Almost a quarter in, how is 2023 shaping up for advertising?

By Mark Challinor

INMA

London, United Kingdom

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Hello everyone from London as usual. 

In this newsletter, I want to stop for a moment and consider how 2023 is shaping up for us from an advertising perspective — an update on what we have discussed in past months and to see where things are now moving. 

At the end of last year, much focus in the advertising industry and my INMA Advertising Initiative newsletters focused on the coming year ahead and what we could expect.

Well, here we are with the first quarter of 2023 now gone. What has stood out to me amid all the predictions and forecasts as we have moved into this new year? 

I will not only remind and update us all on what has stood out to me but also inform on what my take on it all is. This, I hope, can keep you on track and help steer your efforts as this latest year of change (on so many levels) elapses.

How are WARC predictions playing out?

I find I am particularly drawn back to what WARC (World Advertising Research Center) had to say. What did they think about 2023 that seems to have been accurate thus far? 

WARC said the overarching trends to look out for are largely influenced by the economic conditions we all find ourselves in right now. Most advertisers worldwide (a huge 95%) expect to be affected by the current economic recession, they said. 

In addition, they said optimism at the start of last year faded fairly quickly as the Russian/Ukrainian war came to the fore. The war, of course, has had a terrible impact as we all know on energy prices, inflation, and the cost of living. WARC reported “the IMF is forecasting the weakest growth in 20 years except for the global financial crisis and the worst phase of the COVID-19 pandemic.” 

But WARC identified a number of main themes around what they expected to be dominant this year, four of which caught my eye. This short list, as we sit here now in April 2023, still sets good benchmarks for ourselves in media:

1. Advertising in a cost-of-living crisis

While almost all marketers were concerned about the impact of the economic crisis, WARC said, many respondents — despite some downward budgetary re-forecasting — are still planning to increase spending this year across both brand and performance if they find the right channels with the right ROI. 

Yet, one-third were planning to cut advertising investment, despite evidence from prior downturns suggesting they should maintain spending levels.

This backs up what I reported in a previous newsletter that some advertisers may cut budgets but few are stopping advertising totally. I reiterate that there is still money to be had if we know where to look and approach those advertisers appropriately and creatively.

2. Sustainability/climate change 

Brands are challenging the idea that eco-credentials necessarily result in price increases, a perception rife in the ad industry. As news publishers invest in more climate coverage in 2023, the question remains whether or not this content category is also drawing interest from advertisers. I believe it is.

Climate change journalism is drawing attention from advertisers who want to be connected to such content.
Climate change journalism is drawing attention from advertisers who want to be connected to such content.

Let me remind you about media companies such as BBC, Bloomberg, Financial Times, Group Nine Media in Australia, and The Economist, where the answer is a big yes. Most are saying advertisers are sending out more requests for publishers to pitch campaign or sponsorship opportunities around their solutions-based content, showing a continued growth/interest in publishers’ coverage of climate and sustainability. 

We heard recently that The Guardian here in the UK doesn’t take advertising money off oil and gas companies anymore (since 2020) … point to WPP and Group M, who now lead the way with a sustainability calculator on all ads. The Guardian points out that one million Internet ad clicks equate to the same carbon impact as someone taking a London-to-NYC return flight. Food for thought?

Linked to all this is that many consumers now want brands to take authenticity and mindfulness seriously, and many are gravitating towards those who centre themselves around those specific values and morals, which they stand for themselves. 

Putting values front and centre will help audiences connect with what we do and want to portray. 

Some advertisers are finding that in terms of digital advertising, embedding their social causes into their brand’s over-arching mission isn’t even a "trend” as such but a natural effect of what it means to be a values-led company in today’s society. 

Therefore, social content, from graphics to e-mail topics, all need to be influenced by, and fed back into, a social impact strategy. 

Many media companies have adopted sustainability as a competitive advantage and continue to do so. Sustainability is commonly described as having three pillars:

  • Environmental
  • Economic
  • Social

In everyday use, sustainability is often focused on countering major environmental problems such as climate change. We can’t afford to ignore it as a publisher, consumer, nor as a community champion in the markets we serve. Expect more advertising focus around sustainability throughout this year.

3. The Big Tech conundrum 

The majority of advertisers (62%, according to WARC) agreed that a range of changing market dynamics are forcing strategic shifts from the tech giants. 

