Recession or not, a consumer’s behaviour is ever evolving. Today the biggest forces influencing it are the technological shifts, slowing economy and diversification and convergence of content platforms. According to a recent report by Dentsu, economic uncertainty always brings out creativity in business and media. Previous cycles have launched or boosted radio, TV, and social media, and in the year to come we will likely see the emergence or acceleration of communication channels.
The need for cost saving and efficiency is also a driver of change, including the rise of ad-funded streaming - commerce sites looking to monetise further through ad sales - and a greater need to measure the attention consumers pay to advertising. With content and commerce having stronger ties than ever, let’s look at some of the trends outlined by Dentsu set to shake up 2023.
Trend 1: Ad-based VOD (AVOD) eats subscription VOD (SVOD) time spent
Ad-funded video streaming is expected to overtake time spent with subscription channels in 2023, as streaming giants such as Netflix and Disney+ add ad-funded tiers. With viewers under new economic constraints, streaming platforms are competing in an increasingly expensive content arms race, and innovative technology will enable more targeted and creative messaging.
As such, AVOD is set to enter a new age of domination over the video streaming category. Many platforms are are caught between the deteriorating economic situation which pushes cost conscious households to reconsider their subscriptions to streaming services, hence the appeal of ad-funded programming and its promise of cheaper subscriptions is becoming a streaming service of choice. Forrester projects that the streaming platforms’ revenues from advertising will rise from 21% in 2020 to 38% in 2027.
Nonetheless, there is no guarantee that the massive move toward Free Ad-Supported TV (FAST) models will be enough for all platforms to keep up with the cost of doing business.
Connected TV (CTV) advertising is also evolving. The growth of CTV means that advertising can potentially be targeted in a much more granular way, and formats can be more innovative and interactive. Amazon has announced that it will be introducing virtual product placement to some of its programming, using special effects techniques usually seen in movies to seamlessly insert brands into programmes post production.
Trend 2: Games everywhere
With 3.2bn estimated video game players across the world in 2022, gaming is now a mainstream activity. This has not gone unnoticed by technology platforms and media outlets who are actively working to incorporate gaming elements into their offering as an audience attraction and stickiness factor.
Netflix has always kept a close eye on gaming. The platform has developed several shows directly inspired by video games. In April 2022, it introduced a month long interactive daily quiz show that was essentially an adaptation of the mobile game Trivia Quest.
Gaming is also starting to invade TV. In June 2022, Samsung introduced an Xbox app for their smart TVs that allows viewers to play a selection of games without an Xbox. Users need to buy a controller to connect to their sets but can then play as if they have a console.
Games were a part of the Facebook experience in the early days, with titles such as FarmVille becoming popular with users until Facebook changed its algorithm. Now two leading mobile-first apps, Snapchat and TikTok, are introducing games as a way of engaging more users.
TikTok has reportedly started to test HTML5 games within its app, creating a special tab in markets like Vietnam. As for Snapchat, Augmented Reality (AR) has long been a key part of its experience, and earlier this year the platform introduced a new AR lens that is actually a game.
Spotify is another platform that has added games in 2022. In July, it bought Heardle, the music-based game that challenges players to identify a new song each day, playing more of the intro in each round. Heardle was inspired by the word game Wordle, which The New York Times (NYT) bought for a reported seven figure sum in January19 as a way to generate more visits to their site.
Trend 3: Attention brings back the essence of advertising
Attention is an ad metric that correlates with effect, and more marketers are turning to this to see value for money and compare different channels.
As brands look beyond metrics of reach and viewability to understand what content truly engages consumers, they turn toward attention metrics to measure the level at which the audience takes notice of their messages, across formats and platforms.
The proliferation of channels and devices has made it increasingly important to understand what people are paying attention to, whether it is ads or content. In recent years, platforms such as TikTok and YouTube have optimised their algorithms by showing users personalised video feeds based on their interests to improve their experience, keep them engaged longer, and make them return more often.
