The marketing playing field reset in 2022 as pandemic-driven trends once viewed as permanent proved anything but and economic constriction created digital whiplash. This year will test if the industry’s transformational moves have long-term viability: Will ad-supported streaming really usurp TV’s throne? Can alternatives to third-party cookies and measurement currencies take hold? What practical value does the metaverse provide?
Meanwhile, big companies might get even bigger, with the Microsoft-Activision and Kroger-Albertsons deals in the regulatory hot seat. Apple’s reach will advance, weighing on embattled platforms like Meta, and retailers will expand their media networks to capitalize on the migration of dollars toward performance.
The fog of uncertainty that has hung over marketing since the onset of COVID-19 ultimately remains, but unlike earlier in the pandemic — when online engagement soared and war chests were bountiful — marketers are entering 2023 with tight belts. With a battle for attention mounting on multiple fronts, including BeReal and TikTok, consumers will prioritize simplicity and utility, further raising the stakes.
“The way I see the year ahead is fragmentation in the marketplace will continue, with the retail media networks and also with video platforms and ad products. But consumers are going to look at it the opposite way and start really minimizing where and when they're consuming,” said Dave Kersey, chief media officer at GSD&M. “There are all these opportunities to reach people, but a transition of people focusing on fewer channels.”
Consumers embrace ‘posture of prudence’
Consumers have had a rough go of it, plagued first by the pandemic and then inflation, war and recessionary fears. Sentiment was down in 2022, but a majority also displayed resilience, according to J. Walker Smith, chief knowledge officer of brand and marketing at Kantar. Still, uncertainty about what’s around the bend has led many to hunker down further into what the exec described as a “posture of prudence.”
“When we [got] into December, what we saw is that consumers are more concerned about where the year is going to take them,” said Smith. “And there's still a lot of uncertainty.”
To successfully reach consumers in 2023, advertisers should lean further into strategies that have already taken precedence, including messaging around a worthwhile value exchange. That helps reduce feelings of risk-taking in times of uncertainty. Brands should also “ally themselves with positivity,” Smith added, both from a messaging perspective and in terms of simplifying logistics.
“De-stress the transaction,” Smith said.
Allowing for a more human experience — a craving that soared as pandemic restrictions lifted — will continue to be vital, per Smith. Emotional lures versus strict functionality will resonate, and companies should prioritize core values around sustainability and diversity and inclusion as expectations for representation hold firm.
“I don’t think that’s going anywhere just because we're in a period of economic dislocation — that won’t change your commitment to those values,” Smith said.
CMOs must make fewer resources go further
CMOs may be resource-strapped in 2023, but future-facing tools promise new efficiency. Artificial intelligence (AI) software like ChatGPT has gained credibility, making ethical AI a top mandate for marketers. Emergent channels that are difficult to monitor or “dark,” like Discord, will be more important for understanding groups like Gen Z.
“A difficult financial environment does create silos and people who maybe work against each other across functions.”
Ewan McIntyre
Vice president analyst and chief of research at Gartner’s marketing practice
On the messaging front, CMOs will walk on political eggshells following seismic changes like the Supreme Court’s decision to overturn Roe v. Wade. The role’s purview will also bleed further into sustainability and packaging as inflationary concerns top the agenda.
“We've seen a diversification of where the innovation question comes from. More often, it's coming from CMOs trying to really anticipate value shifts that are the result of potential economic anxiety,” said Camilo La Cruz, chief strategy officer at Sparks & Honey.
All that is to say CMOs will wear many hats while contending with a notoriously high turnover rate that makes implementing long-term strategy an obstacle. The drive for self-preservation is natural under the circumstances.
“A difficult financial environment does create silos and people who maybe work against each other across functions,” said Ewan McIntyre, vice president analyst and chief of research at Gartner’s marketing practice.
Recent Gartner research affirms that self-described collaborative marketers often performed worse than independent ones. But the upshot isn’t necessarily that an independent streak carries greater value, per McIntyre.
“I don't think that means CMOs should be looking to work more independently. I think it means they should learn to be better collaborators,” said McIntyre.
Retail media’s power grows and consolidates
In a period of pullbacks, retail media will blossom in 2023 as marketers seek a more direct line from ad impressions to sales. Spending is forecast to climb 10.1% this year to hit $122 billion globally, making it the fastest-growing media channel. The concept will spread across categories following Marriott's lead, as well as into formats like connected TV (CTV).
“Advertisers are having a tough time managing all of these partners.”
Lori O’Neal
Head of global retail and consumer packaged goods strategy at LiveRamp
But retail media growing pains that arose last year will also sharpen. Some marketers will course-correct after over-prioritizing performance and losing some control in the process.
