Companies Tighten Budgets, Advertising Market Sees Subtle Changes (AI Translation)
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文｜财新周刊 关聪
By Guan Cong, Caixin Weekly
阿里巴巴一名广告业务人士将过去一年的广告行业形容为“冰点”：商家全面缩减预算，现在还能有品牌广告预算的行业大致只有汽车、文旅、快消品、白酒；剩下的行业基本不看好品牌广告，企业经营压力大，都在降本增效。
An advertising professional at Alibaba described the past year in the advertising industry as a "freezing point": businesses have been universally slashing budgets, and now the only sectors that still maintain a budget for brand advertising are automotive, cultural tourism, fast-moving consumer goods, and baijiu. The remaining industries are generally pessimistic about brand advertising, facing intense operational pressures and focusing on reducing costs while improving efficiency.
品牌广告收缩，意味着企业不再确信单纯曝光的价值，更多广告预算被腾挪到追求直接产出交易的效果广告上；而与产品销量挂钩的效果广告，努力迎合商家对精准投放的需求，意图通过更精准的数据化分析快速提升销量。平台型互联网公司是效果广告的主要“抢食者”，纷纷发力人工智能（AI）大模型，以提升广告业务增量。（详见本刊 2024年第42期封面报道《AIGC改变互联网营销》）
The contraction of brand advertising signifies that companies are no longer convinced of the mere value of exposure, with more ad budgets being shifted towards performance advertising that directly drives transactions. Performance advertising is closely linked to product sales, striving to meet merchants' demands for precise targeting by employing more accurate data analytics to rapidly boost sales. Platform-based internet companies are the main competitors in the performance advertising space, all intensifying efforts on large AI models to enhance advertising business growth. (For more details, see the cover story "AIGC Transforms Internet Marketing" in Issue 42 of our 2024 edition.)
据WPP旗下群邑（GroupM）媒介花费数据库，2024年，线下户外广告份额稳健，但线上品牌广告份额下降1.6%，长视频和电视媒介都出现下滑；分别反映转化效果和实际销售的竞价信息流广告的市场份额提升0.6%，电商广告提升0.5%。
According to the media expenditure database of GroupM under WPP, in 2024, the share of offline outdoor advertising remains stable, but online brand advertising will decline by 1.6%. Both long video and television media are also experiencing a downturn. In contrast, the market share of bidding information flow ads, which reflects conversion effectiveness and actual sales, is set to increase by 0.6%, while e-commerce advertising will rise by 0.5%.
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- Many industries are cutting advertising budgets except for automotive, cultural tourism, FMCG, and baijiu, shifting focus towards performance advertising for better transaction results.
- In 2024, China's internet advertising market is projected to grow by 6% to RMB 758.36 billion, while the U.S. digital ad spending is expected to increase by 22% to $121.4 billion.
- Leading platforms like ByteDance capture significant market share with AI enhancing advertising efficiency, but sectors like gaming face challenges, with AI helping reduce marketing material production costs.
The advertising industry faced a challenging year, highlighted as a "freezing point" due to widespread budget cuts among businesses, except for a few sectors like automotive and cultural tourism. Brands are shifting their focus from exposure to performance advertising, driven by precise targeting to boost sales. Internet companies are enhancing their advertising through large AI models to foster growth [para. 1][para. 2]. According to GroupM, 2024 will see a decline of 1.6% in online brand advertising, with a slight rise in bidding information flow ads and e-commerce advertising [para. 3]. The advertising market in China is projected to grow at a reduced rate, with only a 1.6% increase expected, compared to the 6% in 2023 [para. 4].
Ad spending shows varied trends across sectors, with declines in pharmaceuticals and IT services, while entertainment and apparel see significant increases [para. 5]. Offline ads in elevators and cinemas demonstrate growth, contrasting the reduced spending on television and radio [para. 5]. The economic recovery in China faces hurdles such as sluggish consumption, and efforts to boost domestic demand are essential [para. 6]. Content platforms like Bilibili and Zhihu experience a slowdown in ad revenue, with ByteDance holding a quarter of China's ad market, thanks to TikTok's strong overseas performance [para. 7]. U.S. digital ad spending is set to rise, driven by social media and large events, with Meta and Alphabet reporting significant annual ad revenue increases [para. 8][para. 9].
The tourism boom in 2024 led to increased ad spending by travel agencies, while the beauty industry maintained healthy ad budgets, with L'Oréal and Estée Lauder among the top spenders [para. 12]. The automotive sector faces a decline in traditional vehicle marketing, with new energy vehicle companies enhancing their marketing efforts [para. 15]. Internet companies focus on cost reduction, impacting their ad expenditures. The rise of blockbuster content sharpens competition, with fewer game launches reflecting intensive market rivalry [para. 21][para. 22]. Platforms like ByteDance dominate the advertising market, capitalizing on AI technologies for cost-effective ad creation [para. 24].
Taobao, Douyin, and WeChat remain the top ad platforms, with e-commerce advertising reflecting sales expectations. In pursuit of efficiency, algorithms are increasingly replacing manual ad optimization tasks, aiming for higher conversion rates [para. 34][para. 35]. The advertising market faces a trend toward high concentration, with major players like Tencent and ByteDance leveraging AI for better ad performance [para. 37]. Platforms balance user experience with ad placements, optimizing reach through data-driven insights [para. 42]. Despite challenges, platforms like Xiaohongshu are gaining interest as undervalued ad opportunities amidst their expanding ecosystem [para. 46].
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