2023 Predictions! 🚀
Happy Friday, everyone! This week, we’re going to get the strategic juices flowing by revisiting our annual tradition of sharing predictions for the trends that I think will be bigger next year than the line for brisket sandwiches at Buc-ees. We’ll also unpack some of the most interesting holiday shopping stats from last weekend. Let’s get to it!
2023 Predictions: Trends Marketers Should be Watching (LINKS BELOW!)
TL;DR – As we enter the home stretch of 2022, it’s time for me to dust off my trusty(ish) crystal ball and predict which trends I’m expecting we’ll see in 2023. This year, I’ve invited longtime friend of the “Hot Take,” Nate Notwell, Head of CxO NA, to weigh in with his thoughts!
1. An elevated role of brand experience and content in the face of inflation – Consumers have more brand choices than ever and at the same time will likely be more careful with their dollars in the coming months. Great experiences and content will be critical for brands to drive relevance and create confidence in their products. With the share of consumers’ time spent with ad-supported media plummeting to 54.6% globally and only 46.6% in the US per PQ Media, brands need to make every interaction count.
Nate: I agree - media inflation combined with budget pressure will force brands to double down on ways to drive impact with consumers. Marketers have spent a long time focused on efficiency, but the more brands can focus on holistic experiences that engage and motivate consumers, the more impactful brands will be. However, I do think that ad-supported media consumption will increase as consumer budgets become tighter. It will be interesting to see how consumers balance cost with the willingness to be exposed to more ads.
2. Retail media goes after brand dollars and obsoletes the term “retail media” – The Retail Media industry is estimated to worth be north of $50B today. You know what would be cooler for retailers? $100B. To get there, I would expect more momentum in opening up retailer data sets for targeting and measurement across more platforms like we’ve seen from Kroger, Amazon, Walmart, Best Buy, and others. This would not only make their offerings more competitive with “traditional digital” channels, but also attract non-endemic advertisers.
Nate: I am super bullish on retail media. For one, in an omni world, there are tons of eyeballs here. And as brands look to make dollars stretch further, and decision makers conclude that ‘media is media’ we will see more dollars invested in retail media with at least some at the expense of traditional channels. For brands, the potential to leverage retail data and consumer insights in a cookieless world will be the biggest swing in 2023. The ability to leverage this data off platform and into OTT or social is what will unlock real value.
3. The Creator Economy segments into 3 distinct verticals – First, look for the largest creators to be viewed as 1. publishers/entertainment content. Why? Younger demos are now spending more time with creator content vs studio-created content. Next, creators focused on 2. review/commerce-based content. Why? 74% of consumers 18-24 rely on social media influencers for information about products and services and a similar number of purchased products based on their recommendations (AdWeek - LINK.) Lastly, 3. UGC creators. Why? They solve a cost and asset volume problem for brands with their content instead of their reach.
Nate: I think this ties to your first point that brands need to focus on the experiences they create to truly engage consumers. I am really interested to see how the business model for content evolves, both for the creators and brands, as a way to facilitate content partnerships. Companies like Spotter (https://spotter.la/) can help both established and up and coming creators monetize their content and also partner with brands which I think will accelerate the reach and impact of creator-led content
4. Emerging touchpoints become more purposeful (or die) – Buzzy tech like the metaverse, NFTs, social shopping / live streaming, and AR/VR will need to solve real problems for consumers and return positive ROIs to prove their value or risk seeing investment dry up. We’re seeing a strong increase in consumers’ adoption of emerging retail tech from 25 to 35% YoY (Deloitte – LINK) so there is reason to be optimistic.
Nate: In the face of budget pressure, 2023 will be the year that new technologies either find a purpose or find the cutting room floor. Virtual try-on is a great example of a technology offering that can add meaningful value to the consumer but has sometimes lacked a truly seamless purchase integration (i.e., now go to our website to order). I predict that we will see a convergence of technology that provides a great experience for the consumer while also collapsing the purchase funnel for the retailer. This could result in an acceleration of Live Streaming / Social Shopping and AR/VR but could slow down investment in the metaverse where brands have yet to build a robust revenue producing model to date.
Bonus long-shot predictions:
Matt: Social platforms embrace their niches to differentiate themselves and maintain relevance with users. We’ve seen years of copycat features in the name of more ad inventory, but logic tells us this will end poorly. Should platforms stop burning billions on features no one asked for? Absolutely. Will they? Eh.
Nate: Google brings back the cookie (but calls it something else) as a way to compete with retail media and the dollars brands are investing in ecosystems where data is the primary differentiator.