When considering the dominance of the duopoly,” WARC’s report points out the dominance has halved over the past two years. Respondents to the report plan to decrease investment in Facebook rather than increase it for the first time in six years, which suggests brands are resetting their relationships with Big Tech. 

Same applies in the media industry as it continues to look for new relationships with the tech giants based on things such as trust and value, as well as a fair share of the industry revenue pie. Expect that to continue.

4. The era of fragmentation

I noted that media and audience fragmentation was the second biggest concern in WARC’s survey, with 34% of respondents choosing it. Among U.S. respondents, it was the highest ranked. 

Two-thirds of advertisers expect to focus more on platforms that “allow them to stitch together interest-based communities” to create reach in a fragmented media world. It remains a learning for us all in media throughout 2023.

My take on the WARC early 2023 predictions

It seems to me that, in addition to the differing angles of main forecasters such as Magna, Deloitte’s, WARC, etc., there are some common themes around what we can expect in news media in the coming three quarters of 2023 and some other thinking the above companies wouldnt necessarily think about/report on, bearing in mind they are not “at the coal face” of the day-to-day challenges in media advertising. 

For instance … 

Subscriptions, a new structure?: We have now moved into an era of ad-funded subscriptions — especially as the cost-of-living crisis bites hard in many areas. The likes of Netflix lost many subscribers in 2022 and led the way for a series of subscriptions that have now followed — some cheaper (with ads included), some (more premium offerings) with no ads. The choice lies with the customer. Are you considering this, too? 

Video strategies: It is highlighted by many of the ad forecasting giants mentioned above in differing guises, but all say video advertising will come to the fore now. And we need to start to have a video strategy as part of our ongoing quest to find new revenue streams. Digital video advertising in 2022 represented the second-fastest growth rate of all digital formats. Just saying. 

Search v AI: We heard from many corners of the ad industry that search would be “recession proof” in 2023, but how will that ultimately shape up now alongside the sudden meteoric rise of AI? I have mentioned this previously, but it now goes deeper. 

We need to look at this in the context of the various AI platforms, which are now being developed around the globe and pontificate how they may influence this year? Three to four months on from WARC’s original forecasts makes us realise that is a long time in media circles. Things have moved on at a considerable pace. 

Will the AI platforms compete with Google Search? It seems they sure will. 

AI can be used in different ways in media to generate summaries, articles, automate customer service, help write advertiser briefs, and much more. Google on the other hand is (in theory) “just” a search engine that can search for information on the Web. 

ChatGPT is likely to compete with Google Search, although it says differently.
ChatGPT is likely to compete with Google Search, although it says differently.

ChatGPT and Google both have different purposes and functions, and ChatGPT says it would be unlikely to compete with Google as such. 

Really? Now we suddenly have Google Bard, which can seemingly differentiate between search and AI responses. A possible game changer if they can get it right. Plus, new AI services such as www.sudowrirte.com offer new ways to present your stories and articles to quote one example. 

It’s all quite confusing. It’s all quite complex. And worrying for some. I am sure we will return to this later in far more detail as things become clearer, particularly from the advertising space viewpoint. What does this all mean from our advertisers’ stance? Watch this space.

E-commerce: It’s on the agenda of so many media companies right now. In my interview with INMA President Maribel Wadsworth in January, she highlighted e-commerce as “one to watch.” 

E-commerce delivers new revenue streams for media companies and an added value, paid services for customers. Sales staff have the skill sets to adopt e-commerce into their armory, and customers want new ways to buy products online, which are recommended by a trusted source.

I still believe this is a win-win for media companies and advertisers alike. (Watch out for a special INMA report early June on the whole e-commerce piece.) 

Interest-based communities: It was predicted months ago and it’s coming to the fore greater still now. Interest-based audiences seem to come out as being important amongst the predictors. We shouldn’t be surprised.

Consider programmatic advertising in comparison, which allows for audiences to be segmented in so many ways and the realisation that cross cooperation between media companies can be a good thing after all. And is becoming increasingly adopted. Efficiencies (especially in hard times) and cross partnerships between media houses are rising. Take note. 

My take on the rest of 2023

For news publishers with so many choices in front of us, now is also the time to understand and focus on who our best customers are and reduce the time and resource on the rest. 

