Month: January 2023

Forecasts predict streaming and digital video to grow, as will social media — TikTok especially. Overall, social media is expected to recover, if only slightly coming out of a turbulent 2022.

Media buyers continue to seem to be intrigued by emerging channels, such as the metaverse and live shopping on social media and other commerce platforms, according to five experts who spoke with Digiday. While efforts to participate in the metaverse largely remain experimental, some marketers and planners are optimistic that its retail potential and immersive storytelling could resonate with consumers.

 “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.,” said John Wittesaele, global CEO at Xaxis, the digital and AI unit at GroupM under WPP.

Here is a look at the channels marketers are eyeing this year:

Streaming and digital video expected to continue to grow

Connected TV and digital video across social platforms will continue to accelerate the market next year. GroupM and Magna had an overall positive outlook for 2023, with digital advertising driving the greatest growth. Social is expected to recover next year after some platforms faced regulatory scrutiny (TikTok) and other tech giants made massive staffing cuts at the end of 2022.

Despite those setbacks, Magna 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.”

Ian Liddicoat, CTO and head of data science at AI advertising company Adludio, agreed that CTV will “become increasingly popular amongst marketers as streaming platforms continue to develop content and direct consumer engagement.”

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.”

Where social media channels are headed

Among the social platforms, experts believe advertising dollars will continue to shift toward TikTok in 2023. For Vickie Segar, founder of influencer agency Village Marketing, clients are still spending the majority on Instagram and Facebook. However, she noted they are beginning to shift from experimenting on TikTok to actually diverting dollars toward it from other platforms.

“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,” Segar added.

Magna’s 2023 forecast supports a notable trajectory for TikTok. While social media ad revenue faced a storm of headwinds in 2022 compared to previous years, TikTok was the only platform to post advertising growth while its competitors saw flat or declining ad sales.

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 feel that in 2023 we’ll see a sizable shift in social media advertising budgets moving over to TikTok from other channels and networks, especially for e-commerce brands,” Turner said. “The lower prices and built-in viral nature of the content can mean CPMs and CPAs for purchases are much lower… The ad landscape on TikTok is still fairly young and it offers many of the benefits advertisers enjoyed for the first few years of Facebook and Instagram.”

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.”

Will the metaverse or live shopping take off?

It’s too early to tell whether the metaverse or immersive content or commerce trends like live shopping will take off. While live shopping, in particular, became popular in China in recent years, 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 stake part of anyone’s social strategy at all.”

Part of the reason is creators don’t like the QVC approach to selling, she added, so adoption has been slow. She had expected TikTok Live and YouTube Live would evolve into live shopping, but it has not moved in that direction.

However, Richard Jones, chief revenue officer at performance marketing agency Wunderkind, believes there is still potential for live commerce features. Jones said this can become “the quickest way brands can monetize on consumers who are shopping on-the-go and on social media, and showing more interest in the metaverse.”

Speaking of the metaverse, in 2022 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 experience 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.

As Val Vacante, vp of solutions and innovation at Dentsu, previously said, the firm’s goal is to create the right experience for each client. “I’m just a firm believer that you need to be experimenting,” Vacante told Digiday. “We cannot advise clients if we are not playing, exploring, testing, winning, failing, right?”

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.

“Within nascent metaverse environments, we’ve already seen how DOOH screens can engage users, while back in the real world, DOOH screens could be harnessed to bring NFTs to life thanks to embedded QR codes or visually engaging creative,” Dimmock said. “The endless creative possibilities of these environments means audiences can be engaged by interactive, immersive content that can help to create a cohesive customer journey across all channels.”

Sales teams are still operating on tight timelines and are building in flexibility as their most important selling point. Remote working means publishers can continue saving on real estate and can hire strategically based on skill versus location. And if the economy takes a bigger hit than publishers can handle, they’re not afraid to make the necessary expense cuts to right the ship.

“Go back in the time machine to March 2020, one thing that we learned really quickly on the job was the importance of scenario planning,” said Jason Wagenheim, CRO and president of BDG. “We had levers that we could pull to keep our business moving forward, whatever the universe threw at us. So now we’re doing the same thing.”

Flexibility sells

In the pandemic’s first year, publishers’ sales teams had to scrap all of their rules around sale cycles and the timelines for campaign executions to be as flexible as necessary with clients who suddenly lost their advertising budgets. Yes, losing that money in Q2 and Q3 of 2020 hurt, but potentially ruining relationships with top clients by being strict about ad deals would have hurt worse. 

The pandemic’s recession was short lived and by the end of that year, many publishers were able to recoup losses as well as sign on advertisers for hefty 2021 deals. But by mid-2022, advertisers were once again asking for the same flexibility as they determined their budgets for this year. 

Media execs are heading into this year preparing to be flexible or risk losing advertisers to competitors that can offer them better terms.

“It’s never been more crucial to be in consistent communication with your clients,” said Josh Stinchcomb, global CRO at The Wall Street Journal. “The ever-evolving economic circumstances can change the needs of your partners and their businesses, and if you’re not closely aligned and can’t quickly adapt to shifting priorities, you can find yourself behind the eight ball.”

