Social
advertising spend grew by 26.2% year-on-year in the first three months of 2019
to a total of $17.9 billion worldwide, and while this is the second-highest
total in the format’s relatively young history, it was roughly half the growth
seen last year and key players are now looking to diversify their revenue
streams.
This is according
to WARC’s latest Global Advertising Trends, which takes a deep dive into the figures for the
six most visible social media companies from across the world – Facebook,
Pinterest, Snap, Twitter, Tencent (WeChat/QQ), and Weibo. All reported an
easing in ad revenue growth in Q1 2019.
“The social sector
is still expanding at a rapid pace – amassing $17.9bn of ad money in the first
three months of this year alone – but growth has eased over recent quarters and
has halved from a year ago,” says James McDonald, Managing Editor, WARC Data.
In its largest and
most saturated market of North America, where $8 billion was spent in Q1 2019
alone, user growth has stalled and consumer trust in social platforms is
waning, McDonald adds.
Meanwhile, time
spent on social platforms hasn’t increased for the last three years, with users
maintaining a two hour per day average since 2016. Across the continent,
Facebook has 186m daily users, Snap 80m, and Twitter 28m – numbers that are
mostly flat or down from the previous year.
In Europe, growth
across all of Facebook’s social properties (which include Instagram and the
wildly popular WhatsApp) slowed to its lowest rate on record: +1.4%. Across all
platforms a similar picture emerges: according to GlobalWebIndex, daily social
media usage has fallen by four minutes versus the previous year to one hour and
49 minutes. For its part, Snap saw user numbers fall for the first time in the
region.
Richer growth is
coming from Asia, with India a particularly strong grower alongside Indonesia
and the Philippines. Daily social usage is climbing: in 2019, daily use across
the region reached 2:11, compared to 2:09 last year. There’s an important
caveat, however, that monetisation in the region is far lower than in Western
markets.
The slowdown in
social ad growth comes at the same time as the tech sector is under pressure
over its use of consumer data. Recent research by YouGov, Dentsu and Universal
McCann, among others, finds that half of consumers believe tech and social
media companies have too much power and influence. A similar proportion want to
see more regulation of the industry.
But the trust
deficit has layers. As many as two-thirds of consumers don’t trust the
information that comes from social media, with rates as high as 82% in Great
Britain and 70% in the US. As many as three-quarters of consumers now limit
their online footprint, citing the misuse of personal data as the biggest cause
of distrust.
Social platforms
are reacting, McDonald observes. “Facebook is looking to diversify its revenue
streams with the launch of Libra which, the company says, will not be used
directly to enrich the consumer data it has harvested for ad selling purposes.
“However, the cost
of advertising on Facebook’s social platforms could feasibly rise if the
company proves a relationship between the ads it serves and an increase in
Libra-facilitated sales.”
While social
shopping is still nascent on Western platforms, in China, the ease of mobile
payment has made social shopping a norm. Tencent made RMB21.8bn ($3.2bn) from
FinTech in the first three months of this year. In the US, meanwhile, concerns
around security and privacy are hampering the growth of social commerce.
Credit: WARC