A few ideas: 

  • Maybe self-serve is the answer for those smaller accounts or maybe for the good of the industry from a collaboration point of view as competitive media brands work with each other where they can.
  • Cross-channel partnerships naturally take longer to build, are resource- and time-intensive and use different skills. More solutions-based sales teams need client and agency relationships, from planning managers to trading directors to deal with a lot of people for bigger deals. 
  • Technical competency on details, at a transactional level, across different platforms is also needed. Campaigns across multiple channels with different creative, objectives, and performance metrics are more complex and rely on clients also having the same operational infrastructure and understanding, maybe with our guidance? What, for instance, will be the impact of AI in our ad business as highlighted earlier?
  • With that guidance, advertisers and agencies will see this as an opportunity for an extended pre-sales process. Even if ideas aren’t accepted or sold immediately, it plants the seed that the publisher is creative, trustworthy, adaptable, present, and has a pulse of the targeted audiences. An extended pre-sales period means publishers are pulling prospective clients more case studies and samples, and the inbound leads are looking more like requests for ideas rather than pitches.
  • It could be argued that publishers should see the need to really beef up the client team and what they know about their top, say 50, clients. Do you immerse your sales process into that level of detail? Tightening up those sales roles to really develop those relationships on a different level is going to be important. How sales teams are going to be shaped as a consequence will change. Most publishers won’t have 100% of staff in the office ever again, for instance. What are the pros and cons and impact of that? Those media companies that have a true focus on trying to solve clients’ challenges will be able to proactively approach said clients with unique solutions for unique times. The simple truth is most news publishers — however premium unique or valued — are in many cases not differentiated enough to do so.

All that brings us to perhaps the biggest area of focus for media companies: how we gather data about and for our advertising clients. 

As third-party cookies come to an end this year, news media companies should be focused on as much first-party data as possible for their ad clients.
As third-party cookies come to an end this year, news media companies should be focused on as much first-party data as possible for their ad clients.

Historically, brands have analysed their consumers creating profiles based on various demographics or using cookies. However, significant changes are hitting the industry pushing brands to rethink how they find and connect with customers. Since Google announced it was ending support for third-party cookies by the end of 2023, advertisers have had their hands forced in looking for new ways to reach their audiences.

As the world moves forward, understanding audiences will be crucial to communicating effectively in a world where privacy is at the top of every news and advertising agenda. The decline of cookies is challenging businesses to source new, effective, and compliant ways of reaching their audiences without invading their privacy. Understandably, this will prove to be a significant adjustment. 

The fallout from the cookie scenario creates an interesting outlook for the rest of 2023 and over the next few years. Several brands and advertisers will be forced to rethink their strategies and the industry will go through a transition period. A wide range of new solutions will be tried and tested, and there will certainly be winners and losers.

However, no one will win more than the consumer, as advertisers place a higher focus on the user experience in an attempt to deliver better results without the use of cookies … more creativity, more insights, more tech focus, more thinking out of comfort zones. 

In a cut-throat and viciously competitive market, pioneering new technology can have a major impact on the effectiveness of advertising campaigns. Any slow, delayed, or ineffective decision can lead to brands falling behind in the fight to attract customers, and importantly, sales. The sooner businesses look toward the future, the quicker they’ll be seen by the right people at the right time, reaping the benefits. 

Deeper relationships with key partners are critically important for media businesses, especially now. We should be trying to extract, manipulate, and exploit as much first-party data and insights for clients as we can. As a result, seek out those opportunities that our data gives us, find those interest-based communities, those opportunities around sustainability, climate change, new revenue streams, etc. 

But perhaps above all, we need to take control of how and where we place our limited resource for maximum ROI. So, expect more industry collaboration, more smart targeting of audiences as we seek to provide a more personalised service to our advertisers. 

We are all in this current economic situation together. Maybe it took the triple nightmare of a pandemic, a war, and a cost-of-living crisis for us all to knock our heads together and realise this? 

One thing is clear in my mind: 2023 is shaping up to be an exciting, vibrant time to be in media advertising. I hope you agree.

About this newsletter 

Today’s newsletter is written by Mark Challinor, based in London and lead for the INMA Advertising Initiative. Mark will share research, case studies, and thought leadership on the topic of global news media advertising. Sign up for the newsletter here.

This newsletter is a public face of the Advertising Initiative by INMA, outlined here.

E-mail Mark at Inma.mark@gmail.com with thoughts, suggestions, and questions or follow him on Twitter (@challinor).

About Mark Challinor

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