Report Q2/2023
State of Commerce Advertising
The quarterly report for decision makers in performance marketing, commerce content, and affiliate marketing
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Report Q2/2023
What is the state of the Commerce Advertising industry? Have expectations for the first quarter of 2023 been met? How optimistic are experts with regard to the coming months, and where do the greatest challenges lurk? We answer these and other questions below, in the second edition of our Commerce Advertising Index.
Find out what industry experts have identified as the top trends for the industry, what they see as the best billing models, and where they locate the greatest growth potential for publishers and advertisers in our new “State of Commerce Advertising” report for the second quarter of 2023.
Find out what industry experts have identified as the top trends for the industry, what they see as the best billing models, and where they locate the greatest growth potential for publishers and advertisers in our new “State of Commerce Advertising” report for the second quarter of 2023.
About the
Commerce Advertising Panel
For the industry index “State of Commerce Advertising Q2/2023”, 49 industry experts were surveyed between February 28 and March 19, 2023. The participants were advertisers, publishers, agencies, networks, and technology providers.
Key learnings
1.
The majority is (very) satisfied or neutral with regard to the traditionally difficult Q1.
2.
Sales have declined – but nowhere near as much as expected.
3.
The industry has an optimistic outlook with regard to the upcoming months.
4.
Cost-per-order (CPO) is the most popular billing model.
5.
Biggest challenges: global economic situation & inflation, privacy-compliant tracking, and generating high-quality traffic sources.
State of Commerce Advertising
Overall state of industry
In most industries, Q4 is the strongest quarter. Commerce Advertising is no exception here. So, what happened in the first quarter of 2023?
How would you describe your company?
20.4%
Publisher
38.8%
Network operator /
Technology provider
Technology provider
40.8%
Advertiser / Agency / Other type of company
How satisfied are you with the last quarter?
Respondents were less satisfied with Q1/2023 than with Q4/2022 – as expected, following the traditionally strong “shopping quarter”. Although 47.6 percent were satisfied or very satisfied, this figure in the last edition of our index was 72.3 percent. The number of dissatisfied respondents almost doubled: from 8.5 to 16.7 percent. However, 35 percent were neutral about the past quarter. Conversely, this means that 83.3 percent of respondents are “not dissatisfied” with the first quarter of 2023. In light of the tense global economic situation, this is a surprisingly good result.
Q1/2023
Q4/2022
How optimistic or pessimistic are you about the next few months?
Unlike respondents’ satisfaction, their optimism has remained fairly stable. Thus, 54.7 percent are optimistic or very optimistic about the coming months, which is only slightly down from the previous survey (57.5 %). Conversely, the pessimists rose only slightly, from 12.7 to 14.3 percent, as did those with a neutral outlook (from 29.8 % to 31 %).
Q1/2023
Q4/2022
The overwhelming majority of respondents, namely a combined total of almost 85.7 percent, are at least not pessimistic about the near future in Commerce Advertising. More than half are even very optimistic or optimistic. This is an excellent result for the industry during a tense economic time.
Felix Witte
General Manager
& SVP Publishers, mrge
& SVP Publishers, mrge
State of Commerce Advertising
Market Situation Review & Preview
Now let’s turn our attention away from personal assessments and focus on the absolute figures: How did sales develop in the past quarter? And what are the forecasts for the coming quarter?
How did your sales develop compared to the previous quarter?
Just over a quarter of respondents (26.2 %) stated that their sales had increased in the past quarter. In Q4/2022, this number was 66 percent. However, for a combined total of 67.2 percent, sales have at least not decreased compared to the previous quarter – despite the strength of Q4.
Q1/2023
Q4/2022
What is your sales forecast for the coming quarter compared to this quarter?
54.8 percent of respondents expect their sales to increase in the coming quarter. This figure corresponds almost exactly to the 54.7 % who are either “very optimistic” or “optimistic” in the question above. Incidentally, our survey at the beginning of 2023, only 12.8 percent had expected their sales to rise in Q1. But, in fact, 26.2 percent saw an increase, as the previous question shows. In other words, many respondents saw their expectations exceeded.
