers to find what they want vs. finding only ads. Amazon is only as strong as its continued customer loyalty, and?customer satisfaction with Amazon?fell to a low in 2022. Still, since then, they have reinvested in fulfillment and delivery capabilities to reduce wait times and lean into what made them so successful in the first place. Despite some of the investments, it only takes a few bad interactions for consumers to start spending their time elsewhere.??

In fact, according to Jungle Scout, US consumers are?increasingly?turning to Walmart.com, YouTube, Instagram, and TikTok to start their online shopping searches, with Amazon, search engines, and Facebook losing share since Q1 2022.?

Consumer behavior is ever-changing; when you look at GenZ, they turn to social platforms to search for what they need, not to Google. Walmart has also been making massive investments in their shopper experience, stealing share away from Amazon, and it's starting to pay off. For brands, I hope you all know it's time to diversify. If you aren't taking advantage of the Walmart Marketplace, it's time to consider it seriously. If Walmart does not necessarily make sense to you, just know that diversification is where it is right now. Every brand needs to ensure that the revenue from Amazon can be diversified, especially with concerns over increased fees, consumer experience, and changing consumer behavior.??

Amazon, of course, is still the 500-pound gorilla in the room and the major player in the space by a significant margin. To continue to bolster its ad business?Amazon?is building a team to work on artificial intelligence tools that will generate photos and videos for merchants to use in advertising campaigns on its platform. Of course, Amazon is not the only one trying to increase ad revenue through AI. According to the?Financial Times, Google's advertising customers will soon be able to use the company's generative artificial intelligence to create ad campaigns. Google is preparing to embed its generative AI?Bard?into its Performance Max program. Performance Max can help customers determine where their ads should run and generate simple ad copy. But adding Bard will allow it to create sophisticated campaigns and generate advertisements based on the imagery, video, and text they supply. In addition, Google said that ads its AI makes would fit the audience they aim to reach and will be designed to enable them to achieve sales targets and other goals. While AI is great, please be warned that it cannot operate independently and needs much human oversight, as anyone who has launched a regular Performance Max campaign can tell you.

Amazon has?announced?some machine learning updates to its DSP, aligning it more with large competitors such as The Trade Desk and Google's Display & Video 360 to create more cost efficiency and improve targeting.?Amazon's claim to fame with its DSP is its data and ability to tie back conversions on its platform. Their goal was to build out the ability to target desired audiences better when cookies were officially a thing of the past. Even without this upgrade, I like the Amazon DSP, and I've seen it be massively successful for various brands, so this new upgrade should make it even better. If you haven't tapped into it yet, know it's becoming more and more of a serious competitor in the DSP space, so don't count it out.??

For those of us tracking Snapchat, they also released some interesting new data on AI adoption as well as ad units. As you recall, they launched their generative AI product called My AI. The tool now facilitates over?2 million?daily chats and is only available to Shapchat+ members.?Based on the success, Snapchat will roll this feature out to its broader user base, enabling more personalization for My AI to increase product usage. Snapchat is still on the fringe for most marketers, but if they can increase adoption and time spent on Snapchat through their My AI product, that may change.??

Overall Snapchat said they were increasing in DAUs by?15%, so clearly, people are spending time on Snapchat, but their ad offering is lagging (revenue fell around?7%?in Q1)so during their?NewFronts?presentation, they focused on new ad units and capabilities including:

• First Story: This will allow an advertiser to buy the first ad unit between friends' stories. With over 50 million users, this could be a scalable ad unit that could make sense for broad campaigns, awareness, and new launches.
• Ads in Spotlight: Spotlight is Snapchat's TikTok competitor. Spotlight has grown 46% YoY and has over 350 million active users monthly. This would be an interesting test for brands having success on other short-form platforms.
• Promoted links in My AI: Contextually relevant links that live alongside an intent-driven query seem like a homerun. While it's yet to be seen what people are talking to My AI about, it's safe to assume this could be a good fit for entertainment, restaurants, and travel brands. If you fit in one of these categories, I'd investigate this offering, as finding more high-intent customers is always something to take into account.????

Chinese fast-fashion retailer Shein finally?launched?a marketplace in the US and is now looking for sellers.?This news seems inevitable if you follow retail media, given how they have set up marketplaces in other countries and the rise in retail media overall. While Shein is a force in shopping, their products tend to focus on the ultra-inexpensive and US merchants can't usually match the types of low prices the Shein buyer has come to expect. They are trying to expand their selection through a marketplace offering, but unless they can diversify their customer base to those interested in paying a premium for a more premium product, it will be hard for any US-based brands to scale on Shein. However, expect to see more merchants testing into the Shein marketplace, and if your product aligns with Shein shoppers (regardless of cost), it's something to consider, given their reach.??

TikTok is beta launching its?TikTok Shop, allowing some sellers to sign up before its broader release. TikTok shop aims to be an e-commerce solution designed to boost sales and brand growth on TikTok. It will allow users to discover and purchase products from their favorite creators and brands in a single seamless experience. While it's always great to be included in these launches, the real benefit is that they will have to pay 0% referral fees for a limited time. However, according to the?Wall Street Journal, they are delaying the full opening of US shop because of concerns from merchants about a possible ban.?Understandably merchants don't want to dedicate a lot of time and resources to an unsure thing. However, consumer behavior is changing, and people increasingly want to be able to buy in the same place they discover a product.

Additionally, 83% of users say the platform influences their purchasing decisions. TikTok shop will allow consumers to discover and purchase from brands in a real-time and seamless fashion. As more and more consumers turn to TikTok as a search engine, it's something for brands to keep an eye on once we know more about the fate of the short-form media company.?

Even?Reddit?is eyeing social commerce as an opportunity for expansion. While Reddit does not have the same inspiration and product-focused platform that Pinterest does, it does have engaged communities and contextually relevant content, which could make e-commerce successful. Just keep an eye on what they do here; if they can keep building out their ad offering, this could be an exciting platform.??

Twitter...how you have fallen. Not only has advertising taken a downturn, but in a new report,?half?the Twitter Blue subscribers canceled their subscriptions. So the next logical step is trying to boost Twitter's subscription revenue by brute force and?informing?all advertisers that they must sign up to either Twitter Blue or Verification for Organizations to keep running ads in the app.?While it's not cost-prohibitive for most at $8 per month for a blue check or $1,000 per month for its Verification for Organizations offering it's still a cost. Many brands have pulled back on Twitter, and creating another hoop for them to jump through to advertise does not seem wise. Twitter is not in the best position to be making demands but interesting tactic nonetheless.??

Finally, remember that the GA4 migration deadline is approaching, with Google sunsetting Universal Analytics on July 1st. So, if you still need to get around to that....this is your sign.??

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Megan Conahan is a 17-year veteran of the digital marketing industry. Over the last 17 years, she’s consulted with Fortune 1000 brands on negotiating the ever-changing digital marketplace demands and creating unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency.?