“The anticipation in 2023 is there's a better balance of brand and performance,” said GSD&M’s Kersey.
A more deliberate approach to retail media could mean power consolidates to fewer players. Brick-and-mortar behemoths already dominate the field, and the potential Kroger-Albertsons merger further emphasizes the importance of data at scale. Some retailers are also in-housing their operations, posing challenges to the partner ecosystem.
“Advertisers are having a tough time managing all of these partners,” said Lori O’Neal, head of global retail and consumer packaged goods strategy at LiveRamp. “They're going to get to the point where they're going to go with their top 10 or their top five.”
While the Kroger-Albertsons deal is notably large — and could still be challenged by regulators — other retailers may look to areas like ad tech to round out their digital infrastructure and talent.
“There is likely a belief that valuations will be more realistic on both the buy- and sell-side in 2023,” said Sean McCaffrey, president and CEO of GSTV. “I would suspect a renewed deal market in 2023.”
And data-driven partnerships, such as the new commerce tie-up between Walmart and Roku, may also proliferate as marketers realize combining resources yields richer insights, experts said.
Choppier waters test agency resilience
Agencies defied expectations in 2022, with the legacy ad-holding groups raising their guidance despite inflationary headwinds. Some of the broader slowdown could finally catch up in 2023.
“When creative style can be generated by AI, the name of your agency becomes less important than what results you can generate with the data you have within your network of partners.”
Greg Paull
Co-founder and principal at R3
Cutbacks the sector previously eluded are on the rise, particularly in creative fields. With the appetite for dealmaking waning and accounts changing hands, acquisitions made earlier in the pandemic will need to show their worth.
“After a few years of aggressive M&A, holding companies now need to prove long-term [return on investment],” said Greg Paull, co-founder and principal at R3, over email.
Investments in areas like performance media and data also require fresh talent. Some researchers expect leadership to be handed off to more tech-oriented executives. Mass layoffs at Big Tech platforms could deepen the agency talent pool.
“As a lot of agencies continue their digital transformation, the skill sets are relative and relevant to what we're doing,” said Kersey.
However, attracting the right people will be difficult as a sense of agency culture is diminished. Individual agency brands will see lessened stature, while the strength of the networks — including in the form of newer medium-sized players like The Brandtech Group and Plus Company — will take the spotlight.
“Advertising is becoming more transactional. It's the nature of media and our data and technologically driven culture,” said Paull. “When creative style can be generated by AI, the name of your agency becomes less important than what results you can generate with the data you have within your network of partners.”
Metaverse becomes less of a guessing game
The metaverse has been luring marketers since 2021, leading to a plethora of mostly one-off activations. Excitement around the concept remains, but this year is likely to bring additional clarity around privacy and safety, particularly for younger consumers, and a better definition of what the term “metaverse” truly entails.
“2023 now redefines the metaverse from a video game to a communication strategy,” said Eric Pulier, CEO of Vatom.
Many metaverse activations to date have been shorthand for activations on sites like Roblox and Fortnite. That understanding endures, which will lead platforms to step up monetization via advertising, according to Matt Moorut, director analyst at Gartner’s marketing practice. For brands to continue getting the most from these tactics, they will need to focus on differentiation.
“Initially, if you set up a new skin or an arena in a game, it was already newsworthy. Now, you need to be able to build a proper campaign promotion strategy with [key performance indicators] to be able to find value from it,” Moorut said in an email.
Non-fungible tokens (NFTs) once appeared to be the darling of the metaverse. But crypto controversy, including the crumbling of FTX, has resulted in a shaky perception of digital collectibles. Regardless, Vatom’s Pulier predicts NFTs will have a place in 2023, namely in loyalty — similar to what Starbucks is already exploring.
Augmented reality will also thrive in 2023, Pulier added, with giants like Snapchat leading the way. Activations in the space can be expected to stretch beyond playful filters to richer shared experiences.
“You're going to see people interacting with billboards in different ways, taking things off of them, having them in their wallet, and bringing them back all the way to retail for attribution,” Pulier said.
Social strategies diversify in pursuit of trust, data
Consumers have shown a willingness to stretch beyond the social media status quo in pursuit of exciting new entrants, paving the way for apps like TikTok and BeReal. In 2023, advertisers will up their bets on user curiosity, opting to test out a wider range of platforms as longtime players like Meta and Snap see a downturn.
“We’re seeing a lot of people in a lot of different verticals really thinking outside the box,” said Amy Rumpler, senior vice president of paid search and social for Basis Technologies.
In 2023, the punchy video format popularized by TikTok will remain social’s shiny toy, but it won’t come at the expense of long-form video, said Rumpler, who projects that shorter videos will be used to lock-in interest to then deliver longer content.
