4 Key Marketing Trends to Watch for in 2023
There has been a lot of change and evolution in the marketing industry in recent years, and many recent changes that will be impacting marketing in 2023. We feel the 4 most important areas marketing teams need to focus on are: demand for video content, shifts in social with the rise of Gen Z, privacy’s impact on performance reporting, and the economy, E-commerce and post-Covid considerations.
1. Demand for Video Content Continues to Grow
In response to this demand most industries are growing their investment in video. The below chart from SMI is showing how video investment is shifting across linear/broadcast, digital, as well as both channels. Some categories are experiencing post Covid growth while others have supply issues and therefore may be down in their investment year over year; however the majority is up! This aligns with our experience as well. We continue to see video grow across the programs we manage and continue to see strong performance from video suggesting the consumers want more.
Ad supported video on demand platforms (AVOD including CTV and OTT) continue to grow in terms of both availability and usage yet they are not to the level that we can confidently buy as a replacement for broadcast (or linear) television. The available ad impressions, especially at provincial or city levels, are just too low to be able to target with any scale to rival broadcast television and the broadcasters won’t make enough profit to justify the effort.
That being said, the paid streamers, like Netflix, are offering lower-tiered paid subscriptions that include advertising. This will increase overall ad avails and as advertisers include them in their video buys (if they are willing to pay the massive premium that is being demanded) avails for other platforms such as CBC Gem and pre-roll on broadcasters websites will loosen up and we may even see prices drop over time.
Stacey, our VP of Media in a prior blog noted that the available inventory has been growing but we are not yet able to do a standalone CTV/OTT buy with any real strong reach and coverage of a mass audience let alone a targeted audience. This will change over time.
Insider Intelligence notes for Canada (Insider Intelligence, Global Media Intelligence Report 2022) :
- “Online Streaming is gaining on broadcast TV viewership, both in penetration rates of internet uses and daily time spent with each medium. The growth in VOD services is driving this growth, as is heavier adoption of digital devices that make it easy to stream, like smart TV. “
- Time spent with online TV/streaming at 2:15 hours daily for H1 2022 was 68.9% of broadcast TV. That is up from 57.9% in 2021 and 47.6% in 2019”
- “Video penetration now outpaces TV. More consumers (91%) watched an on-demand/streaming service than broadcast TV.”
A consolidated view of audience measurement is not available for markets outside of Ontario and French Quebec. This data is available through Numeris’ Video Audience Measurement (VAM). National data and other regions and markets will roll out over time. We will be publishing more detailed blogs on the state of AVOD and video measurement later this year.
Broadcast television still has an influence on this as well. According to SMI, even with a looming recession both prime and fridge linear TV have seen eCPM inflation of 13% and 22% respectively YoY. They also note that “Seven of the twelve advertising categories are growing their spend year over year and technology advancements continue to drive consumer adoption, media consumption, and more advertising investment” (SMI, 2022). Insider Intelligence also reports “TV numbers are still strong where H1 2022 84.3% of respondents watched live TV or a traditional TV channel“ (Insider Intelligence, Global Media Intelligence Report 2022).
What about Gen Z and TikTok? The habits on social media continue to push demand for authentic “bite-sized” video. We’ll cover these social media trends next.
2. Social Media Landscapes Continued Shift with Gen Z
According to Insider Intelligence’s 2022 Global Report – Canada Edition, social media usage continues to rise, driven by new platforms that attract younger audiences. 65% of internet users report using between 3 to 8 social networks/messaging services.
Thanks to Gen Z’s habits on social media, time spent continues to grow. If you aren’t currently focused on Gen Z habits you need to recognize population distribution and how things are shifting. Take note of these 5-year differences in the chart below and the growth we are seeing among Gen Z. These are individuals born from 1997-2012
A McKinsey research study from 2019 shows social media being the main driver on what Gen Z 18-23 year olds buy at almost 40%. I appreciate the data shown below for the younger generation of 13-17 is lower but suspect those numbers from 13-17 are likely starting to mimic the 18-23 numbers post pandemic based on consumer habit research data.
As evidence to this research let’s just review TikTok’s growth and how they continue to gain ground. Below, the chart showing global growth in active users on the platform. As you can see TikTok is closing the gap on Meta (Facebook, Instagram, etc). Also please note TikTok’s trajectory through the Pandemic.
Then when you look at the 2021 data for Gen Z you can see it is at the top for users with Snap and Instagram.
When we dive into time spent, the data is even scarier:
- The data from eMarketer back in February notes projections of 38/37 minutes per day for TikTok use; however, I have seen other sources, like from sproutsocial that note kids spend on average 75 minutes per day on TikTok.
