Privacy, ad fatigue and creating a valuable user experience
In a 2022 survey, 81% of U.S. Gen Z respondents said they liked personalized ads, as did 57% of millennials. More than two-fifths of U.K. consumers (43%), meanwhile, are happy for social media sites to have access to this data for a more relevant ad experience.
Privacy-minded or ad-weary users may decide to pay up, but costs will start to accumulate as they determine how important going ad-free is for them. Those using multiple social media platforms like X and TikTok could be looking at nearly $30 per month on spending to avoid ads across platforms. Interestingly, younger social media users don’t seem to mind advertisements as much as was once thought, and recent research shows users’ growing comfort with personalized ads.
The takeaway from this should be that creating content and value for consumers is the best trade for their data. Consumers don’t mind seeing ads, so long as they feel what they’ve been served is relevant and thoughtful.
Super-juicing or uber-pricing?
Monitoring movement to ad-free will be especially important to advertisers who have upped their social media spend, with 51% of media decision-makers on the brand and agency side saying they will increase investment in the category this year. Meta is also one of the five companies expected to attract over half of global ad spending, which itself is forecast to grow by more than 4% this year.
In the short term, if the new model is popular with consumers, Meta’s decision may mean a significant decrease in ad inventory, and reduced supply with the same demand means ad prices will rise while free-tier users will see a greater number of ads. Advertisers will need to decide how they value those ad dollars and carefully consider the impact of reaching an audience that has specifically opted to see ads on the effectiveness of these campaigns. When every dollar is scrutinized, performance is king.
In the longer-term, there are a few things to watch both for Meta and others. First, does your offering assuage privacy-focused regulators and legislators in the EU? Subscription costs tend to rise over time, which may cause some users to pay to avoid ads on some platforms but not others. How this affects who has access to the best data is the biggest trickle-down effect to pay attention to.