Technology has made it easier to measure the attention paid to advertising. Companies can now use the cameras in laptops, phones, and tablets to see eye movements when a user is on a page. It is possible to use similar techniques to analyse advertising in media such as TV, Out-of-Home (OOH), and audio, potentially creating a common attention metric to assess different channels and placements against each other.
The advent of digital media brought great understanding of how performance-based ads work, from exposure through to sales. Studies on attention can help platforms to understand their inventory better, help marketers to understand more about what is working, and use this knowledge to make advertising work better.
Trend 4: From going shopping to always shopping
Shopping has permeated social and messaging platforms and in 2022 social commerce became more mainstream. Grand View Research values the global social commerce market size at US$584.91bn in 2021 and projects the growth at a compound annual growth rate (CAGR) of 30.8% from 2022 to 2030, across B2C, B2B, and C2C.
Commerce is also coming to TV. The growth in penetration of smart TVs means that for many homes, TV now has the potential to be shoppable within one device, rather than relying on a secondary technology, such as scanning a QR code, visiting an on-screen URL, or just picking up the phone.
The coming problem with the expansion of this technology is the comparative interoperability of the platforms if social media buyers need different shopping baskets on every service, even though the products on sale are likely to be the same. This is creating a very siloed experience that requires brands to create bespoke stores for each platform (rather than just have one online store).
As commerce becomes ever more present in every service people use, there will be a need for simplification of the process, otherwise, brands will have to choose to have stores on some platforms and leave others for promotion or more brand-based messages.
Trend 5: Retail media shakes up adland
Retail media is advertising using retailers’ own omnichannel properties and data, leveraging their ecosystems to create a brand-safe medium to advertise to people who may already be in the shopping mindset, with the tools to track attribution effectively.
The most successful proponent of retail media is Amazon, whose advertising revenues have grown enormously in the past five years. Advertising reportedly gives Amazon very high margins, much higher than commerce. Advertisers benefit from access to Amazon’s data on their own logged-in customers, including address and purchase history, the ability to target shoppers searching for specific products and categories, and the ability to track the path to purchase, when users are likely to buy within minutes of being exposed to an ad, and without travelling to multiple sites.
Shopping data gives retail media sites a big advantage over more traditional publishers and even newer social media apps and content sites that simply do not have as much data on their users, especially with the ongoing deprecation of third-party cookies as targeting and measurement technology within online campaigns. Many retailers and fulfilment companies are now introducing their own advertising opportunities.
Trend 6: The rise of the super apps
A super app combines various features - typically messaging, commerce, booking and payments - to provide a fuller service to its users and remove the need to download lots of specialist apps, but instead give one app, one sign in, and one user experience.
WeChat, which started off as a messaging app, is a good example of a super app. It has expanded its focus from messaging to video, content, entertainment, commerce and more. Other apps are integrated into it as mini apps, meaning you can request a taxi via Didi while you are within the WeChat app.
By diversifying and adding more features it has become an essential life tool, providing help throughout the day, whatever its users want to do. Other popular super apps around Asia include AliPay, OMNi and Grab.
While Western-owned apps do not seem to have quite this scale of ambition, we are seeing several add more features to extend the scope of what they offer. TikTok is a classic case in point. It has been evolving from a video app to include commerce and live video, and its parent company has recently trademarked TikTok Music in several markets including the United States. TikTok Music would let users create and share playlists and use the app as a music player without watching videos.
Facebook has also been quietly adding new features to WhatsApp, making it less of a one-to-one messaging app and more of a community tool with the ability to make even bigger groups and to like and react to other people’s messages. It is also experimenting with payments and commerce, for example, users can now make payments for friends or businesses in India.
Trend 7: No way back for third-party cookies
The move to a cookieless future feels less like a specific moment of change and more something that is happening over time as marketers test and adapt. Google’s decision to delay the deprecation of third-party cookies in Chrome by another year gives the industry more time to adapt, but with some sources estimating that as much as 50% of the web is now already cookie-free on browsers like Safari and Firefox, not to mention within iOS apps.
