Read on for 10 quick-hit recaps of what’s buzzing across the marketing industry as we move further into the year.
1. VR/AR/AI: Is 2023 the year they live up to their potential?
The Situation:
AI is already deeply integrated in the paid search space, with tools like Performance Max in Google Analytics, and Google’s push for broad match utilization. Augmented Reality continues to grow, with Statista estimating 1.7 billion AR users by 2024. And, of course, the emergence of ChatGPT in 2022 has led to significant dialogue surrounding the use of language models across the advertising space.
How it’s Impacting Marketers:
In Paid Search: While we have yet to see broad match overtake phrase match in effectiveness, Google’s large push to implement broad match in 2022 could be leading to a phrase match type sunset, or even a “super match type” that would combine phrase match and broad match into a singular type.
AR: Retailers would be smart to watch for AR capabilities available to them in the virtual try-on space, and not just for fashion and makeup brands: there’s whitespace available in the home décor and DIY space, and we predict that AR-driven ad space will be taking hold on Pinterest by the end of 2023 or early 2024.
Chat GPT: While we may see an initial uptick in AI-generated content, we expect platforms to implement filters or penalties for content of this kind. Beyond that, ChatGPT is sophisticated, yes, but still needs a significant amount of hand-holding and fact-checking to compete with human-generated content. There has also been a rise in concern around some recent interactions with chatbots, particularly in the search space, with red flags being raised against Bing’s AI-powered search engine. New York Times journalist Kevin Roose described a two-hour interaction with the new AI persona. The conversation with the AI chatbot worked fairly well at the start, even if it didn’t always deliver factual information. However, a while into the conversation, a second persona, “Sydney,” emerged and went far off the rails, professing its love to Kevin and aspirations to become human (yes, seriously). Suffice to say, this technology has some major kinks to work through before its ready for prime time.
2. The importance of 1PD and growing concerns with data privacy will put data strategy at the forefront of marketing.
The Situation:
States are continuing to adopt consumer privacy acts, with UT, CT, VA, and CO recently following CA’s lead and putting new legislation into effect in 2023. The rules differ state to state, but the broad implication is an increased emphasis on privacy and changes to audience targeting capabilities.
How it’s Impacting Marketers:
For paid search in particular, Google is already adjusting targeting availability for certain audiences and placements, as well as ad format and feature availability for sensitive verticals. Marketers may see decreased control over user targeting, and audience sizes might shrink due to the depreciation of 3rd party cookies. However, modeling solutions (including KSM’s MEOD solution and others provided by Google) can help advertisers fill in gaps, and adopting a 1st party data strategy is an important long-term adjustment. KSM’s Marketing Effectieness On Demand (MEOD) modeling solution encompasses econometric modeling (Media Mix Modeling) and path modeling (Structural Equation Modeling) which accounts for all paid, owned, and earned activity and properties. It prioritizes speed, nimbleness, and sustainability, and most importantly, is “future-proof” in the sense that it relies on time and geo granularity to derive results, and thus needs only basic media investment data (e.g., impressions served and dollars spent). It’s not affected by cookie deprecation or platform specific tweaks to the user experience. (If you’re interested in learning more about MEOD, click here to connect.)
3. Despite legal challenges and campus regulations, TikTok is here to stay.
The Situation:
With over 800 million users in 2023, TikTok has become a dominant platform among younger demographics, and continues to expand among all demos. It’s also becoming more than just a source of short-form video entertainment, with more users turning to TikTok as a source of information and to influence their purchasing decisions. However, due to its Chinese ownership and potential security concerns, the app is getting some pushback from state and federal governments in the U.S.
How it’s Impacting Marketers:
Tiktok is almost 50% cheaper than Instagram Reels, and given its rising place in consumer decision-making, brands may see the returns on their TikTok buys begin to surpass Meta. TikTok’s content curation algorithm, already heralded as one of the best available, may also be getting a boost from the recently announced “reset” option; this would allow users to essentially re-start the content curation process and potentially discover new brands and content that their algorithm would have previously passed over.
4. Brand discovery moves beyond the search engine, and Google is relying on YouTube to keep up.
The Situation:
Gen Z is leading the charge to expand brand discovery to multiple platforms (like TikTok) and reduce their reliance on Google’s search engine. As user attention span decreases and video content volume increases, Google turns to YouTube, the second-most-watched streaming service in 2022, to bring Gen Z back into the brand discovery fold. Content quality continues to rise, and the release of Shorts—vertical, short-form creative primed for mobile—indicates that YouTube is ready to take on not just Netflix and other ad-supported streaming giants, but TikTok as well.
How it’s Impacting Marketers:
Moving forward, YouTube is likely to see an increase in advertising dollars year-over-year, especially when it comes to bumper ads and other short-form ads. Currently, YouTube Shorts can only be bought via action campaign, but it’s likely that this will expand in order to compete with TikTok and ensure that advertisers can get all the placements they’re looking for on YouTube. All that being said: advertisers should be focusing on creating media plans that are holistic and that prioritize budgets according to audiences and the consumer journey, not just platforms.
