According to John Wittesaele, global CEO at Xaxis, the digital and AI unit at GroupM under WPP, “GroupM’s end of year report predicts growth in advertising for 2023 to come in at 5.9%, with strong gains in connected TV and retail media in particular — the latter being the fastest growing component of digital in the U.S”.
Naturally, it is impossible to predict twelve months of an industry with any real sense of accuracy but when planning ahead, it can prove useful to get a grasp on what seems to be simmering in the near future. The good news for now is that after a turbulent 2022, experts are expecting social media to recover fairly soon.
Despite the recent setbacks, Magna (the leading global media investment and intelligence company) anticipates the global digital advertising to grow by 8% to reach $557 billion, accounting for 65% of total ad revenue in 2023. The growth is driven by e-commerce and media consumption shifts into digital video, the fastest-growing ad format expected to reach $65 billion. Magna points to CTV usage and streaming consumption continuing as “a tailwind for long-form streaming growth.”
In particular with streaming services, there is still room to scale for advertisers. Mateusz Jędrocha, head of upper funnel solutions at marketing firm RTB House, said the CTV market seems “far from being saturated,” as the launch of ad-supported plans on Netflix and Disney+ seemed to show. He said this hunger for on-demand content will continue to grow.
“Marketers have been looking closely at OTT video, not only on mobile, but also on CTV,” Jędrocha said. “This premium experience provides a more measurable and addressable alternative to linear TV buying, hence more and more brands are investing heavily in it.”
Among the social platforms, experts believe rising star TikTok will continue to attract the majority of the advertising dollars. According to Vickie Segar, founder of influencer agency Village Marketing “our biggest shift, if you were to look at the data across all of our clients, is taking more money from Instagram and pushing it over to TikTok,” Segar told Digiday. “It’s just the very clear number one answer.”
Spending across other platforms such as YouTube and Pinterest remains steady, but the investment in TikTok is increasing faster particularly when it comes to spending on creator content. “2023 is [where we] commit to a 12-month strategy that actually really extends what we’re doing — but don’t give up on Instagram. Reels is becoming much more of a part of the Instagram game” she added.
The retail potential may also help TikTok’s rise. The platform introduced features such as shoppable ads, “shop this trend” and other creator and commerce solutions in recent years. We may begin to see that brands previously relying on Facebook and Instagram advertising will see “huge success with TikTok ads,” said Ryan Turner, founder of marketing agency EcommerceIntelligence.com. We have also seen TikTok continuing to push its ecommerce live stream shopping potential as it has found monumental success in the East, namely China. Nevertheless, there are mixed feelings for its potential in the U.S. In 2022, Segar said brands wanted to experiment with live shopping and believed it was “going to be the thing” — yet it has not evolved into a part of the social strategy as much as they expected.
“We watched that Asia was ahead of us and that we were going to then follow suit,” Segar said. “And by the holiday of this year, we expected gift guides to be done live… but it is not a table stakes part of anyone’s social strategy at all.”
Overall, Oz Etzioni, CEO of ad personalization platform Clinch, added that social media will continue its evolution toward programmatic advertising as they expand their ad-tech offerings. “The process of planning and buying social media will start to more closely resemble programmatic,” said Etzioni. “Third-party solutions will create the fundamental building blocks and define standard taxonomies across social media platforms, unifying workflows and making the overall process easier for everyone involved.”
A newcomer worth taking a look at in the digital advertising landscape is the metaverse. This past year, we saw many holding company giants and media firms testing out content in the metaverse — from building a campus on virtual reality platforms to partnering with brands on immersive experiences for consumers. Some agencies look at it as a way to help guide their clients into the metaverse, but there is still debate on what that will look like in the future.
The metaverse may also be a way to expand current out-of-home advertising applications, said Paul Dimmock, co-founder and director of strategy at media agency Eidgensi. This could be digital audio or other digital out-of-home campaigns that combine with immersive storytelling.
2023 may not determine its use, but creative and risk-taking enterprises will be smart to start experimenting with how metaverse and blockchain technology can aid the consumer and creator experience.