Think back to 2019.
Businesses fired on all cylinders as the economy boomed and low interest rates reigned.
Eggs weren’t a luxury item.
Much has changed since the World Health Organization (WHO) declared a pandemic in early 2019. Many of those shifts are still influencing advertising budgets.
Changes continue as turmoil overseas, a recession, and ongoing supply-chain challenges disrupt the market like never before.
It seems all but inevitable that 2023 will bring its own set of challenges—and as it does, advertisers will face opportunities they must be ready to capitalize on at a moment’s notice.
Here are six potential advertising accelerators to keep on your radar in 2023:
1. Rising Interest Rates
Rising interest rates continue to make headlines. As many companies lament their decision to grow at all costs, layoffs are becoming necessary. Even Google, Microsoft, and Amazon aren’t immune.
In addition to widespread layoffs, rising interest rates will ignite asset sales. When a recession strikes, a consolidation of media companies, typically weaker firms looking for scale by pairing, becomes inevitable.
Disney may sell Hulu just a few years after taking a controlling stake in the streaming giant, despite its continued growth. In Q1 2023, Hulu reported 48mm paid subscribers, up from 45.3mm in Q4 2022. The company’s advertising arm is thriving, too.
Meanwhile, Discovery was rumored to merge HBO Max and Discovery+ into a single streaming service. However, that plan won’t come to fruition, with the company recently announcing its intention to keep Discovery+ a standalone product.
We’ve even seen Special Purpose Acquisition Companies (SPACs) created to acquire media companies, like Buzzfeed.
This fragmentation will create opportunities for advertisers to gobble up ad inventory at lower prices as these ecosystems look for every life raft to stay afloat.
2. Retail Media Is Still Hot…for Some
Retail media has made waves over the past several years thanks to Walmart, Best Buy, TripAdvisor, and others investing heavily in their networks as advertisers sought robust first-party data in lieu of its fading third-party counterpart.
According to eMarketer, U.S. digital retail media ad spending was estimated to grow by 31.4% in 2022. By 2024, that number’s expected to balloon to more than $61b when it’ll account for nearly 20% of digital ad spending.
While retail media’s iron is still hot, only specific industries are feeling the heat (in a good way).
Supermarkets, for example, have the most to gain thanks to a captive audience, a strong presence in the local community, frequent buys from their websites, and higher margins.
Walmart will likely serve as the “gold standard” as competitors mirror its strategy in their attempt to rise to retail media stardom.
By 2024, eMarketer estimates revenue from Walmart’s retail media network will reach $4.52b and account for 8.2% of retail media digital ad spending.
The explosive growth will undoubtedly pressure other retail media networks to innovate quickly, which we’re already seeing with Kroger’s expansion in late 2022 to include CTV and video in its network.
3. The Metaverse Is Alive
Meta’s (formerly Facebook) Metaverse division lost a 13.7b in 2022, quite possibly marking Mark Zuckerberg’s first major “defeat” in his Facebook era (at least temporarily).
Still, the Metaverse is far from dead. Despite strong headwinds, these parallel universes will continue to open up new inventory for advertisers looking to delight consumers in new ways and break free from over-saturated digital ecosystems.
Many forward-thinking advertisers are already dipping their toes in.
Pizza Hut, for example, created an interactive version of a restaurant in Decentraland where people could “build a custom ‘Metasandwich’ that can be ordered for pickup in the real world.”
While the advertising implications of the Metaverse seem a bit far off, advertisers should keep their eyes on it as the ecosystem matures and advertising opportunities spread.
4. ChatGPT Comes in Clutch
And the award for the fastest-growing user base of all time goes to…ChatGPT?
The AI-powered chatbot’s rise to fame has been nothing short of remarkable, reaching 100mm monthly active users (MAUs) in just two months.
To put this growth into perspective, it took Instagram more than two years to reach 100mm MAUs.
ChatGPT’s long-term use cases remain unclear, but it will likely change the business of selling ads.
At MediaRadar, we observe more than 4.8mm brands advertising in the U.S. In some way, shape or form, advertisers for all of these brands are preparing thoughtful outreach—a task that’s far too time-consuming for any individual ad sales team.
Given the pressure to do more with less during a down economy, additional resources and headcount are unlikely. Thankfully, ChatGPT can fill that void with mass customization of outreach.
ChatGPT and other AI-powered tools are positioned to improve the number of advertisers a sales team could contact while collapsing the time required by ad sellers to hit their quotas.
5. Government Spending Is Good for Advertising
The war in Ukraine has launched a tidal wave of change that nearly everyone has felt. Advertisers in certain industries, namely energy, agriculture, and defense, are finding their products and services in more demand than ever. Ad spending is following in droves.
The U.S. government recently passed two key bills that will continue to drive investments in ad spending. For example, the CHIPS and Science Act provides roughly $280b in funding for domestic research and manufacturing of semiconductors.
Meanwhile, the Infrastructure Investment and Jobs Act will invest $1t in updating roads, bridges, and tunnels across the U.S. These updates will create employment, travel and business opportunities for Americans—all of which will require advertising to spread the word.
6. Sponsorships and Exhibitor Revenue Will Be Big
The sponsorship and exhibit pocket of the world felt the brunt of the pandemic more than others.
With the pandemic pushing in-person events to the side, sponsorship and exhibitor revenue dried up. In fact, the live events industry lost well over $30b during the pandemic.
While the pandemic accelerated virtual events and many businesses found value in them, advertisers will revert to the norm as in-person sponsorship and event opportunities open up.
In fact, by the second half of 2023, many marketers say it’s “extremely likely they’ll return to in-person events.” Smart media companies will be creating and selling unique experiences, like NBCU’s BravoCon.
Our early analysis in Q1 suggests an exceptionally robust market for live events. Brands are eager to interact with customers in-person, and these fun events will bring new advertising opportunities for media companies.
Advertising Opportunities Abound in 2023
The absurd cost of eggs won’t be society’s only challenge in 2023. The war in Ukraine, ongoing supply-chain challenges, the recession, and other unprecedented events will continue to influence every part of life, including how advertisers spend their ad dollars.
While current events are creating unimaginable hardships for millions around the world, some advertisers will find their products and services in greater demand. Ad spending will undoubtedly follow.
For more insights, sign up for MediaRadar’s blog here.