2022

Unbundling Meta:
How the tech giant’s digital advertising
business is being disrupted
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Precise targeting and affordable ad
options have driven Meta’s explosive
growth, which is now threatened
by new privacy regulations and a
slew of competitors. From digital
ad-serving technology to media
networks, here’s how companies are
unbundling one of the world’s leading
digital advertisers.

In Q2’22, Meta’s digital advertising business — which accounts for

approximately 97% of its overall revenue — reported its first-ever
drop in revenue.

That figure dropped again in Q3’22, further compounding digital

advertisers’ fears of a major slowdown — and Meta expects to see
revenue drop again at year-end.

This can largely be attributed to the new challenges the company

faces in effectively targeting audiences, including Facebook’s
stagnating user base, generally tighter marketing budgets, and
Apple’s updated privacy settings, which let iOS users opt out of
targeted ad tracking.

Meanwhile, startups are attacking the digital advertising space.

Funding to targeted marketing tech startups rose to $6.3B in 2021,
nearly tripling from 2020.

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Meta is also facing competition from retail media networks, which
allow their partner brands to access their first-party customer data
directly. Further, other social media networks — like TikTok — are
consuming the attention of younger audiences.

Below, we look at how tech companies are unbundling Meta and the
broader digital advertising business, broken out by data services,
new ad formats, and digital media & entertainment.

Note: This graphic is not exhaustive of the space. Categories are not
mutually exclusive.

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Category breakdown

We categorize technologies and services unbundling Meta across

3 segments:

• Data services: These companies develop new tech-enabled

audience targeting tools to reach customers.

• Digital media & entertainment: This space includes online

channels that distribute content and engage large audiences,
such as social networks, fitness apps, and gaming.

• New ad formats: This segment features new ways to advertise

to customers beyond standard display formats.

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Data services

CONSUMER IDENTITY RESOLUTION & INTELLIGENCE

Apple’s privacy update makes tracking user behavior more
challenging. In response, many advertisers and publishers are
turning to new solutions that can offer online ad targeting without
cookies.

Identity resolution technology matches anonymous consumer

data across devices and touchpoints to a single profile. This
builds a cohesive, omnichannel view of a consumer, which helps
marketers access audience information to deliver personalized
messaging throughout the customer experience. As cookieless
environments like connected TV and mobile apps become more
popular, identity resolution tech is vital to creating a seamless
omnichannel shopping experience.

In recent months, advertisers and publishers such as P&G,

Albertsons, and Disney have partnered with adtech company The
Trade Desk to create a universal identity resolution solution.

Meanwhile, New York-based startup MediaWallah offers a data

connectivity platform that integrates with other martech and
adtech stacks to help advertisers match and create holistic views
of customers. The company claims 15.2x better match rates than
“those of the third-party cookies for a major publisher to run a
targeted campaign.”

CUSTOMER DATA PLATFORMS

In 2024, Google will phase out third-party cookies from its Chrome
web browser. This means brands will have to rely even more
heavily on first-party data to build their targeted ad campaigns.

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Customer data platforms (CDPs) aim to give retailers a clearer
picture of customer identities and spending habits. The platforms
aggregate and analyze first-party customer data from disparate
sources — such as websites, social media, and retail software
--- to create customer profiles. They offer brands and retailers an
opportunity to build direct relationships with customers through
personalized offers, recommendations, and ads.

Retailers are embracing alternatives to Meta’s first-party targeting

through CDPs. AB InBev, Mattel, and Carrefour have already
leveraged this technology.

• Europe-based Synerise uses AI to create behavioral segments

and automated marketing tools that work across online,
mobile apps, or physical channels (e.g., a POS).

• Blueconic’s platform allows advertisers to build dynamic

segments, individualizing experiences at each stage of the
customer journey.

DATA CLEAN ROOMS

Data clean rooms offer a privacy-friendly solution that enable
advertisers to share data.

These solutions leverage first-party data, allowing brands and

retailers to run targeted advertising campaigns. Retailers can
use data clean rooms to plan, activate, and measure advertising
campaigns across audiences.

The benefit of this tech is that neither side’s personally identifiable

information is exposed to the other, giving companies greater
control and transparency over how their first-party data is used.

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Major retailers such as Carrefour, Walgreens, and Walmart have
entered the space through partnerships with vendors. Meanwhile,
connected TV player Roku has launched a data clean room to
target ads to viewers.

