Meta’s recent policy shift to permit alcohol and gambling advertisements across the globe excluding the Indian market, in its walled gardens has created a significant ripple across the digital advertising landscape. With questions about its implementation and the regulatory adjustments popping up, this opportunity might be a stepping stone to unlocking new revenue streams, potentially reshaping the dynamics of digital ad spend and competitive positioning of Meta in the market. “The opening up of these previously restricted categories will lead to a significant increase in ad inventory and potential revenue for Meta, especially as alcohol and gambling companies increase their digital ad spending,” Gopa Menon, former digital head, South Asia, Mindshare, told BrandWagon Online. This will also result in overall growth in digital ad spending. Industry experts believe that with a major platform like Meta accepting these ads might encourage more brands in these categories to shift their advertising budgets towards digital platforms, contributing to the overall growth of the digital advertising market, he added.
Last month, Meta updated its WhatsApp Business policy, allowing companies in the real-money gaming segment to send promotional messages to users in India through the platform. This update is expected to help online real-money gaming companies, particularly MSMEs, by expanding their reach and engagement with users who have consented to receive communications via WhatsApp. Previously, Meta’s policy broadly allowed companies in certain countries to send promotional messages related to alcohol and online gambling on WhatsApp Business. However, following backlash in India, a Meta spokesperson clarified that the company adheres to local laws when setting business policies, and some types of business messaging would not be permitted in certain countries, including India.
New revenue streams
Meta’s latest decision, reportedly, marks a pivotal change in its advertising strategy. Historically, these sectors have been restricted due to stringent regulatory and ethical concerns. The online gambling market is projected to reach $97.15 billion in 2024 and projects a CAGR (Compound Annual Growth Rate) of 6.47% till 2029, according to market research firm Statista. Similarly, the global alcoholic beverages market size is expected to grow from $1639.9 billion in 2023 to $2249.3 billion by 2033 with a CAGR of 3.21% during the period. “We will leverage a multi-optional approach and splitting our ad spends on both digital and traditional advertising so while there will be a change in our ad spends, it is too early to say how much of an increase there will be,” Vedant Kedia, CEO, Mount Everest Breweries Ltd., said.
From what is understood, by allowing ads from these sectors, Meta stands to benefit from a substantial influx of ad dollars. “The inclusion of alcohol advertising on Meta’s platforms marks a significant advancement in our digital strategy. We plan to divide our marketing efforts to create a healthy balance of traditional and personalised digital approaches. Meta’s algorithms will allow us to focus on targeted digital ads and ensure that our campaigns reach the right demographic,” Kedia said. While continuing to promote the brand’s messaging of enjoying beer with friends, the company will also encourage consumers to practise responsible drinking, he added.
To ensure brands can effectively measure the success of their campaigns, it is recommended that a comprehensive approach is followed which involves a deep dive into analytics and data insights. “This includes conversion tracking and attribution models to provide detailed insights into campaign effectiveness using both first- and third-party data and multi-touch attribution to identify key touchpoints,” Vineet Goyal, head of digital transformation and enablement, SMC Group, said. The company also emphasised on customer journey mapping to pinpoint engagement successes and friction points, A/B testing to determine the most effective creatives and targeting options, and advanced audience segmentation for personalised campaigns. Additionally, they offer real-time reporting dashboards to monitor key performance indicators such as impressions, click-through rates, cost per acquisition, and return on ad spend, he added.
Experts predict that Forrester – recently claimed this policy change could lead to a significant increase in the ad spend on Meta’s platforms by up to 20%. Alcohol beverage “We will be leveraging a multi-optional approach and splitting our ad spends on both digital and traditional advertising so while there will be a change in our ad spends, it is too early to say how much of an increase there will be,” Kedia said. Advertising on Meta’s platforms is likely to enhance our brand’s visibility and perception among consumers. It will allow us to engage with consumers in more meaningful and interactive ways, which can deepen brand loyalty and strengthen our community, he added. However, the need to ensure that the message remains authentic and consistent with brand values in order to avoid any potential disconnect with the audience remains.
