Dentsu warns brands over tech ‘battling’ to increase ad revenue

Dentsu warns brands over tech ‘battling’ to increase ad revenue

More ads in more places could hurt user experiences and advertiser outcomes, new research has found.

Global media buyer Dentsu’s forward-looking report said there had been an “explosion of the ad-supported segment” and that next year will see “an intensification of competition between ad platforms” with more lookalike apps, data partnership possibilities, premium subscriptions and a further proliferation of advertising formats and offerings.

“Brands will have to balance these opportunities with risks to alienate audiences”, the report said. Especially given the fact digital adspend is forecast to hit $450.6bn in 2024, but its year-on-year growth is slowing to 6.2%.

This means tech platforms are “battling” to increase their advertising revenue by launching new formats and carrying more placements.

Some examples the report highlighted included: developments in adoption of search advertising on social media platforms like Instagram and TikTok, the rise of retail media on commerce sites, ticketing platforms and delivery apps, forecasted “spectacular growth” in advertising on connected TV (CTV), advertising video on-demand players launching new formats like YouTube’s unskippable 30-second ads, and major streaming players (and Amazon’s Audible) trialling or launching ad-supported plans.

While these “booming advertising opportunities” offer brands new ways to engage with audiences, the report warned: “More ads across the board means more advertising clutter, and it will be even more important for brands to dive into audience insights, invest in creativity, and operate careful media planning if they are to drive effectiveness and not oversaturate their audiences.”

The report urged platforms looking for “lucrative” new revenue streams by adding more ads to more spaces to be careful “the balance remains acceptable to all stakeholders”, so as not to “hurt the user experience” or create “massive clutter” for brands.

Generative AI and brands’ sustainability

Dentsu’s annual media trend report also isolated generative AI and “integrity economics” as significant drivers of growth in the media industry into 2024 and beyond.

The report called generative AI “the most disruptive technology breakthrough of the last decade”, and found 63% of marketers said they had already “started engaging” with it in their companies.

Generative AI can be used in search, content, copywriting, image development and to optimise and simplify advertising production, targeting, and effectiveness at speed and scale.

Meanwhile, “integrity economics” relates to growth from a brands’ sustainable contributions to society, not just their bottom lines.

Developing carbon efficiency, diversity and safe online spaces and environments for consumers and advertisers will be “central to success”, especially as the climate emergency and political polarisation deepen.

Not only that, but optimising for both attention and carbon media efficiency should lead to an improved impact for campaigns.

Dentsu’s report, The Pace of Progress: Dentsu 2024 Media Trends, was collated from insights from specialists within its agencies Carat, dentsu X and iProspect globally.

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