• Clean room provider Habu partnered with Snowflake to

provide its automated data and analytics software to
companies already using its data cloud platform. Habu raised
$25M in a Series B round in November 2021 from Snowflake
Ventures and other investors.

• InfoSum’s Sigma Platform tool facilitates marketing use

cases, including consumer insights, cross-channel activation,
and campaign measurement, with end-to-end protection and
security. Disney partnered with InfoSum and Snowflake to
help onboard brands into its clean room system.

MEASUREMENT
Apple’s privacy settings are bringing challenges to measuring ad
performance. This is an issue for Meta, which estimates that the
privacy change will cost Facebook $10B in revenue in 2022.

Tightening restrictions on user-level tracking will make legacy

attribution platforms less effective. While Meta searches for more
reliable conversion metrics for advertisers, measurement tools like
marketing attribution are helping brands get the insights they need
to make advertising decisions.

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These tech solutions provide a more expansive lens across
channel attribution (search, ads, social), showing brands which
channel drives conversions and attribute revenue to marketing
campaigns. Some of these tools focus on closed-loop attribution,
providing a direct link between targeted ads and sales to improve
advertisers’ return on ad spend (ROAS).

• California-based Measured delivers more granular insights

at the marketing campaign and tactic level. The startup
offers optimization strategies and makes recommendations
to maximize revenue via digital marketing budget allocation.
Measured partners with direct-to-consumer brands such as
Parachute, Savage Fenty, and Vuori.

• Meanwhile, Branch raised a $300M mega-round in Q1’22 for

its mobile measurement platform, elevating the startup to
unicorn status.

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Digital media & entertainment

FITNESS
The rise in connected fitness makes collecting data and learning
more about audiences easier. Peloton, for example, has 7M
members and can connect people from the same demographics
with the same goals.

In November 2021, Meta announced its plan to acquire Within, the

company behind the virtual reality fitness app Supernatural. Meta’s
fitness-themed VR apps and fitness tracker app, the Quest Move,
span boxing, dance, and other full-body workouts.

Startups are revolutionizing fitness by combining social networks,

gaming, and interactive content with consumers’ workouts.
Next-gen fitness experiences are more immersive and game-like,
helping consumers engage better with exercises. From haptics to
immersive gaming content, startups such as Quell, Ergatta, and
Zwift are at the forefront of this technology.

To learn more about the consumer fitness and wearables startup

landscape, check out our fitness tech and consumer wearables
market maps.

GAMING
Gamers already spend hundreds of hours in virtual worlds
featuring live concerts and online games — but enthusiasts see a
future where entire societies thrive in online realms inhabited by
avatars of real people, creating a richer gaming experience.

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Companies in this space are creating opportunities for brands
and retailers to engage with or advertise to consumers in virtual
spaces.

• Gucci, Nike, and Forever 21 are building next-level brand

engagement experiences through gaming platforms like
Roblox.

• Fortnite maker Epic Games has more than 350M registered

users. The company has partnered with Lego to build a
metaverse aimed at kids, Balenciaga, and Disney.

• VR social platform Rec Room achieved unicorn status in 2021,

and among its investors are Sequoia Capital, First Round,
and Index Ventures. In April 2022, Rec Room announced
a partnership with the NBA to offer a new set of virtual
experiences during the 2022 Playoffs.

LIVESTREAM SHOPPING
With advertising targeting capabilities suffering, marketers are
searching for new sales avenues to test. Livestream shopping
has become hugely popular in China, but remains an experimental
channel for US marketers.

Through livestreams, brand representatives or social influencers

showcase products and answer questions. Meanwhile, retailers
can engage customers, potentially increasing conversion rates
and reaching a younger audience.

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Meta has been testing a new livestreaming platform for influencers
called “Super,” which will allow influencers to host livestreams,
earn commissions, and engage with viewers. The company faces
a growing pool of players in the livestreaming arena, from big tech
and social media giants to startups.

TikTok, for example, has been promoting its livestreaming feature

in the US. It commissioned a survey that showed that “half of
TikTok users have bought something after watching TikTok LIVE.”

Startups in this category develop B2B and B2C solutions allowing

customers to buy featured products on a livestream.

• Flip is a social commerce platform for beauty products.

Since the beginning of the year, the company’s user base has
reportedly grown by 500%, and the number of transactions on
its platform has increased by 600%.

