How Marketers Can Leverage Last Year’s Learnings to Stop 2023 Strategy Stagnation
The world of digital marketing and programmatic advertising cannot be accused of standing still. 2022 saw not only technological changes, such as further developments to accommodate the fall of third-party cookies and advances in the use of AI, but also variation in where marketing budget was allocated, highlighted by the shifting spend from linear to connected TV channels.
With such considerable evolution and changing trends in 2022, how can marketers leverage the learnings of last year to avoid upcoming challenges and ensure their strategies stay relevant over the year to come? Let’s recap some of the recent prominent industry events and consider what they could spell out for ad tech in 2023.
Learnings for Managing Adspend
The news in September last year that the UK’s economy contracted by 0.3% in the three months did little to alleviate fears of the country heading for a recession.
However, in both its Q3 and Q4 2022 Bellwether reports, the Institute of Practitioners in Advertising (IPA) found that UK marketing budgets were increasing, despite the financial outlook being at its most “downbeat” since the start of the pandemic, with many brands expected to return to marketing basics.
As predicted, advertisers renewed their focus on spending efficiencies, prioritising return on investment (ROI) and return on adspend (ROAS) as key marketing objectives with measurement solidly in the spotlight.
With economic concerns forcing brands to be more careful and grow efficiently, digital advertising is recognised as being a powerful tool in demonstrating effectiveness and allowing advertisers to continue to justify their expenditure.
Looking ahead, the Q4 2022 IPA Bellwether report predicts a modest 0.3% decline in adspend for the whole of 2023 with brands looking at scaling back.
With the focus on cost-effectiveness, the marketing mix modelling (MMM) is one way to analyse sales success; using aggregated, historical time-series data to model sales performance as a function of advertising variables.
By leaning into MMM, marketers can demonstrate attribution — both offline and online — and accurately assess which variables have been the most effective over a given period. Demonstrating success is one way to maintain a marketing budget, but if spend is reduced then getting the most out of investment is also crucial.
Learnings from 2022 have shown for example, that Meta and Google can become overcrowded advertising marketplaces, particularly during highly competitive periods like Black Friday and last year, the World Cup.
Brands without the budget to compete should consider cheaper environments where often, the same users can be found.
Channels like Snapchat, Twitter, Reddit, TikTok and Pinterest are worth considering in this year’s strategy for those stretching the advertising budget, and could prove more cost-effective options, or depending on business objectives, a combination could be the smart choice.
Maintaining Efficiency Inline with Privacy Evolution
Coverage of high-profile breaches and the prospect of further changes to regulation in the UK kept privacy, rightly, at the top of businesses’ agendas.
News of Google’s further delay to the deprecation of third-party cookies, Apple enhancing its iOS software to improve user privacy, and numerous court rulings and regulatory fines issued to big tech players, reinforced how robust data strategies or alternative solutions for a cookieless future must be part of successful, privacy-compliant business plans this year.
Clearly, first-party data strategies’ importance will continue to increase, and — if they haven’t already — marketers will need to collate a suite of alternative solutions to avoid reliance on third-party cookies and find new ways to activate their first-party data.
In response to this growing demand, last summer Apple Search Ads (ASA) added two new features — Today Tab and Product Pages — to their existing tools and now offer four browsing placements for advertisers to promote their app. The expansion gives advertisers more reach and the opportunity to drive installs from users across the Apple’s App Store.
Similarly with Google Analytics 4 (GA4) — Google’s next generation of measurement — marketers are able to lean heavily on the software’s Consent Mode feature to build a more realistic vision of audiences, delivered through enhanced quality of data.
This is achieved by modelling the behaviour of users who reject cookies based on the habits of those who accept them. Meaning marketers will obtain higher quality insights. Around 30-40% of users do not accept cookies, so marketers who opt for this approach could expect to see the volume of data gathered grow by approximately 30%.
Another tactic for marketers to consider is contextual advertising; targeting audiences based on webpage content and keywords, rather than user behaviour.
Although, despite AI starting to facilitate a cookie-free, contextually targeted workaround, the finer details of exactly how this works in a privacy-compliant way is still evolving; marketers will need to keep a close eye on their own first-party data strategies to run alongside this.
However, new industry partnership approaches to further tackle privacy issues are also being explored, with some of Europe’s major telecom companies, including Vodafone, announcing a planned alliance which will offer a privacy-based digital identification solution to help brands and publishers transition to a world without cookies.
Review Key Objectives to Manage TV Spend
In 2022, big increases were seen for video channels — television, cinema, and online video —, especially in the final quarter of the year. A key driver of marketing budget being diverted to video was the emergence of connected TV (CTV) — a growth area that is bucking the trend of its declining, linear counterpart.
Astute marketers have recognised the benefits of CTV; it’s compatibility with advanced reporting tools that offer marketing efficiencies — achieved by monitoring transparent performance reviews and clear demonstrations of ROI — and the flexibility to pivot campaigns according to all-important consumer behaviour insights.
However, marketers who are considering diversified channel investment, or varying their own video spend will need to be careful that they are not throwing the baby out with the bath water by ignoring the benefits of linear TV.
Due to its unrivalled reach, advertisers should ensure they are assessing their key objectives regularly and look to make incremental shifts in budget towards CTV.
Consider Web3 Closely and With Cautious Optimism
Internet users all over the world have progressively gained a better understanding of how their data is handled in relation to privacy and are continually learning how to control its use.
Web3 has provided a platform for both the user and advertiser to control data more tightly through its decentralised capabilities. However, a lack of robust and clear regulation in crypto and NFTs was highlighted last year and issues around Web3’s susceptibility to fraudulent activity exposed.
Web3 is undoubtedly going to attract more investment as the decentralised currency market bounces back after the economic downturn, whether this be early on in 2023 or towards the end of the year.
But, as Web3 companies look to ignite public engagement, advertisers may want to consider their investment in the platform carefully. In some instances challenges still exist, with convoluted regulation and bans on advertising, and centralised bodies, such as governments, still not fully understanding these decentralised environments.
Tailoring Social Strategies to Suit your Customer
The UK currently trails China and the US in social commerce adoption — consumers making purchases via social networks and messaging apps. However, forecasts predict that by 2025, 18 million UK consumers will be engaging; representing over a quarter of the UK’s population.
While still in its infancy, social commerce in the UK is very much forward facing, with marketers starting to learn from the mistakes of their early investment attempts. There has already been a steep learning curve for the marketers that have recently ventured into social commerce.
Issues such as cheapening a brand image through poor quality creative and high ad frequency should start to improve as brands begin to better understand which strategies are most effective for them.
With brands keen to capitalise on the predicted growth of social commerce platforms, advertisers will likely be considering allocating further budget to this advertising space.
But before they do, marketers must ensure they are selecting the most relevant platforms for their products — for example, using Pinterest for visually appealing luxury goods or Snapchat to target a younger demographic — or adopting tactics such as livestream shopping to improve interaction with core audiences, and working with influencers to engage consumers.
Based on the progress already made to address recent industry challenges — such as privacy compliant audience targeting — the innovation of and investment in new media channels such as CTV, and the ongoing battle for efficiency, it is clear that marketers are learning from their previous actions.
As 2023 strategies are finalised and tested, it will be important for the cycle of test, learn and grow to continue in order to overcome the immediate economic and budgetary challenges, but also to foster the growth of exciting new mediums for advertising.