The AdNews end of year Perspectives, looking back at 2023 and forward to next year.
It is the time year again where we review 2023 and dust off that cloudy crystal ball for a little peak into 2024.
2023 is fast closing out the year as being the moment in time AI went mainstream while the era of free money evaporated. Two diametrically opposed forces, one with an optimistic sense of wonder and opportunity and the other with a heavy dose of pragmatic market realism. The convergence of AI innovation, economic shifts, and the resulting consumer behaviours have been the catalyst for a paradigm shift, making it imperative for marketers to stay ahead of the curve. Agency villages in 2024 will do well to go beyond the admonitory gesturing to these problems to embrace more action-orientated solutions for their clients, as the level of disquietude is rising in marketing teams facing more headwinds than ever before.
So, in 2023 what went down and what will continue for 2024?
Well, with both technical innovation and a recessionary-like economy, five key trends emerged in shaping the way brands connected with their audiences. And as we inch closer to 2024, it's worth exploring the trajectory of these trends as they will be prominent in what is shaping up to be an exciting yet challenging environment.
AI Media Innovation
All agencies in ad-land are in an AI arms race to be better, smarter, and more efficient. The truly exciting development in this space over the next year will be the agencies that create something real. Those that transcend the hype and/or resist overselling re-purposed third-party technology, bringing something real to the enhancement of data processing capabilities, will win the first few rounds of this boxing match. While the prospective applications are exciting, the reality is media volume run by AI will remain only a small percentage in the short term. A cautionary fact for those too focused on the future state and not the nuts-and-bolts delivery of today.
The Rise of Immersive Experiences
In 2023, brands showcased exemplary use of immersive technologies, such as virtual try-ons and web3 projects. Looking ahead, 2024 is poised to witness the continued embrace of virtual and augmented reality (VR and AR) as powerful tools for creating engaging brand experiences. Notably, brands like Ikea, with their iconic blue bag, have set the benchmark for immersive excellence. Closer to home, brands like Zooper Dooper, with its space launch ‘When will it freeze?’ competition, are also providing fun, immersive engagement relevant to the brand.
Personalisation and Hyper-Targeting
In 2023, the digital maturity and advances that brands have made (where possible and relevant) will enable the harnessing of both first-party data analytics and artificial intelligence to deliver hyper-targeted content. Advertisers will begin to tailor messages based on individual preferences, behaviours, and demographics, fostering better connections and relevance of brand message to consumers that will create a better experience for those customers.
Sustainability and Social ‘Relevance’
Consumers will continue to be conscious of brands’ footprint in environmental and social issues. In 2023, there was a notable surge in sustainability-focused advertising, with brands aligning themselves with eco-friendly practices and social responsibilities. As consumers demand transparency and ethical business practices, advertisers will need to find both relevance and balance as a key differentiator to build meaningful and sustainable consumer trust. Relevance and balance are key however, as consumer trust hinges on this equilibrium. This has been seen in recent times where overstepping boundaries has led to brand cynicism and damage to those brands.
“It’s the Economy Stupid” – Bill Clinton
With 13 rate rises over the past two years, the most recent occurring on Melbourne Cup Day, the key questions we must ask as marketers are, ‘What does this change for consumers?’ and ‘What is next?’ Well, the cash rate has gone from 0.1% in November 2020 up to 4.35% in November 2023. This is all in the name of inflation or the management of it, given costs across pretty much everything have gone up significantly. What it means for consumers is less money to spend as the essentials get more expensive.
In 2024, marketers will need to be more strategic, ensuring that well-spent budgets deliver results in an increasingly challenging market. With the potential for more rate rises, marketers must navigate an environment where consumer spending is under greater scrutiny. Further, there are only two key levers to manage inflation, raise interest rates or that other (less accountable) lever – fiscal policy that cuts spending, particularly infrastructure spending which uses enormous levels of fuel. But that costs votes. So, I think we can reasonably assume there are some more rate rises on the way in 2024, which means less money. Only the best, well spent marketing budgets will deliver positive results.
Looking ahead
As we step into 2024, the integration of artificial intelligence into advertising strategies will be pivotal for refining personalisation efforts in the face of economic challenges. Brands that swiftly adapt to immersive storytelling and redefine brand interactions will capture the consumer dollar in an evolving landscape. The delicate balance between personalisation and privacy becomes even more critical in the wake of growing privacy concerns and stricter regulations.
Equally, sustainability and social activism by brands will need to navigate an increasingly cynical public domain. The stage is set for a dynamic and innovative advertising landscape, demanding agility, adaptability, and a keen awareness of economic shifts at home and abroad.
Buckle up for a thrilling journey into 2024!
Nick Keenan is CEO of Starcom Australia
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