• Israel-based buywith is a platform for influencers to host

livestream shopping events that work without a code
integration or app download.

MEDIA NETWORKS
Media networks are among the fastest-growing ad marketplaces
in the US. Amazon’s online ad business comprised 78% of US
digital retail media ad spending in 2021 per eMarketer. Its ad
business beat Meta and Google in growth in Q2’22.

Media networks tout their website traffic, quality, and first-party

data to meet the demands of brands. Shopper data is used
to identify customer demographics, buying patterns, or other
engagement metrics that would be of value to an advertiser.

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Marketers worried about a looming recession and seeking digital
alternatives to Google and Meta are allocating more of their ad
budgets to media networks, where they can show measurable
returns on ad spend.

• Retailers are at the forefront of launching media networks and

scaling their digital advertising capabilities, and new sectors
are emerging in the space. Beyond sponsored search ads,
retail media platforms are moving into new media formats like
connected TV (CTV). In September 2022, Kroger expanded its
ads marketplace to include video and CTV.

• Media networks are also emerging outside of retail. In 2022,

Lyft and Marriott launched their media networks. Lyft Media
includes vehicle ad options like digital rooftop screens and in-
car tablets. The mobility platform has worked with companies
such as DoorDash, Starbucks, and HBO Max.

For an in-depth look into retail media networks and tech solutions
leading the space, check out CB Insights’ Tech Market Map Report:
Retail Media Networks.

SOCIAL NETWORKS
Meta’s biggest rival, ByteDance’s TikTok, has over 1B active
users each month and has proven to be a popular platform for
brands looking to appeal to younger consumers. It is now on
track to overtake Facebook in influencer marketing spending as
Facebook’s popularity among US teens falls.

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 • Meanwhile, Spotify has over 400M active users and has
attracted brands like Coca-Cola, Reebok, and Victoria’s Secret
to its ad marketplace. In the last 2 years, the company has
made 8 acquisitions spanning content creator tools to data
and analytics.

• France-based social media platform BeReal, where users have

2 minutes each day to share a photo, went from 10K daily
active users to 10M in just a year.

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New ad formats

AUDIO ADVERTISING
Apple’s privacy updates have opened up new, cookieless
advertising opportunities for digital audio formats. Digital audio
(including podcasting) saw the highest growth rate (by format) in
2021, with a year-over-year growth rate of almost 60%, according
to the IAB 2021 report.

Now, adtech startups are creating solutions to support these new

formats for well-known digital music platforms.

For example, Instreamatic’s voice AI tech enables brands to create

interactive voice ads that customers can respond to verbally
when streaming audio or video content. The company has raised
$9.3M in total funding from investors including Google Assistant
Investments. Brands like IKEA, Sephora, and HP have used
Instreamatic’s technology.

DIGITAL AD-SERVING TECHNOLOGY

As the advertising ecosystem becomes more complex, publishers
and advertisers are turning to digital ad-serving tech to manage
and optimize their campaigns.

The Trade Desk develops advertising automation tools and

manages an ad network that couples online publishers with
brands. Automation allows advertisers to sell more ads at scale,
accelerating a brand’s or retailer’s goal of targeting more of its
first-party data pool. The company has partnered with Disney
and Albertson’s to power greater audience activation at scale
programmatically.

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Brands and retailers adopting demand-side platforms (DSPs) like
Choozle make it easy for advertisers to buy ads across display,
video, mobile, and search ads.

VIDEO & IN-GAME ADVERTISING

Digital video is one of the fastest-growing advertising channels,
with ad revenue up over 50% year-over-year, according to the IAB.

In-game advertising (IGA) uses its unique format and fixed

position within a game environment to expose users to ads for
longer than typical, reinforcing brand awareness. For example,
startup Anzu blends ads directly into video games and operates
cross mobile, PC, console, and other virtual environments. The
company raised $20M in a Series C round in March 2022. Its
investors include Sony Innovation Fund, NBC Universal, and the
Chicago Cubs.

Connected TV environments are also beginning to support video

ad formats. Premium content that streams through apps on a
device can have commercials run alongside shows. In 2022,
Netflix and Disney+ announced advertising opportunities for
companies to reach their audiences.

Startup IRIS.TV enables video-level contextual targeting, a method

that matches images and video to an advertisement. It also
conducts brand-safety analysis to ensure appropriate content.

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