Not just a game
Meta’s announcement to allow companies in the real money gaming segment to send promotional messages to users initially created early confusion in India. But as per Indian laws betting and gambling apps are not allowed to advertise. As per industry experts, Meta’s move supports India’s established jurisprudence as the new policy will not be implemented in the country. “Of India’s $3 billion gaming industry, 88% skilled-based games are monetised through the microtransaction model. On the other hand, the free-to-play games market, monetised by ads and subscriptions is only a $400 million segment. WhatsApp Business messaging allowing online real money skill gaming companies to use its platform signals growing recognition of this,” Saumya Singh Rathore, co-founder, WinZo said.
It is believed that this move by Meta paves the way for more personalised advertising by gambling companies. “Although there are platforms like Telegram where many gamers connect, WhatsApp remains the most preferred platform for chatting. Apart from that, people have their mobile numbers connected to online payments in many countries. From now on, if people get advertisements of games on the same platform, the level of convenience and the number of purchases in the online gaming ecosystem will be increased globally. I believe WhatsApp Business platform will be a medium of interaction between gamers and companies, ” Sreedhar Prasad, start-up advisor and former partner at KPMG, said.
Meta versus others
With several countries implementing a strict ban on alcohol and gambling advertisements like India platforms like Google have been more conservative when it comes to alcohol and gambling ads. In such a scenario, Meta’s approach could attract a broader range of advertisers looking for new avenues to reach consumers. In countries where alcohol and gambling ads are permitted, Meta’s new policy could solidify its position as a leading platform for high-value ad spend.
“Some platforms might choose to maintain stricter ad regulations to differentiate themselves from Meta, focusing on different types of content or industries that Meta’s new policy does not address,” Goyal added. Another possibility is that platforms might enhance their compliance and targeting features to ensure advertisers can navigate new policies effectively. This could include improved tools for geo-targeting and content moderation he stated.
Experts opine in light of Meta’s latest decisions, other platforms may reevaluate their ad policies to remain competitive given the number of competitors in the walled garden market. This could involve relaxing restrictions on certain ad categories or introducing similar allowances to attract advertisers looking for broader reach. Additionally, to compete with Meta’s expanded ad opportunities, platforms might develop new features that enhance targeting, personalization, and compliance. “Platforms might also introduce improved compliance mechanisms to help advertisers navigate regulatory complexities, ensuring that they can meet local legal requirements while maximising ad effectiveness,” Goyal added.
Regulatory challenges
Implementing this policy across different countries presents a complex challenge. In markets like India, where regulations prohibit alcohol and gambling ads, Meta will not be able to implement this policy. Furthermore, Meta spokesperson has also confirmed that the company would not be going ahead with this policy in India.
“Protocols in line with the legal and ethical guidelines have to be put in place before pressing the button on this one. So, it is very early days to assess how this will pan out and its effect on the digital ad industry,” Sanjay Trehan, digital and new media advisor, said. Despite the potential financial benefits, Meta is in line to face significant regulatory and ethical challenges. In a recent statement, Meta spokesperson did clarify that the company will be abiding by the local lawl as the inclusion of alcohol and gambling ads could attract scrutiny from regulatory bodies concerned about the impact on public health and safety. For instance, in the United States, the Federal Trade Commission (FTC) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) are likely to closely monitor these ads for compliance with existing regulations.
“The overall impact will depend on how effectively Meta implements responsible advertising practices, how advertisers navigate the challenges, and how governments and regulatory bodies respond to this change,” Menon said. It will be crucial for Meta to prioritise transparency, age verification, and responsible advertising guidelines to mitigate the potential negative impacts and ensure a safe and sustainable advertising ecosystem for all stakeholders, he added.
Furthermore, Meta will also need to address ethical concerns when it comes to the promotion of products that can have negative social consequences. The risk of promoting gambling addiction and irresponsible drinking could lead to backlash from the government and the public. This scrutiny could, in turn, impact advertiser interest and lead to stricter self-regulation, potentially affecting Meta’s revenue.
As Meta moves forward with this policy, the impact on ad spend and revenue will become clearer. The industry will be watching closely to see how Meta’s strategy unfolds and whether other platforms will follow suit. For now, we can only wait and watch to know if Meta has really turned to a slippery slope or a stepping stone.