- 90% of TikTok users access the app everyday and 8% of the TikTok users have posted a video at some point (sproutsocial, 2022). We have an office full of parents with tweens and teens as well as some older Gen Z’s and we all agree the 75 min per day is likely if not more regrettably. On top of that TikTok is seeing adoption among the older age groups this past year, expanding its base.
- Those making purchases on social platforms continues to grow (eMarketer Webinar, December 2022):
- TikTok grew in this area from 6% in 2020 to 37% in 2023. They are testing TikTok shop in the US and will confirm the launch of fulfilment centres in 2023
- Facebook grew from 25% to 37%
- Instagram grew from 21% to 35%
- For the heavy Gen Z users, we have seen a growing incidence of it being the go-to source for their searching/researching behaviour; sproutsocial notes this is at 30%, eMarketer indicated 40% of US users 18-24 (eMarketer Webinar, December 2022). We suspect it might be even higher.
As for the other social platforms:
- YouTube continues to gain ground, where we see the average daily time spent is still stronger than the climbing TikTok. However, this differs by age.
- Snap has heavy usage and time spent with the younger generations, but advertisers still struggle to gauge ROI from this platform as it’s very message/text based in use
- As expected, Meta has experienced a decline in share. eMarketer indicated since the iOS14 changes in mid 2021 that Meta’s share of ad spend has dropped from 34.9% (Q1, 2021) to 27% (Q1 2022) and that this spend has shifted to Google, TikTok and Connected TV (CTV) and offline channels like linear TV and direct mail (eMarketer Webinar Dec 2022)
- BeReal has been around for 3 years but is gaining traction among Gen Z this past year. eMarketer shared that 34% of US teens use BeReal monthly. To compare, this is inline with Snap which was at 35%, but way ahead of Instagram which was at 16%. TikTok of course exceeds these stats at 62%, making it the favourite app for GenZ. Startups like Fixx, Gas and Geneva will continue this momentum
Ads are what is driving revenue today for social platforms, but these new players will be looking to other ways to generate revenue such as commerce, subscriptions, and paid features as they are emerging into the market post cookies with privacy as a priority.
Social ads formats continue to be 15 sec or less, with more and more emphasis on shorter lengths. eMarketer shared stats around active attention which worldwide averages at 1.6 seconds and Gen Z is at 1.3 seconds. Look at the difference across age groups in the graph below. The trends are definitely concerning. Needless to say, marketers need to be concise in conveying their message! We also need to keep in mind the growth of the creator economy and stray away from high-end production and use a creative approach that is more authentic and in line with consumer’s expectations in these platforms and/or tap into influencer(s) to do this.
For anyone that is a parent reading this, if you aren’t using time limit management for your kids’/teenagers’ social media use, you should consider doing so. Keep in mind, this advice is coming from someone who runs a successful media agency that supports many clients in driving business growth at times from these heavily used platforms. Like all things, the key is moderation. I care about our future generation! The rate at which this is growing in adoption and time spent, combined with the decline in average attention spans is concerning.
3. Reporting Variances will Continue to Increase Impacting Digital Optimizations & Measurement
Policies and rulings continue to push the media giants to innovate and ensure customer privacy. Recently the EU ruled that it is illegal for Meta to require users to opt-in to be targeted with personalized ads. Meta will likely tie this up in court for a long time, but emerging platforms will need to build a revenue model based on this becoming the norm (Search Engine Land, 2023).
In Canada, this past June the government introduced Bill C-27. We support Sonia Carreno’s comments from IAB Canada when she said ”It provides the industry with clarity on several areas of privacy with an emphasis on consent and accountability, […] the bill would allow for a balanced approach to privacy that protects individuals’ personal information while allowing businesses to innovate and provide services in a frictionless way” (Strategy Online, Jan 2023).
Compared to other areas of the world like the EU, Canada has largely been exempt from having to fully comply with restrictive privacy requirements like GDPR, or CCPA. These days are also numbered. The amount of data that is being generated by people is staggering and the ways we can leverage that data over the years has been truly incredible and sometimes even scary. It is encouraging to see that the industry understands the importance of respecting and protecting user data and that changes are being made to regulate it.
With privacy changes, increased use of ad blockers, and the gradual demise of cookies over the past couple of years, we have been seeing increasing data discrepancies between third party analytics tools such as Google Analytics and actual business data. At the beginning of 2022 we were witnessing around 10-15% discrepancies in many cases and over the course of the year we have started to see discrepancies as high as 40% in some cases. If your business is still relying heavily on 3rd party metrics collected from tools such as Google Analytics, we strongly recommend that you layer in first party business data into your attribution picture.