Take Insider, for example. The publisher’s customer success team was born out of the pandemic and was created to provide flexibility from point-of-sale to execution in a way that salespeople and the campaign creatives aren’t equipped to do on their own. 

“When you have clients just getting thrown everything at them from their leadership teams [from] changing deadlines, changing budgets and changing priorities, that means we have to shift gears really quickly. [Even] after the deal is done, [we will have to] reposition ads, change creative, change the lines of stories that we’re telling through our studio,” said Maggie Milnamow, CRO of Insider. 

Operating with a remote workforce

While many publishers have made the return to office on a permanent or hybrid basis, there are several still committed to giving employees the option of working from home as much as they’d like. 

Having fewer employees commuting into an office opens up the possibility for downsizing its real estate footprints as well, typically one of the most significant pieces of overhead businesses have to consider, particularly in a recession.

“Insider has a policy in support of working remotely. We did this very quickly when COVID hit and embraced it. We’ve been consistently supporting remote work here [which] has really transformed so many things for the better,” said Barbara Peng, president of Insider.

Because staffers are scattered around the world, they’ve retained ways of communicating that first started at the beginning of the pandemic. Employees who are sitting in the same conference room, for example, will still video call in individually instead of putting one camera on everyone.

“It’s been better from a communication standpoint,” Peng said. 

Hiring based on skill vs. location

Having the option of working remotely on job listings helped to significantly improve the application pool of employees once companies unfroze hiring plans and moved from survival mode into growth mode. And for publishers that do not mandate in-office days, being able to hire employees outside of major city hubs has helped to improve the diversity of its talent.

“The talent pool is greatly expanded to include people from more diverse backgrounds and geography, but it’s all kinds of diversity,” said Peng. “So not just socio-economic or racial, [but it opens up the talent pool in regards to] neurodiversity, introverts and women. Remote work has also been transformational with people with disabilities — people who never would have been comfortable coming into an office job and commuting from their homes every day.”

In the past year, Insider’s racial diversity has improved marginally, changing the ratio of white staffers to BIPOC staffers from 66:33 in 2021 to 62:36 as of September 2022. 

Taking a page from the cost cutting playbook 

Media execs are in general consensus that the first half of 2023 will be “spooky,” and if things get too bad, Wagenheim said 2020 trained his team to know the exact right levers to pull in case of emergency. 

“It’s right out of an MBA textbook,” said Wagenheim. “Boil it down to careful expense management, hiring freezes and slow rolling hires. We’re not in a place where we’re necessarily executing on any of those things, but we’re very, very thoughtful about every dollar we spend.”

In this column this week, we’d like to establish the biggest opportunities and challenges that lie ahead in 2023 for all media agencies, whether holding-company-owned or independent. But before we get to that, and speaking of holdco vs indie, what remains unchanged is the constant tussle between the two as the latter try to steal away a larger share. 

The indie argument for would-be clients is their nimbleness, their deep expertise in whatever discipline they specialize in, and their creative freedom to work with whoever and however they want. That has been an intoxicating pitch for major marketers like Nike, which landed all its North American media work with PMG last year.

But the holding companies, flush with new media channels and tactics they can bring to the table (commerce media, artificial intelligence/machine learning tools, and ESG/sustainability-focused investment), argue they offer the whole package in an era when more marketers want to reduce their roster of agencies working for them. 

“Our fundamental belief is, clients want fewer agencies solving much bigger problems,” said Jacki Kelley, CEO of Dentsu Americas and chief client officer for the parent company. “And we see this in the consolidation reviews that are going on — the desire to reduce complexity. So we have really retooled ourselves to deliver on that.”

Meanwhile, holdcos and indies alike are feeling the pinch of a newer generation of holding company in the form of Media.Monks, BrandTech Group or MediaPlus, which are leaner, faster networks with multi-national reach and modern tools.

And now, the opportunities/challenges media agencies will harness/face down this year: 

The influencer/creator market goes big time

It’s safe to say agencies are taking influencer marketing and the creator economy more seriously going forward. Experts explain that marketers and media agencies are beginning to experiment with new ways to leverage creator-driven content, from bots to micro influencers, in order to connect with audiences. Where there may have been more skepticism to influencer marketing in years past, now Fortune 500 companies and holding giants are investing in influencers and commerce strategies. The biggest potential obstacle ahead is that, with demand going up, some influencers will start charging more for their services. Global media spend in the influencer advertising segment is projected to reach $51 billion by 2027, increasing at an annual growth rate of 13.21% from 2022 to 2027, according to Statista.

Progress on data privacy

Agencies want a coherent national data privacy bill to be passed, as a way to bring order to the chaotic set of state-by-state rules, led by California’s updated CPRA. Because then, they’d at least know what they can and can’t do — and in a perfect world, bad actors that have collected data without securing proper consumer permission would be forced to either clean up their act or get shut down. Meantime, agencies are encouraging clients to find new ways to generate more privacy-compliant first-party data as historical forms of identifiable information (ie cookies) fade. The thirst for more data hasn’t eased a bit — quite the opposite, as agencies and marketers build more loyalty programs designed to build their databases while building deeper relationships with customers. Ad-tech and mar-tech firms keep coming up with newer platforms and SaaS products to make the process easier. Expect this trend to continue throughout the year.

