Perspective - Growth opportunities amidst volatility

By Sonal Patel | 6 December 2023
Sonal Patel.

The AdNews end of year Perspectives, looking back at 2023 and forward to next year.

In 2023, a convergence of factors, including rising inflation, economic instability and low visibility, created a perfect storm that significantly disrupted business and advertising strategies.

The travel industry in particular experienced a unique situation where advertisers saw a surge in organic demand, driven by pent-up appetites for "revenge travel". This led to travel advertisers deprioritising investment in efforts to attract attention and conversions, and subsequently to inflated pricing in the market. Additionally, many airlines made the strategic decision to trim routes in order to bolster their profitability, a response to the lingering economic aftermath of the COVID-19 pandemic.

Marketers in this climate found themselves forced to adapt to high volatility, which, while necessary, had tangible effects on team morale, motivation, and overall engagement in my opinion. The ever-present uncertainty about the possibility of a global recession has further muddied the waters and negatively impacted visibility in this region; there is so much going on in the world right now that businesses in ANZ, while operating in relatively stable conditions for now, is glossed over as companies focus on their presence in other more volatile markets.

Despite these challenges, programmatic advertising has managed to sustain growth, and Quantcast’s Advertising State of Play Report for 2023 accurately predicted certain developments, such as media budgets for this year largely staying the same with more investment into connected TV on the horizon. These findings show that the industry continues to be resilient and adaptable in the face of increasing complexity and economic unpredictability.

A somewhat slower economy will play out in 2024, with inflation gradually decreasing due to the impact of adjusted interest rates. However, the substantial savings that many amassed during the COVID-19 pandemic are beginning to dwindle, and we are likely to witness lower overall consumer demand. This presents a unique challenge for marketers who must work diligently to maintain high levels of engagement with their customer base to ensure that brand loyalty remains unchanged.

To illustrate the significance of this engagement, take the UK over the past decade for example. There, the retail industry experienced a notable shift, with consumers transitioning from top retailers such as Tesco and Sainsbury's to lower-cost alternatives like Aldi and Lidl. Even as savings and spending rebounded, many consumers did not revert to their previous buying patterns. This phenomenon aligns with the 21/90 rule – the notion in psychology that it takes 21 days to form a habit and 90 days for that habit to become an integral part of one's lifestyle.

In 2024, I anticipate a substantial focus on digital out-of-home advertising (DOOH) and shifting advertising strategies as businesses contend with the complete loss of third-party cookies. However, this transition won’t happen abruptly, as it is still largely uncharted territory for the industry.

A concerted effort from the advertising, technology, and banking sectors to encourage employees to return to physical office spaces is expected to boost foot traffic and, consequently, drive growth in the DOOH market. Programmatic advertising is also poised for continuous growth, thanks to its ability to process real-time data signals and deliver outcomes for clients and agencies, even in cookieless environments.

Three key points come to mind about the market right now:

  1. Growth opportunities amidst volatility: Marketers have been compelled to adapt to a highly volatile business environment. However, many businesses are seeing the market situation now as an opportunity to explore growth plans that might have been shelved during the pandemic, part of which includes investing in acquisition-led advertising activities to drive brand uptake and performance. Leaner teams are investing in tools and partnerships that can help supplement talent gaps and make their lives easier at work.
  2. The resilience of programmatic advertising: Despite these challenges, programmatic advertising has demonstrated remarkable resilience and growth. Digital continues to dominate media investment growth, particularly in channels such as DOOH and CTV.
  3. Being prepared for more change: Agencies and brands are realising now that sooner rather than later is better when it comes to being prepared for more changes in the media industry. This includes becoming more omnichannel in their advertising tactics to reach and engage consumers across disparate platforms, considering how to measure the impact of marketing efforts holistically given more complex consumer journeys, and investing in first-party data technologies to fuel more purposeful marketing.

Is the talent crisis over? Yes and no. The talent crisis has indeed undergone a transformation, and moving forward, we can expect to witness a more natural alignment of skill sets between the realms of advertising technology (adtech) and marketing technology (martech). Additionally, agencies that have undergone restructuring will naturally need to focus on enhancing their efficiencies and proficiencies.

This current phase in the labour market is one of the most pivotal moments in recent history.

Managing a multi-generational workforce will prove to be a formidable challenge for leaders and managers, particularly in the context of the post-COVID era and the ongoing shift towards remote work. Furthermore, we are entering an era where large language models and advanced AI are rapidly evolving, promising increased efficiency. However, it is imperative that these technologies are harnessed appropriately.

In light of these complexities, it is unlikely that any business will have the perfect individuals in their talent pool at this moment. The nature of work and the skills required are in a constant state of evolution. Therefore, the focus should shift towards cultivating a clear vision and engaging employees to maximise their potential.

Sonal Patel is Vice-President APAC at Quantcast

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