Moreover, Gartner predicts that by the end of 2024, 75% of the world’s population will have its personal data protected under modern privacy regulations. Google’s role as an arbiter of change is less pivotal than it was. A multiple-path journey brands and publishers are now much more active in collecting, processing, and scaling first-party data, including through new value- and consent-based loyalty programmes.
Marketers are also finding new ways to blend diverse data sources to create ID Graphs that allow brands’ own data to be expanded without having to use third-party data. One way of doing this is through Clean Room technology. Clean rooms securely blend first-party data from two sources, typically brands and publishers, to find the matches and then target existing customers on publisher sites without either side being able to see what matching has taken place. One analogy is the concept of escrow in finance - a safe space for something to be stored that neither party can independently access. Another solution is the development of Universal IDs (UIDs). AdTech companies including The Trade Desk have created their own UIDs to allow them to identify users across multiple websites and devices, using open source technology that other companies can use and build into their own systems.
There is also rising interest in new forms of contextual targeting, i.e., targeting ads based on the context of the page rather than observed features of the individual being targeted. Google is currently testing its own initiative Topics where 350 topics will be identified and each website categorised accordingly.
Trend 8: Going live goes a long way
One of the biggest changes seen in the streaming platforms is their experimentation around staggered releasing. Netflix released the latest season of Stranger Things in two drops, and will be experimenting further including Guillermo del Toro’s Cabinet of Curiosities which will release over a four-day period.
Fans have proven their affinity to congregate around physical or virtual events. Knowing this, podcasts have started to feature live events and even tours, so that fans who enjoy listening on their own can share a collective experience with others. Live viewing is one of the appeals of video game streaming services such as Twitch, where viewers log on to watch other people play games, to both learn new tricks and enjoy the sense of community. Since the pandemic, Twitch’s most popular genre of streaming is Just Chatting where personalities either talk to themselves or the community without playing a game at all.
One segment of live video that has not yet taken off in the West is live commerce. While this is hugely popular in Asia, accounting for more than 10% of online sales in 2021, attempts to introduce it in the West have not yet succeeded. Live commerce may be succeeding, however, in very tight niches.
Trend 9: Responsibility takes centre stage
While some may take the point of view that concern about societal issues can be bad for business, research shows that the public is on board with these principles. The world is becoming more diverse, and people are growing up with a greater appreciation of issues like identity and the environment.
Kantar’s 2022 Sustainability Sector Index, 97% of consumers across 32 countries report they want to live a sustainable lifestyle, and almost half (47%) globally say they have stopped buying certain products/services because of their impact on the environment or society.
Brands can differentiate themselves and build brand equity by expressing points of view that many of their customers agree with and setting an example with their own actions and campaigns. The pandemic showed that brands could get kudos and respect from their customers by acting in an emotionally intelligent way, both showing they understood what their customers were experiencing, and taking positive steps or providing tools and resources (or even humour) to help people get through a difficult time. In order to face new challenges, brands are forming communities to connect people and organisations to resonate with a single purpose, not just serving their own interests, but serving society, too. It is easy to voice support, but brands now need to act.
The rise in the cost of living is another example of a global event that brands can use to show what their priorities are, and how they can authentically become a part of their customers’ lives. We are starting to see cooperation across industries around issues, and the economic situation is also increasing the incentive tp live sustainably both for consumers.
Trend 10: Social algorithms give users what they don’t know they want
TikTok’s most important innovation was the endless feed based on observed interests and popular content, rather than follows. Users’ feeds are different, but this is largely driven by the algorithm, rather than who they have consciously decided to follow.
Services such as Instagram also rely on algorithms, but until recently algorithms picked the content users would see from accounts they follow, rather than broadening the pool to include all content on the platform. These days if you use these platforms it can seem like half the content is from accounts you do not actually follow, shown with explanations like “Based on your likes” or “Accounts you follow also follow.”
What this shows is that social media has now become much more about the content shared than the fame or the number of followers the user has. It is now much more possible for content from anywhere to go viral, and for new users’ content to be seen, if it is judged to be good by the algorithms, based on likes, shares, video views, and more.
Moreover, younger people are searching less on traditional platforms such as Google and taking to social apps to search for content.
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