Matt’s Hot Take™ - As always, if we could get all these right, Nate and I would be surrounded by leather-bound books sipping on Pappy Van Winkle 23 right now but it’s important for us to think about the future so we can be prepared for what’s coming around the corner. I’m always reminded by a quote from Dwight D. Eisenhower who once said, “Plans are worthless, but planning is everything.” Our world changes literally every day and the only way to keep up is to be curious and to always keep learning. What are you expecting to see in ‘23?
“Turkey 5” by the Numbers (LINKS BELOW!)
TL:DR – The holidays are always a fascinating time to take stock of evolving shopping behaviors but perhaps the most interesting period for us is the 5 days between Thanksgiving and Cyber Monday aka “Turkey 5.” Here are a few of the stats that really stood out to me:
$11.3B - The amount of online shopping done during Cyber Monday which represents a +5.8% increase YoY (TechCrunch – LINK.) Thanksgiving saw $5.3B of online sales (+2.9% YoY) along with $9.1B on Black Friday (+2.3%.)
+78% - The increase in Buy Now, Pay Later (BNPL) payments this past week as consumer navigate financial challenges. These have grown so much that in 2020, 91% of all consumer loans issued in California were BNPL loans. The massive watch out here is that 43% of Gen Z users have missed at least one payment (SFGate – LINK.)
30% - Percentage of online Black Friday Sales driven by paid search. Other traffic drivers were Direct (18%), email (17%) and organic search (15%). Revenue attributed to social media was < 5% (AdWeek – LINK.)
48% - Online sales that were mobile orders, up from 44% in 2021.
+386% - Surge in searches for Black Friday discounts at Walmart, surpassing Amazon who was #1 in 2021. Amazon ranked 4th this year, behind Target and Kohl’s, respectively (CNBC – LINK.)
+17% - The increase in shoppers visiting physical stores compared to 2021 (The Wall Street Journal – LINK.)
Matt’s Hot Take™ - Despite economic headwinds and discounts starting as early as October this year, “Turkey 5” still broke records for online sales. Going a bit deeper into the data, it’s easy to see the importance of strong digital fundamentals like seamless website and app experiences, robust SEO and SEM strategies, and mobile-first design. Additionally, the BNPL trend is an important one to watch but also be wary of as these companies are basically loan sharks in Patagonia vests and we could see the negative side of this equation impact spending power down the line.
Quick Hits
Warehouse Packing Help Wanted, Excellent Penmanship Required (Wall Street Journal - LINK) – Experience matters, but for luxury brands, it’s absolutely critical as consumers are buying an emotion as much as they are a physical good. That’s why we’re seeing logistics providers training their staff to hand-tie ribbons and to carefully hand-write notes as luxury brands attempt to replicate the care that comes with their in-store experiences for items shipped to consumers’ homes. While these offerings seem to go against decades of online retailers trying to as many goods as quickly as possible through warehouses, it’s a mandatory today as someone who just dropped some serious coin on a bag or a watch wants more than a dented brown box on their doorstep. Online sales now account for 22% of luxury retail sales, up from 6% in 2015 and it’s forcing these brands to think about the eCommerce experience as an extension of their brand experience.
How Holiday Virtual Stores are Delivering Data and Deeper Connections for Brands (AdAge - LINK) – We’re seeing more brands invest in virtual stores to improve the online shopping experience for consumers. These experiences can also be a treasure trove of data. Crocs opened a virtual shop in November where consumers can browse and buy products within branded rooms, take an interactive quiz, and play a game. Consumers are getting a better experience while Crocs gets data on which products consumers are interacting with most, and insights from quizzes that can help the brand better understand their shoppers’ needs. These experiences have a long way to go still, but the potential is there to create valuable and enjoyable experiences for consumers that go beyond brand websites that only feature an endless grid of thumbnails.
Amazon’s New Telehealth Service to Offer Care for Common Conditions (Wall Street Journal - LINK) – The eCommerce giant’s latest foray into healthcare is “Amazon Clinic” which will allow customers in 32 states to get virtual care for common conditions such as allergies, acne, hair loss and heartburn. The service allows users to select the condition they are dealing with, pick a provider and fill out an intake questionnaire. A licensed clinician will then provide consultation over secure messaging and recommend treatment, prescriptions or other guidance based on that information. Consultation costs are expected to be less than an average co-pay. A service that offers fast relief for common health issues could be an interesting sweet spot for Amazon to act as a bridge into their growing primary care and prescription offerings. to benefit from their expanded distribution and not be cannibalized by it.