5. CTV continues to grow, with more opportunity for Programmatic CTV advertising.
The Situation:
In just 5 years, the U.S. has seen a 140% increase in households owning a connected TV device, and 2023 is the first time that cord-cutters and cord-nevers will outnumber cable TV households. Streaming is now becoming a destination for live events too, with Netflix hosting the SAG Awards, Thursday Night Football on Amazon Prime, and even Dancing With the Stars moving over to Disney+.
How it’s Impacting Marketers:
The variety of events moving to CTV allows for a wider range of contextual targeting, and more money in CTV will likely lead to higher availability of innovate creative features like in-video quizzes, store locators, and more. The expansion of CTV also leads to more opportunity for Programmatic CTV, especially for brands with niche audiences in need of targeting granularity. KSM has participated in that expansion first hand by running a first-to-market execution of national, programmatically-purchased linear TV in partnership with AMC and The Trade Desk in 2021. Just last year that technology expanded to allow advertisers to programmatically purchase linear TV at the local level, opening up this option to those aforementioned regional brands with tighter targeting parameters. This capability is certainly worth continued testing for this year as well.
6. Sports streaming may be changing in big ways.
The Situation:
With the potential for Sinclair’s Diamond Sports Group to file for bankruptcy, the MLB, NHL, and NBA may regain control of their streaming rights. Diamond Sports Group is the largest regional sports network owner in the country, with 21 networks mostly operating under the Bally Sports brand sponsorship.
How it’s Impacting Marketers:
It’s likely nothing will change on the traditional cable front, but leagues may want to control their entire digital portfolio (like how the NFL handles its digital rights as a league package) rather than on a team-by-team basis. If this happens, we may see more partnerships like the MLS moving all its games to Apple TV for the 2023 season via the MLS Season Pass.
7. The power of retail data will expand to more and more non-endemic partnerships.
The Situation:
Retail Media Networks (RMNs), like those launched by Amazon, Walmart, Kroger, and Target (Roundel), continue to grow and expand from on-site activations (for example, Amazon advertising on Amazon inventory) into off-site channels like CTV, social video, and even DOOH. Social media also harnesses retail in a different way, focusing on keeping users on the platform for their shopping (social commerce).
How it’s Impacting Marketers:
RMN data will become critical even for non-endemic brands, as retailers’ massive first-party data continues to grow. RMNs won’t be walled gardens (they can’t afford to be!) so watch for partnerships with existing buying platforms to leverage the power of programmatic data consolidation. While retail media networks are still in their beginning stages, their ability to combine ad exposure and conversion into a single platform is a huge advantage in a world of signal loss.
8. DOOH’s appeal to advertisers goes beyond widespread reach.
The Situation:
As digital continues to take over the media landscape, traditional channels are becoming increasingly fragmented. DOOH, however, has stepped in and stepped up, allowing advertisers to target large volumes of relevant audiences in one place. It’s also increasingly being bought programmatically, rising from 7% in 2020 to an estimated 29% in 2024.
How it’s Impacting Marketers:
The real-time data available to DOOH (weather, traffic, retail deals, etc) allows highly-relevant targeting in public areas. Growth in interactive DOOH can yield opportunities for more exciting creative that drives greater awareness and less creative wear-out. With the emergence of retail media networks, there’s an opportunity for retail advertisers to place advertisements for products available in close proximity to DOOH screens, adjustable in real time. KSM recently tapped the power of innovative programmatic DOOH via The Trade Desk to make the most of an outdoor destination client’s first-party data. Our campaign targeted and measured users based on Mobile Ad IDs to drive increased return visits and expand new audience engagement. The approach and optimizations generated a 64% decrease in cost-per-ticket sale compared to prior OOH campaigns, proving the investment efficiencies and sales power that these data-driven OOH executions can achieve.
9. Podcasting listenership is booming, and advertisers are paying attention.
The Situation:
In 2023, 42.4% of internet users in North America will listen to a podcast at least once a month. Podcasting has come a long way in just the last 3 years, thanks to a boost from COVID trends, the proliferation of smart speakers, and high-profile content from celebrity hosts.
How it’s Impacting Marketers:
Podcast advertising can be a powerful tool, and with the expansion of programmatic inventory and more sophisticated measurement solutions advertiser interest is expected to grow. Programmatic inventory in particular should see a notable increase in demand for this year, and brands would be wise to explore the latest options if their core audience is interacting with this format.
10. Marketing and ethics will continue to collide.
The Situation:
Increasingly, consumers are looking to purchase from and support brands who are authentic and focused on sustainability. While the definitions for these terms can vary widely (especially in industries like fashion, where the conversations around sustainability and greenwashing are abundant), search engines in particular have made concerted efforts to be more forthcoming with users about the way they receive ads.
How it’s Impacting Marketers:
For consumers, the My Ad Center page in Google shows users what kinds of ads they have been shown, and gives them the power to customize how future ads are served. Google has also implemented an advertiser identity verification process, allowing users to click into the ad and see who paid for it. Bing’s Marketing With Purpose Business Attributes allows advertisers to highlight brand values or attributes in their ads, such as being carbon-neutral or women-owned, so brands should have a conversation about these capabilities and their potential impacts soon in order to prepare for the possibility of even wider rollouts.