I’ve been preaching about the wisdom of upper-funnel advertising investment for a while, and I’ve got some words of caution for Google and Meta: brands are starting to listen.

There’s a reason I’m so bullish on the upper funnel; as we diversify our clients’ ad spend into upper-funnel initiatives, e.g. Connected TV, we are seeing a greater acceleration in revenue growth than when brands over-invest in lower-funnel channels like Google and Meta Advantage+ ads. 

Interest isn’t limited to my agency’s clients; I’ve had dozens of conversations over the last few months (not to mention well-attended webinars and engagement on content on the topic) that indicate a heightened interest in moving away from performance-only marketing campaigns.

Here’s why, despite killer recent earnings calls and viable upper-funnel inventory of their own, Meta and Google might want to brace for impact.

Why Google Needs to Fear the Upper Funnel

On the Google side, YouTube’s inventory won’t make up for search erosion. If people shift their dollars to increase incremental reach, they will see a delayed return on their investment that forces them to change how they look at attribution windows – which puts Google in a tough spot. While it is possible for them to outcompete CTV and programmatic video through YouTube, doing so disrupts their core search business. If advertisers are open to that delayed return, then they are more likely to move dollars away from low-funnel keywords. 

Furthermore, CTV placements force a view, similar to linear TV, where most video ads in YouTube are skippable. With the increase of YouTube TV, Google is in a better place to capture the shift, but CTV is a much more competitive industry than search, so they risk losing share to Roku, Netflix, Amazon, etc. 

Why Meta Needs to Fear the Upper Funnel

Meta also faces some upper-funnel headwinds. Currently, there’s a huge opportunity for advertisers to bid toward upper-funnel objectives to decrease their CPM (which we consistently see leads to improved efficiency for mature brands). While this is good for advertisers, if Meta’s clients were to do this en masse, it would actually decrease their revenue because advertisers would be shifting spend out of their low-funnel campaigns, where the auction commands high CPMs. 

While the share shift within Meta’s ecosystem presents a relatively minor threat, the bigger threat is in advertisers shifting to more high-impact ads on other channels. Because Meta’s ad format is feed-based, users can easily scroll right past the advertisement, which reduces the overall efficacy of each impression. 

There is a silver lining, of course; Google and Meta have unrivaled scale and familiarity with advertisers – not to mention the technology and resources to dominate the upper funnel if they seize the opportunity. But if Google and Meta don’t invest heavily enough in improving the efficacy of upper-funnel ads, the shift to performance branding is going to leave the door open for other platforms to take market share – which would make for a healthier ad ecosystem overall.