January 25, 2023 | 2 min read
This article originally appeared in The Drum.
eMarketer recently downgraded its US digital ad spend forecast by $5bn for 2023 as a result of anticipated macroeconomic headwinds, such as rising inflation, geopolitical instability, recession, and supply chain disruptions negatively impacting planned marketing budgets.
The macro-environment in 2023 will put pressure on marketers to respond to the changing economic climate. As a result, many advertisers will tighten marketing budgets in preparation for an economic slowdown. Many brands will reduce budgets and lower forecasts, with some pulling back (to their detriment) on upper-funnel awareness and testing spending.
Savvy brands, however, will take lessons from history by spending into the recession and gaining a competitive cost advantage while simultaneously fueling long-term brand growth. Marketers who don’t pull back on spending will be able to take advantage of specific media opportunity areas. These include cookieless solutions and growth channels like connected TV and advertising-based video on demand.
Marketers will have a unique opportunity to test into cookieless solutions ahead of cookie deprecation on Google Chrome in the second half of 2024—assuming the deadline isn’t delayed further. At PMG, we’re already seeing doubling cost efficiencies of cookieless impressions (versus cookie-targeted impressions), meaning the efficiency potential for brands that lean into future-proofing tactics and testing could see massive upside.
“At PMG, we’re already seeing doubling cost efficiencies of cookieless impressions versus cookie-targeted impressions.”
This will also help brands to position themselves well for Google Chrome’s planned cookie deprecation. The time is now, while costs are low and cookie tracking is still enabled on Google Chrome, to test and learn what solutions drive business results ahead of the uncertain future of identification tracking.
While overall digital ad spend forecasts have been downgraded, not all media formats will be impacted in the same way. Growing media channels such as CTV and retail media networks offer massive innovation opportunities for marketers at lower costs than can be expected in the long term. In addition to cost efficiencies, the intersection of connected TV and retail media networks enables CTV to be held accountable to sales metrics through partners such as Amazon and Walmart for the first time, allowing real-time optimization and budget allocation across CTV.
“While overall digital ad spend forecasts have been downgraded, not all media formats will be impacted in the same way. ”
This increased accountability of connected TV towards sales goals comes at an opportune time in the current macroeconomic climate and the increased need for all media investment to drive business results.
AVOD is uniquely positioned in 2023 as the appeal for ad-supported content increases in parallel with consumers’ desire to cut costs amid inflation and subscription fatigue. Deloitte predicts that by the end of 2023, all major subscription video-on-demand (SVOD) services will have launched an ad-supported tier to complement ad-free options, following the launches of Netflix Basic with Ads and Disney+ with Ads in late 2022. AVOD revenues are expected to be three times higher than video subscription revenues by 2027, further demonstrating a massive shift in the video landscape. This move towards AVOD offers a competitive advantage to marketers who invest to reach consumers in premium content that was previously not ad-supported.
Marketers who stay agile with their approach and continue to invest in full-funnel marketing will see short-term cost efficiencies through decreased competition while simultaneously fueling long-term brand growth. Investing in cookieless solutions, retail media networks, and video presents unlimited opportunities for marketers to drive a competitive brand edge in 2023 and beyond.
Invest in privacy-first future-proofing
Explore retail media & CTV advancements
Accelerate investments into AVOD platforms
About the Author
Written by Mary O'Brien