Q1/2023
Q4/2022
State of Commerce Advertising
Trends & Challenges
What are the biggest challenges in Commerce Advertising? Where are the trends and potentials? Here are the qualitative and quantitative assessments of the industry.
What is the biggest challenge in Commerce Advertising you see for the next quarters?
For the first time, we asked an open-ended question about the biggest challenges for the next quarter. The respondents most frequently mentioned possible budget cuts, the consequences of the economic downturn and inflation, as well as tracking and data-protection regulations. Here are five examples of what respondents wrote:
Traffic
- Managing tracking issues with advertisers' sales
- Cookieless
- Quality of traffic
- Bad traffic
Economy
- Budget cuts
- User behavior will change due to inflation
- Economic downturn
- Managing the inflation
- The insecurity at customers' side
- Global economic situation (uncertainty)
- Lower purchasing power due to inflation
- Consumer climate
Targeting
- Make affiliate marketing more transparent
- Appropriate tracking whilst remaining compliant to privacy regulations / laws
- Data protection in combination with tracking/attribution
What is your favorite billing model?
Cost-per-order (50 %) and cost-per-click (35.3 %) are the most popular billing models among the industry experts we surveyed. In this expert article, our General Manager & SVP Advertisers, Nikolaus Spitzy, summarizes the advantages and disadvantages of all billing models – and how to make the best possible decision.
What are the top industry trends in Commerce Advertising right now?
As in the last survey, the majority of experts see artificial intelligence (AI) and machine learning as the most important industry trends in the upcoming months. Dynamic attribution and privacy-friendly advertising are again among the top 3, but share the podium with influencer advertising and brand safety.
Q1/2023
Q4/2022
* up to 3 answers possible
Where is the greatest growth potential for publishers and advertisers in Commerce Advertising?
According to respondents, improved tracking technologies offer the greatest potential for publishers and advertisers in Commerce Advertising. This is followed by the diversification of publisher models and the integration of app tracking.
Q1/2023
Q4/2022
* up to 3 answers possible
"The demands that advertisers and users place on publishers are becoming greater. Especially when it comes to their privacy and the protection of their data, more and more people are looking very closely at how their data is handled. On the other hand, advertisers and publishers can score points with them if they credibly show them that they also take these issues seriously. Fortunately, our survey shows that the industry is aware of exactly that and has recognized the potential of alternative tracking technologies."
Nikolaus Spitzy
General Manager &
SVP Advertisers, mrge
SVP Advertisers, mrge
State of Commerce Advertising Q2/2023
Executive Summary
Despite downturns, the Commerce Advertising industry remains optimistic
Sales in Commerce Advertising declined in Q1/2023 compared with the fourth quarter of 2022. This is not surprising, however, given the shopping season at the end of the year, and the tense global economy. However: The downturn was less severe than expected, and the industry feels confident about the near future. This positive development is all the more surprising, especially after the strong Q4, and could be a sign that Commerce Advertising is a comparatively safe haven in times of crisis.
The industry must develop innovative tracking methods
Offering advertisers high-reach, high-quality traffic while guaranteeing tracking and attribution that comply with data protection laws – this is the task publishers face every day. But the requirements are increasing, both in terms of advertisers’ expectations and, not least, privacy-conscious users. The industry is well-aware of this: More than a third of those surveyed see “innovative tracking methods” as one of the areas of greatest potential growth.
The sector must take advantage of the “AI hype”
For the second time in a row, our index showed that artificial intelligence (AI) and machine learning are among the hottest topics in Commerce Advertising. And that’s no surprise. ChatGPT, at the latest, made the topic accessible to the general public this year and anchored it in people’s minds. Advertisers and publishers should take advantage of this hype and use AI for campaign optimization, for example.
Close relationships between publishers and advertisers are more important than ever
Trust is the foundation for every good partnership. This has always been the case in Commerce Advertising, but it will become even more important in the coming quarters. For example, nearly a third of respondents see one of the greatest growth potentials in a very specific area: concluding target agreements that stipulate any commissions and exclusive deals from the very beginning.
Join the Panel
For its “State of Commerce Advertising” index, mrge regularly surveys the industry’s top experts and decision makers. Become part of this expert panel and actively shape the future of the industry! Register today, join our next panel survey in March 2023, and receive the results before everyone else:
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