Brands Are Bracing for Recession, but Only 3% Expect Media Channel Revenue to Drop Y/Y in Q4 2022, Merkle Performance Media Report Finds

• Nearly half of respondents (49%) view creative as “very important” to their customer experience strategies in Q4.

• 39% of brands have measurement and budget plans that span a broader period rather than focusing on narrow timeframes such as the “Cyber Five.”

• Less than half of respondents have inflation-related marketing strategies that vary across audiences and their unique inflation resilience.

Merkle, dentsu’s leading technology-enabled, data-driven customer experience management (CXM) company, has released its Performance Media Report (PMR), a quarterly research report that analyzes and highlights performance media trends and the overall impact across digital media. Following the Q3 2022 PMR, Merkle identified several major shifts for brands, including a drop in concern around the impending privacy changes and cooling cost per click (CPC) and cost per impression (CPM) across channels. They also found that, while brands are starting to prepare for the effects of inflation and tightening consumer disposable income, there is less concern around inflation and other macro-economic factors impacting revenue driven by media channels, with only 3% of brands expecting a revenue drop Y/Y for Q4.

“As economic hardship continues, consumers are being more conscientious about how and where they invest their money. What was working a year ago simply isn’t going to cut it anymore,” said Liz Rutgersson, chief media officer at Merkle. “This report helps identify opportunities for performance media innovation and helps marketers create stronger customer experiences, invest in the right media channels, and be nimble with marketing strategies.”

Merkle’s PMR reveals both brands and consumers are facing economic challenges and must adjust to the new landscape.

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The key trends revealed include:

Rising CPC and CPM are not currently as big a concern for many organizations.

Compared to the Q3 2022 PMR, fewer advertisers reported year-over-year increases in CPC and CPM across paid search, display, Facebook, and Instagram. In fact, CPC growth for both Google Shopping and Google text ads cooled, with just 41% of respondents seeing year-over-year increases on each format. This is a welcomed change after brands experienced significant upward pressure on CPC in 2021 and into early 2022; it will provide an opportunity for brands who are willing to invest additional budget to steal market share when competition is softer.

Organizations have mixed feelings about impending privacy and tracking changes.

In this survey, respondents showed slightly less concern that privacy and tracking updates will create significant challenges for their business, with 77% agreeing with that sentiment, compared to 83% in the previous report. However, when talking about specific impacts, tracking and privacy were still top concerns. Across display and paid social, “measuring performance accurately in the face of new privacy regulations and tracking changes” was the second-most selected priority, and within measurement, “getting an accurate view of performance with new privacy regulations and tracking changes” was the top concern.

Retail shifts priorities for the holiday season.

Ahead of the holiday season, driving revenue and efficiency aren’t the clear winners in terms of performance priorities. Growing brand awareness, acquiring new customers, and retaining existing ones all ranked higher. The report found that brands are expanding their view of the holiday season, with 39% of brands having measurement and budget plans that span a broader period rather than focusing on narrow timeframes like the “Cyber Five.”

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