We leave 2022, the year of the tiger, according to the Chinese zodiac, with a sense of uncertainty, knowing we will continue to face strong economic headwinds and huge shifts in how we live, work and do business.
The tiger symbolises ambition, power and courageousness – so it feels fitting that the past year served as a reminder that the benefits of a powerful global economy come with risks and costs. The last 12 months opened our eyes to the fragility of supply chains and how the breaking of peace in one region can cause ripples and tidal waves around the world.
It has been a lot to absorb for businesses and individuals, so the prospect of a fresh page may be more cathartic than usual. We can start anew, and I tend to agree with Thomas Jefferson when he said: “I like the dreams of the future better than the history of the past.”
So, while it may feel like the crystal ball in 2023 is rather foggy, we can at least get some perspective on what lies ahead for the world of marketing. After all, this is the year of the rabbit – quick-witted, studious, agile and, hopefully, peaceful.
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The first big bet for 2023 is retail media, and while Amazon has been in the ad business for 10 years now, it’s an area Ciaran O’Kane, chief strategy officer at Wirecorp and Exchangewire and GP of FirstPartyCapital, believes will grow and grow as ad-tech plugs in.
“Amazon really ramped up their ad business when they started putting ads against some of the items that they list on the ecommerce site,” he explains. “It’s a $30-billion business now running sponsored listings. What we’ve seen happen is a lot of retailers see an opportunity to copy this model, like Walmart in the US, for example. It’s a hyper growth area and every retailer is now looking at this as a potentially lucrative new revenue stream for them. Even closer to home, Tesco, Asda and Sainsbury’s are investing very heavily in this space.”
Retailers already act as if they were media owners. Consumer-packaged goods (CPG) brands already invest in physical media presence, whether that’s end-of-aisle display, on shelf, or on screens in store, so the progression to digital retail advertising is a natural one.
“There’s only a finite number of spaces within a store physically, so you can only extract so much revenue from traditional point of sale, but there is infinite space on the ecommerce platform because there are millions of impressions and users.” It’s only a matter of time before Irish retailers do likewise – it would make sense for Dunnes Stores, for instance, to offer CPG brands advertising opportunities on their site.
O’Kane describes this as “a completely new digital ecosystem”, which begs the question, where will the media investment money come from, will it be additive to sales and marketing budgets or will the budget from other promotional channels and media be cut to fund it? His view is that it will more than likely come from various places. Some traditional point-of-sale budget will be redeployed to digital and it’s likely that some money will be taken from Google or Meta (Facebook). He says it will be a gradual shift. “It’s going to be more of a 10-year horizon than an overnight shift. You will see Amazon and companies like Walmart set the pace, then you’ll see the retailers and supermarkets experiment and follow suit.”
While it may seem like easy money, O’Kane counsels clients to tread carefully. “They need to be super-careful not to leak any customer data, and they have to be mindful of the user experience If., for example, you’re on the Dunnes site doing your weekly shop and you are constantly bombarded with in-stream ads, you’ll shop elsewhere, so there’s a certain amount of nuance involved.”
The lure of new revenue can be attractive, but the primary function of an ecommerce site is to sell products, not sell ads to promote products. User experience should always trump ad revenue. It’s a mistake we saw happen with some digital publishers who crammed every page of their site with clunky pop-ups and video overlays to try to maximise the yield from a single site visit.
Will we see a rise in specialist “retail” agencies, much like we saw happen with rise of social media as the money started flowing to social platforms? A new agency niche was born, with social agencies cropping up everywhere, but O’Kane doesn’t think this will happen. “The skill sets of a performance agency are transferable to the retail digital space, but again there are nuances, you need a third-party technology platform as an interface to the retail sites.”
O’Kane’s view on Meta, the multinational tech conglomerate and its unwavering focus on betting the ranch on the metaverse, is something that will never materialise. “This huge bet by Meta is speculative. I still maintain that the metaverse, as they define it, is a nonsensical term. We already have an ecosystem of separate digital universes, in gaming for example, but what Meta is trying to do is build a world where people live their lives virtually and I don’t see that happening. There are some brilliant opportunities in the B2B space to shift some “real world” services online, but I think it will be extremely difficult from a B2C perspective to try and extract people from the real world and put them into a virtual world for eight hours a day or anything like that.”
He says, however, that it is an interesting space and predicts that a big war will happen between Meta and Apple in 2023. “This war that has been brewing will go up a notch next year. Mixed reality is where we’ll end up – the ability to overlay things digitally on to the real world. The problem is that Meta don’t own an infrastructure layer in the same way Apple does, and Apple will make it difficult for Meta to integrate in that area.”
The podcast goes into far more detail. The pair spoke about Performance Max, Google’s so-called “black box”, as O’Kane describes it, and the likelihood of Apple getting into the ad business in a serious way. This is something he believes will definitely happen if they make an acquisition in the ad tech space. To hear more click here to listen to the full episode. (digital)
To hear more go to irishtimes.com/tags/insidemarketing-advertisingfeature/