By Ayman Haydar, CEO MMPWW
There’s a big feeling of Deja vu right now. As we head into the final few weeks of 2022 you could be forgiven for thinking it’s two years earlier; uncertain markets, the looming threat of a worldwide recession, clien uncertainty and budgets being squeezed across every vertical.
It’s frustrating to find ourselves in this position again, even though it was unavoidable. The fallout from the pandemic continues to ripple. I’ve said it before; recovery is not linear and this inevitable downturn has been on the cards for months, if not the entire year. There’s a sense that 2023 is going to be one of the toughest to date.
I was talking to a friend recently about the situation and talk turned to life pre-pandemic, specifically asking the question: Were we all too comfortable? 2019 feels like another lifetime with high industry investment and unguarded spending, so in a sense, did COVID help us avoid a major crash landing? There’s some truth there, even if it may have felt like falling off a cliff at the time.
We live and learn though. We are already equipped to handle one more wave of economic turmoil, but hopefully not a tsunami. Before you think it’s doomsday all over again though, every market will react differently to the economic crisis, and the governing body in the UAE has an excellent track record of making the right decisions to keep businesses afloat.
In fact, the IMF recently revised its 2023 forecast for the UAE’s growth upward, from 3.8 per cent to 4.2 per cent, outpacing Saudi Arabia, Bahrain, and Qatar. The country’s GDP is projected to show the highest growth in seven years for 2022, which is reason enough to boost confidence in how we will weather the oncoming storm.
So, taking this all into account, I wanted to look at where investments are likely to go next year as changing media consumption habits push marketers to lean into channels that drive performance.
AVOD eats SVOD for lunch – metaphorically speaking
If we’ve learned one thing, it’s that whenever companies say they’re not interested in something, then they absolutely are. Yes, I’m looking at you Netflix. In 2023, I think we’ll see a continued move away from Linear TV towards more AVOD streaming platforms over SVOD, with a Magna report forecasting ad sales will grow 33 per cent in 2023 to hit $6.3 bnin the US alone.
Brands will be watching cautiously to see how Netflix and Disney+ utilise their user data to offer competitive advertising placements, but with ad-funded video set to overtake subscription channels with time, it’s a smart move from these companies to include ad-funded tiers now.
Social – it’s TikTok’s world, we’re just living in it
Social will continue to see significant investment in 2023 and for me, the smart money is on TikTok becoming one of the most dominant platforms. According to Business of Apps, TikTok generated an estimated $4.6bn revenue in 2021, a 142 per cent increase year-on-year and by the end of 2022 is expected to reach 1.8bn users.
There’s also something in this platform becoming more dominant in Search, even rivaling Google as Gen Z turn to TikTok (and Instagram in the interest of fairness-ish) for more of their queries. It’s as high as 40 per cent of 18–24-year-olds in the US, so don’t discount the diversity of this channel; it has a lot of potential.
It’s less clear how the likes of Snapchat, Facebook and Twitter will fare given they are all facing their own big challenges right now. All three platforms have fired a huge portion of their workforce in recent months as they fight to keep up with growth projections, shifting market priorities and the rising costs of doing business amid declining sales revenue.
In Snapchat’s case, the layoffs will go some way to stem the losses, but their struggle to innovate in line with competitors like TikTok is still a major issue. They should lean into countries where there is significant engagement potential, like Qatar, where they recently opened an office, and double-down on country-led trends. Locality is an advantage and if they can tailor the algorithm effectively, it could significantly improve user engagement.
Twitter has a steep hill to climb with Elon Musk at the helm, that’s for sure. The new owner’s volatility isn’t doing the company any favors in the short-term beyond a lot of press, but from an advertiser standpoint, his shift towards free speech on the platform is a disaster. On the flip side, let’s wait and see if those preaching ‘brand safety’ will follow through in practice when the chips are down.
Firing 15 per cent of the workforce who worked on content moderation, when this is so key to advertiser buy-in, seems like a ticking time bomb, and one that makes even less sense when advertising recently accounted for about 90 percent of Twitter’s revenue. Trust in the platform is rapidly shrinking while Musk figures out where to draw the line and I can’t see marketers waiting around in the meantime.
Can he turn things around to make the platform a cash cow or is this just his starting point to future presidential elections?! The jury’s still out, but in the meantime, I’ll be watching the implosion and seeing where the debris lands, because that is likely the Twitter 2.0, we’ll be left with.
As for Facebook, Meta’s decision to let go of 11,000 employees shows how fragmented the landscape is. With Apple’s continued ATT dominance, losing audience share to TikTok, and the decelerating e-commerce market, they have a difficult road ahead. Still, I wouldn’t write them off completely. They have proven themselves formidable time and time again, and I stand by the fact that they are still the biggest platform for reach and scale.
Search – Apple and Amazon play catch up
Search will do well because it is closely linked to performance in the retail space, which is still on an upwards trajectory, despite e-commerce slowing down. eMarketer forecasts that spend on Search could hit nearly $112bn by 2023, with Google, unsurprisingly the most popular platform, although Apple and Amazon are catching up.
Apple Search Ads is predicted to make $5bn in revenue this year, but there are still questions for me surrounding their offering, particularly their pledge for 100 per cent data privacy. It’s very easy to promise the world on the outside, but now they are inside the system, it’s impossible not to think that their view will be compromised, potentially using this personalised data for their own needs. How will their ethics fare then when it comes to making money vs allowing others to profit from their platform?
Overall, I think Amazon is the more interesting bet right now, given consumer preference for this platform for purchases; it’s this that is likely fueling the growth in overall search ad spending.
And there you have it. Although no-one knows exactly what’s coming and how we’ll handle the challenges ahead, we have faced tough times before and we will again. That’s the nature of the game we’re in. My parting words of wisdom? Fasten your seatbelts everyone because the ride is far from over.