It will also be increasingly important to leverage things like server side tracking and platform specific features like Google’s Enhanced Conversions and Facebook’s Conversion API to help provide actionable data to optimize against. This will be even more important with the demise of Universal Analytics in June of 2023 when Google transitions to Google Analytics 4 (GA4) which uses a very different approach to collecting data. Sylwia from our Marketing Intelligence team has recently shared a great blog on thing you need to know about GA4. These shifts have also contributed to the rise of retail media where retailers are integrating programmatic advertising to their websites, allowing brands to leverage retailers’ massive amounts of first-party data to target consumers in a privacy safe manner. Loblaw Media’s MediaAisle is an example of this. We are also seeing brands move to super apps where a vast range of services are offered and users are motivated or incentivized in their use of the app.
The shifts in trackability will also continue to require that we change our mindset on how we have traditionally evaluated the performance of channels within any given campaign. The days of last click attribution are truly behind us. Moving forward, marketers will need to move to a more holistic view of channel performance rather than evaluating one channel against another. Understanding the role each channel plays in the marketing mix and success of a campaign as a whole will be more important than comparing individual KPI’s against each other. This is where media mix modelling can come into the picture. This type of analysis was once only available to marketers with large budgets and complex media plans. This is quickly becoming much more affordable with advancements in technology and a well put together techstack.
Having internal resources or a partner like Vovia that is well versed in these significant shifts will be critical to ensure your techstack has the necessary tools in it to properly gauge performance.
4. Economy, Ecommerce and Post-Pandemic Reset
Ensure the pandemic behaviour shifts are accounted for in your revenue forecasting
We have had a few clients experience the post-pandemic reset. Initial forecasts were predicting around 30% of customers would continue to prefer online shopping. However, we are seeing many customers revert back to pre-pandemic habits, yet many companies continue to forecast online revenue growth over pandemic numbers (for industries that benefited over the pandemic digitally).
Yes, overall sales should be up but the mix of sales from in-store vs. online will vary by industry. Forecasts should reflect declines around year over year digital sales to account for individuals that are choosing to revert back to in-store shopping. Some businesses, depending on their digital experience and level of competitiveness, may need to plan that the ROAS or ROI will be lower in order to convert similar customers online. This same principle applies to forecasting revenue for various product sales. We saw the pandemic drive a spike in sales for certain products and tank sales for other products and services. Over this past year, sales have stabilized back to 2019 trajectories in many cases. It is important to ensure revenue and ROAS targets take these behaviour changes into account.
Offer a frictionless customer experience
Digital and physical experiences will continue to merge across touchpoints. This again relates to offering a frictionless experience for the consumer across your various touchpoints. And those touch points need to be within their control from a privacy standpoint.
Google shared searches for “open now near me” have grown globally by over 400% year over year.
Physical stores still have a role to play and some consumers still prefer them. The opportunity is enhancing that customer experience and increasing digitization. We see more and more companies leveraging augmented/virtual reality (AR/VR) allowing you to take a picture of your room etc. and put the flooring or furniture in it to see how it looks. VR and AR will further improve the online shopping experience at home. However we also see brands like Nike launching a number of in-person “retail experiences” that include terminals with product information and online ordering functionality, integration with customer smartphones, social media walls, interactive augmented reality installations, and more.” (Michael Brener, Marketing Insider Group, 2022).
Impacts to ROAS and ROI have been further amplified by the economy. As inflation continues to rise, there is less disposable income making customers more price conscious and therefore looking for deals, hence that conversion volume might be lower vs. what companies saw during the pandemic or even pre pandemic levels. According to eMarketer, 54% of Canadians agree the rising cost of goods has made them less loyal to their favourite brands and this loyalty erosion spans across all generations (eMarketer, May 2022). Google shared in January that customers will be seeking the best value for money. In fact, searches for “cheap and best” grew over 40%.
What we can learned from Black Friday and peak season habits is that (Google, 2022):
- Customers are shopping for promotions sooner
- They are expecting strong discounts
- They want reassurance on inventory
- They are seeking free shipping
We are aligned with the priorities eMarketer shared on how to address this:
- Tier Buildout – offering different programs at different price points.
- Ad vs no ad programs
- Free loyalty program vs higher value paid membership programs with additional benefits
- Expanded Features – look for ways to offer more to your customer i.e. Amazon providing ad-free music and podcasts for their Prime members
- Partner Development – where companies join forces to expand their offerings, share data and gain brand affinities that tie each to the success of the other. We have already seen this with Optimum, Scene and AIRMILES programs in the past but expect to see more.
2023 Planning and Programs
If you need help with your marketing plans, media programs, performance reporting or have any questions, please don’t hesitate to reach out.