Streaming keeps growing but problems persist

While traditional TV still accounts for more advertising spend, connected TV is closing in fast, with more premium inventory coming online at Netflix and Disney+. CTV will see some big changes ahead, like more potential consolidation across the supply chain, which could make mid-tier services and niche players good targets for acquisition. But it remains hard to track measurements on CTV, especially as services become more disjointed, which means media agencies will demand improved performance metrics from the medium in 2023. There’s also increasing interest in exploring interactive elements that engage audiences during the content, such as sports betting for live games or shopping for featured products in a show. 

On the audio streaming/podcasting front, experts anticipate steady growth as audio buying matures. With more quality content, use of smart speakers and a larger market (Spotify and YouTube introduced podcast features), these consumers are generally seen as a sticky audience. Marketers like podcasting for its precise audience targeting, dynamic messaging and outcome-based analytics. Plus, agencies will continue experimenting with different ad formats and content creators as platforms invest in this medium.

Social media hits harder times

The social media landscape is constantly shifting, with differing fortunes for big players and newcomers. Here’s what we know:

• Some advertisers and brands have gradually shifted spending away from Facebook and Instagram and putting it into TikTok. While fast-growing, the Chinese-owned Bytedance app is increasingly coming under scrutiny by regulators citing national security and safety concerns, which could be a problem down the line.
• Twitter remains unstable after acquisition by Tesla boss Elon Musk. Agencies have cautioned clients that Twitter is a “high risk” media buy, and it remains unclear whether Musk will continue to helm the company.
• Snap may have seen some steady growth last year, but it also lost key advertising leadership to Netflix in September. As the company restructures, it may try to differentiate itself through augmented reality, which could offer a distinction from its social brethren for media buyers.
• While BeReal appears to offer a refreshing new take, the social platform does not run on ads. Many are curious whether this French app can grow instead through subscriptions or premium content.

Will B2B stay hot?

Many agencies ramped up their business-to-business marketing prowess, as marketers grappled with the challenges of supply-chain issues and economic worries that forced them to ensure their business needs were as strong as possible. After all, it’s predicted to be a $30 billion marketplace in media spend, with digital channels sucking up close to half of those dollars this year. B2B marketing is another channel that’s been boosted by ad-tech advancements including account-based marketing and other SaaS-based tools that help otherwise disparate departments coordinate approaches so that supply and demand match. 

Expect to see more B2B marketing encroach into the consumer space, from sports to entertainment content as agencies target potential customers more effectively using these tools.

We will endeavor to cover all these topics and more throughout 2023. Thanks for reading! 

Color by numbers

WARC’s Marketer’s Toolkit 2023 highlighted the biggest digital commerce trends based on global data from 1,700 marketers. The big takeaway: Retail is now considered the fourth-largest advertising medium with an ad forecast of $121.9 billion globally this year (a 10.1% increase from 2022). For brands, agencies and partners, the three key areas to pay attention to are retail media networks, organizational readiness and social commerce. —AS

More stats:

• Retail media ad spend has more than doubled from 2019 to 2022, surpassing audio, OOH and cinema, publishing and OTT/streaming. At this rate, WARC expects the retail media industry to become even more valuable to advertisers than linear TV by 2025.
• Social commerce is expected to reach $660 billion globally and $80 billion in the U.S. by 2025, up from $295 billion in 2021.
• According to the survey, 76% of respondents said they plan to increase their spending on TikTok in 2023, and 44% plan to increase investment in Amazon.
• As digital commerce gets more competitive, more brands will shift to a decentralized approach to incorporate e-commerce across their organizations.
• In the next decade, WARC notes retail media networks will grow like search advertising did in the 2000s and how social media grew in the 2010s.

Direct quote

“Because of its Chinese ownership, TikTok has to solve a problem. Their COO says the servers are located outside China and  that the Chinese management leave the TikTok management a lot of room in decision making. But the anti-China rhetoric is a bipartisan issue. That issue remains extant. At [a recent] meeting in D.C., we had a discussion about whether it was likely that the rhetoric against China would be reduced on both sides of the House of Representatives. I was told vehemently that it would not. The more problems that TikTok has, the better it is for Facebook. TikTok [has] to sort out what they’re going to do about their corporate structure.”

— S4 Capital’s Sir Martin Sorrell on political headwinds TikTok will face

Speed reading

• Digiday’s senior reporter on gaming & esports Alexander Lee looked at how the major streaming platforms are looking to secure a piece of the lucrative gaming world through intellectual property plays.
• Digiday’s platforms reporter Krystal Scanlon mused on who might become CEO of Twitter — that is, if Elon Musk ever decides to actually step down from the job. 
• Finally, I posed the question of whether Paramount pulling out of Upfront Week in 2023 signals the beginning of the end of the upfront process. Only time will tell.