The Exordian: April Edition

May 6

The Shifting Advertising Landscape: Declining ROAS, AI's Impact, and the Future of Brand Marketing

The New Reality of Digital Advertising: Declining ROAS and Regulatory Challenges

In today's rapidly evolving digital marketing ecosystem, brands face unprecedented challenges that are fundamentally reshaping advertising strategies. Return on ad spend (ROAS) – once the holy grail of digital marketing – is experiencing a visible decline across platforms, forcing marketers to rethink their approach to customer acquisition and retention.

Privacy Regulations Tightening the Reins

The transformation began with Apple's groundbreaking iOS update in 2021, introducing app-tracking transparency, followed by the EU's now-standard GDPR regulations. These changes represented just the beginning of a significant shift in how brands can collect and use consumer data.

More recently, Google's much-discussed third-party cookie deprecation proved to be something of a false alarm – cookies remained, but advertiser behavior changed dramatically nonetheless, with a renewed focus on first-party data collection and management.

Eight states including California and Texas are implementing new privacy laws in 2025, according to the International Association of Privacy Professionals. With federal privacy legislation still unlikely in the near term, advertisers face increasing complexity navigating different state standards and compliance requirements.

Brands Taking Control of Their Advertising Future

These regulatory changes have catalyzed a strategic pivot among brand marketers. Many are:

Pulling budgets away from large agencies
Developing proprietary technology stacks
Prioritizing ownership of their advertising processes and data

As Jack Campbell, founder of Wize Media, explains: "Your email list, your community, your events, your collaborations — that's the stuff that's future-proof." These owned channels provide brands with clean, first-party data about their customers – an increasingly valuable asset in today's privacy-focused landscape.

AI's Double-Edged Impact on Advertising Performance

Meta's AI Revenue Boost: Sustainable or Temporary?

Meta recently outperformed quarterly expectations as AI implementations attracted increased advertising spend. The company reported earnings of $42.31 billion for the first quarter, surpassing analysts' average estimate of $41.40 billion. Additionally, Meta lowered its total expenses forecast for the year to between $113 billion and $118 billion, down from earlier projections of $114 billion to $119 billion.

However, industry experts caution against overoptimism. Much of this AI-driven advertising revenue stems from what appears to be an experimentation phase, with brands testing new capabilities. The concerning reality: AI-enhanced ads have not yet demonstrated consistently improved performance metrics. This raises important questions about the sustainability of current spending trends.

Apple's AI Controversy Adds Uncertainty

Further complicating the advertising landscape, a 170-page internal playbook from Apple was recently leaked to Search Engine Land, offering unprecedented insight into how the company determines what content is considered "good" or "harmful" to display to users.

This leak coincided with controversy surrounding Apple's promotion of its "Apple Intelligence" suite during the iPhone 16 launch in September 2024. The company claimed features like Genmoji, Image Playground, and ChatGPT integration with Siri were "Available Now," when in reality these capabilities were neither fully functional nor released on the promised timeline. This discrepancy has resulted in a lawsuit alleging false advertising around AI capabilities.

The Future of Brand Marketing: Beyond Traditional Digital Ads

Real-World Results Show Declining Efficiency

The impact of these industry shifts on advertising performance is increasingly evident. Pia Mance, founder of Haven Accessories, previously achieved customer acquisition costs of just $2.50 through a modest $15 daily Meta ad spend. Now, she reports that "in more recent months, the digital advertising landscape has definitely become more competitive and less efficient."

Elena Bonvicini, founder of Los Angeles-based label EB Denim, echoes this experience: "A seven to tenfold ROAS seemed to be the norm; now we are lucky if it's fourfold."

Potential Antitrust Actions Could Further Disrupt the Landscape

Adding another layer of complexity, Meta faces yet another anticompetitive lawsuit. While some analysts consider the case weak, its existence alone influences how marketers approach ad spend allocation. If any major antitrust action eventually succeeds against digital advertising giants, the consequences would "greatly limit the overlapping data and would likely mean less granular targeting options for media buyers," according to Amperity's Slager.

The Return to IRL Marketing Strategies

Forward-thinking brands are responding to these challenges by diversifying beyond purely digital approaches. As Poppy Lissiman notes, "The flip side of this saturated digital world presents a very strong case for analogue or 'antisocial' marketing strategies. Shifting the brand away from exclusively URL to more IRL is going to be a big focus for 2025."

This trend toward in-person marketing experiences represents more than just a tactical shift – it reflects a fundamental reassessment of how brands build relationships with customers. As previous editions of The Exordian have highlighted, IRL pop-ups and even dinner parties are becoming increasingly important components of sophisticated marketing strategies.

Building Community-Centered Brands

The ultimate conclusion from these converging trends is clear: successful brands must create genuine connections with their audience. As Slager succinctly puts it: "The brands that survive the next few years are going to be the ones that people genuinely want to be part of, not just the ones with the best retargeting."

Owning the advertising process doesn't simply mean building proprietary technology. It requires getting "in the trenches" with customers, understanding their needs on a personal level, and creating experiences and communications that resonate authentically.

The Exordian is committed to promoting exceptional talent and providing unfiltered insights about the current creative landscape. Feel free to share your thoughts with us at INFO@EXORDI.IO.

sources: Vogue Business, Emarketer, The Times, Business Insider, Modo News