The end of third-party cookies could lead to increased social ad spend but also heightened conversations regarding the channel’s targeting and measurement challenges, Rumpler added. During such a critical time, Twitter will find itself on the backburner due to troubles stemming from Elon Musk's dramatic takeover.
Cookie deprecation deja vu
Ever since Google first announced — then pushed back — the deprecation of third-party cookies, advertisers have been looking for ways to protect their data investments. Experts predict that 2023 will be no different in a macro sense, but with new solutions coming into focus.
“I think third-party cookies will basically be deja vu with 2022,” said John Puterbaugh, executive director of advanced media and innovation at Quad. “All the actions are going to be around first-party cookies."
Attribution and measurement will come to the forefront in 2023, especially as third-party cookies may go obsolete before they are completely phased out. Forty percent of global traffic on traffic is already cookie unaddressable, according to Mathieu Roche, co-founder and CEO of ID5.
New solutions to the measurement and attribution question are likely to proliferate. For example, The Trade Desk introduced Galileo in early January, which seeks to provide accurate, cross-channel data activation. Data clean rooms are also expected to become more popular after major players Amazon and Disney began bulking up their capabilities last year.
“The bottom line is that the industry needs to move away from cookies and test and adopt next-generation identity solutions that do not rely on cookies and provide improved addressability and data protection mechanisms,” said Roche in an email.
Sports marketing reaches ‘inflection point’
Sports marketing will continue to fragment as consumers increasingly watch on alternative platforms. NFL Sunday Ticket is migrating to YouTube TV for the 2023 season following the move of “Thursday Night Football” to Amazon Prime.
“I would predict that we’ll continue to see further consolidation of esports teams due to lack of revenue and struggles, i.e., their inability to raise the necessary capital.”
Chris Mann
Senior vice president of the gaming and esports group REV/XP at rEvolution
Amid the digital push, there may be an advertiser shake-up. While consumers can expect to see the usual packaged goods and alcohol advertisements, more vice industries, such as gambling and even cannabis, are likely to appear.
Liquor giant Diageo will air its first Super Bowl commercial this year. Additionally, sports betting platforms such as DraftKings and FanDuel are vying for a piece of the pie. FanDuel is going so far as to stage a live bet during a third-quarter commercial break during Super Bowl LVII, with $10 million on the line.
“We're at the inflection point now where the money behind gambling, behind the spirits industry and cannabis as well, is just so massive that there's no way that leagues, teams and athletes are not going to continue getting paid off of it,” said Evan Scott Schwartz, partner and head of content at creative consultancy Kingsland.
Experts project that other sports such as soccer will grow in popularity in the U.S. Thirty-one percent of U.S. consumers call themselves soccer fans, an all-time high. Esports is expected to attract sponsors as well, though it will see its share of trouble as finances tighten.
“I would predict that we’ll continue to see further consolidation of esports teams due to lack of revenue and struggles, i.e., their inability to raise the necessary capital,” said Chris Mann, senior vice president of the gaming and esports group REV/XP at rEvolution, in an email.
The FIFA Women’s World Cup is on the horizon and WNBA ratings hold strong. Some experts predict that women’s sports could potentially be a better marketing investment than men’s sports given the opportunity for growth.
“Investment in women's sports media, sponsorship, and athletes will continue to grow as more brands look at equity across their spending, and see the power of the communities that have formed in and around women's sports,” said Lou Kovacs, president of marketing, Octagon North America, in an email.
Streaming fatigue comes for CTV
CTV will remain an important part of the digital ecosystem in 2023, with new ad-supported offerings from Disney+ and Netflix watched closely. In such a fragmented space, measuring cross-channel efficacy will be more important for brands — assuming their messages can cut through the clutter and engage fatigued consumers.
“You have this ad-avoidance behavior,” said Eric Schmitt, a research director for Gartner. “We've all skipped ads, we've all blocked ads, but you have this scenario now where … really appealing segments of consumers are able to escape large pieces of advertising.”
As streamers fight for eyeballs, consumers may be more careful with where their dollars go. Services like HBO Max have already begun to play with consolidation and cutting back on content costs, a trend that could continue. Warner Bros Discovery is expected to launch a service combining HBO Max and Discovery Plus in a move that will disrupt the space.
Additionally, ad-supported tiers will take more of the spotlight as platforms seek fresh revenue and more budget-conscious users. As consumers tighten their belts, the growth of advertiser-based video-on-demand and free ad-supported streaming TV services seems probable as well.
Correction: John Puterbaugh is executive director of advanced media and innovation at Quad. This article has been updated to accurately reflect his title, which was incorrect in a previous version.
