2023 has seen significant change and progress in the advertising sector - the resilience and adaptability of the industry has been demonstrated in its ability to embrace and harness new technologies, such as Generative AI. ChatGPT, Google’s Bard and MidJourney have resulted in an exponential increase in content created, in parallel with an emerging trend of more discerning curation of content consumed.
The events scene also returned in a big way. From the Cannes Lions International Festival of Creativity through to SXSW making its Sydney debut - it’s clear that despite the seclusion comforts which we learnt during lockdown, people still crave physical connection and interactivity.
With such a ripe atmosphere for tech adoption, we also saw continued exponential growth in Commerce Media and Retail Media. These are two emerging areas in which the industry is really starting to come alive with demand for tech enablers in this space (case in point is the recent acquisition of cloud-based digital commerce platform Flywheel Digital by global marketing and communications giant Omnicom for US$835 million to capitalise on the boom of eCommerce and Retail Media).
Consumers, with their ever-increasing expectations, are the catalyst of this environment. They demand that brands meet them wherever they are and make interaction and transactions seamless. The developments of Amazon Anywhere, TikTok’s Commerce capability, and Pinterest’s new product updates and ad solutions are testament to how businesses are responding in a strong way.
Looking into the crystal ball
Looking ahead into 2024, we identify several key trends.
- Focus on premium content: as the proliferation of content rises, users will become increasingly discerning about the content consumed. While the majority of this proliferation is currently digital, it will also extend into TV. Publishers and brands will play a key role in enriching interactions with their audiences and building trust with relevant, premium content.
- The rise of the checkout: there will be even more demand for seamless transactions and the best way to do this is a clean checkout experience. The retail industry and social networks (we see you TikTok Shop!) at large will scramble to bring their businesses in-line to create more fluid experiences. This will involve adopting and deploying new owned checkouts as well as enhancing content.
- Increasing media options: media options will continue to grow with budgets shifting to Retail Media. In the US alone, 35% of media spend currently goes to Retail Media, and that’s estimated to grow to 50% in the next few years. We will also see programmatic advertising developed with the ability to serve these new Retail Media spots (as compared to the usual landscape of publisher spots). Closed-loop attribution, a key USP in Retail Media, will increase as it’s granular, tangible and takes the guesswork out of which advertising approach or tactic delivers sales. Brands will soon realise that this type of measurement can be attained beyond Retail Media and in the broader realm of Commerce Media.
- Always-shopping mindset: content across all platforms, online and TV, will move from just being static and passively consumed. Brands in Europe and the US are exploring content commerce toolings to meet the customer where they are. This extends their storefront beyond their owned assets onto every single content and ad developed, creating an "always-shopping" mindset. As part of this, retailers and brands will need to lift their game with more sophisticated campaigns that don’t rely on third-party data. As a result, the industry may also witness a shift away from websites as the primary location for shopping.
- Decline of QR codes: major global publishers, brands and agencies believe that 2024 could be the year we all start shopping seamlessly on TVs - without a QR code. The alternative will be in-content purchase. The future of connected TV is to enable viewers to pause the content stream and surface relevant products to be viewed and transacted on a single CTV screen. Shh … there are some exciting developments (we may or may not know about) coming to market in 2024.
Navigating a difficult market
It’s undoubtedly a tough market globally and we’re not going to see sudden easing in 2024. The expectation is that either budgets are holding stable (with zero room for increase) or decreasing. Therefore many businesses are looking to innovation to drive better performance and incremental revenue from existing budgets.
Publishers, agencies and brands will also be taking another look at the metrics by which they measure performance. Several archaic metrics no longer serve a purpose and will influence budgets and their allocation. Simply measuring the number of views will become less relevant as interactive videos that facilitate transactions will shift the focus toward engagement metrics.
While click-through-rates (CTR) tell you the number of clicks the content receives, it doesn't offer insights into deeper engagement like time spent interacting or even number of transactions completed. Similarly impressions only indicate the number of times a video or ad is fetched, regardless of whether it was clicked or watched to completion. In an interactive commerce setting, this metric will be far less valuable than actual conversions.
New technologies will require new measurement concepts and techniques. Attention metrics, which track consumers’ focus on ads, are gaining traction and advertisers are also taking an approach that measures consumers themselves, with metrics such as Returning Visitors, Customer Retention Rate (CRR) and Customer Lifetime Value (CLV). With tighter scrutiny on budgets and demand for better Return on Advertising Spend (ROAS), expect to see a surge in Retail Media, thanks to closed-loop attribution.
The swift embrace of advanced technologies in 2023, and the resurgence of live events, has underscored the human need for connection. As we move into a new year, quality content and seamless transaction experiences will be the priority, with an "always-shopping" mentality redefining content consumption. But amid these advances, the industry will grapple with budget constraints, prompting a re-evaluation of traditional performance metrics that are better aligned with a more interactive, consumer-focused world.