It has been a tumultuous year in social advertising, as brands and advertisers pulled back on paid social amid macro-economic challenges and iOS privacy updates.
So, as we head into 2023, can we expect a different story? We spoke to industry experts to get some insight into what’s to come, with brand safety, first-party data, and TikTok’s ad platform all predicted to shape the year ahead.
TikTok to draw in ad spend despite wider economic challenges
Will Ashton, CEO, Nest Commerce:
“Meta saw a gradual decline in revenues in the second half of 2022 (aside from during peak) and we expect this to continue into 2023. This is driven by a combination of competition from TikTok and a slowdown in the wider economy. However, the good news for brands is that this presents an excellent opportunity to capitalise on cheaper in-platform advertising costs.
“TikTok, on the other hand, has grown significantly in 2022 – and is likely to continue to do so in 2023. It benefits from having significant growth opportunities from new and existing advertisers scaling on the platform. TikTok is also at a different stage to Meta and therefore less exposed to economic factors.”
Emma Welland, co-founder and director, House of Performance:
“As we head into a cost-of-living crisis, where focus is on driving efficiencies and growth to survive, social platforms will become more important. Why? The nature of performance marketing means the focus is on finding your customers online and encouraging them to interact with your brand in a cost-efficient way. Whilst branding budgets may feel the pinch in 2023, we believe direct response budgets will continue as brands need to drive any activity which directly correlates to the bottom line.
“I think the diversification of social platforms revenue will continue, with platforms like TikTok continuing to rise in popularity, especially as they drive more options for brands to drive efficient returns through their ad platforms. Platforms like TikTok provide a cost efficient way to speak to new audiences due to the creative requirements being centred around user generated content that is authentic as opposed to high budget creative solutions that other marketing platforms and channels require. This low cost of entry will enable TikTok to stay on marketing plans in a recession, especially if brands are seeing return.
“I think Meta has seen a hit this year for a number of reasons, but the iOS changes have made brands doubt the incrementality of what they are seeing through these advertising channels. Over 2022 we have seen brands apply a test and learn approach to truly try and pinpoint how effective social is in their media mix. This will heavily influence investment in 2023 and beyond.”
Data-driven intelligence to rise in importance
Anthony Lamy, VP EMEA Client Partnerships, VidMob:
“This year we witnessed ad revenue decline across social platforms as a direct result of signal loss. In the coming year, as companies make investment decisions with maximum campaign impact in mind, creative data will play an even greater role in measuring and justifying revenue across platforms and ensuring all spend is accounted for.
“In order to win in this revamped ecosystem, brands will need to stand out creatively and find ways to deliver creative that drives impact. Using data driven insights allows brands to build creative based on what they know will work, rather than having to guess. For example, our previous analysis of Snap Ads showed that when a product is demonstrated to viewers, the Return on Advertising Spend (ROAS) increased by 151%. These kinds of insights will make creative intelligence increasingly important to social commerce ads across platforms.”
Advertisers could shift to the open web
Stephen Cutbill, General Manager, UK, Yieldmo:
“While there are many active social users still engaging with ads, it is becoming harder to target and track consumers, and the turbulent past year has forced advertisers to think about the distribution of their budgets in social environments. In 2023, advertisers will likely look again at the open web as a way to effectively reach their audience.
“Increasingly easy format creation and execution provided by SSPs allow marketers to run more engaging and unique creative within the open web, and also more effectively measure impact. Newly available attention metrics that can measure everything from a user’s phone tilt to scroll speed, ensure that marketers can get a better insight into how their ads are being interacted with, in a privacy secure fashion. While social platforms will still be an effective way to reach consumers, more brands will be looking towards the open web to make a splash.”
Brand safety will be scrutinised
Tamara Littleton, founder and CEO, The Social Element:
“Navigating brand safety in 2023 will undoubtedly come with new obstacles. As we saw this year on Twitter, Musk removing the Trust and Safety Council has had a negative impact on brand safety, with many retreating from the platform out of fear. It has highlighted that brand safety is no longer just a given and entering the new year will mean prioritising protection to avoid being victim to complacency. Brands can no longer rely on checks and balances being enforced and so rethinking your brand safety strategy should be a top priority for brands going forward.
“That said, we should expect more social media platforms being scrutinised about this thanks to the work of groups like the Conscious Advertising Network, who are helping to tackle misinformation, harmful content, and exploitation in advertising. It’s clear that there is still much more to be done and each platform will come with its own set of concerns – whilst TikTok may cause data privacy issues, it is still a channel that has an unmatched impact on brand discovery.
“Understanding that social media will always come with brand safety risk shouldn’t deter brands from taking advantage of the opportunities it presents, and we still hope to see social play a large role in brand strategy in 2023.”
Csaba Szabo, EMEA Managing Director, Integral Ad Science (IAS):
“Despite the concern of eroding consumer trust in social platforms, our own research shows that more than nine-in-ten of the industry (91%) plan to advertise on social platforms in 2023. The high rates of consumer usage, ad engagement, and the continued growth of influencer marketing is still a pull for advertisers. At the same time, however, advertisers will demand greater transparency and media quality metrics next year.
“For this to be successful, and for brands to keep profiting from social in-feed environments, brand safety and collaboration need to be a priority. This needs to be driven by AI solutions that can more effectively classify media in these dynamic environments, while there needs to be a wider uptake of industry safety frameworks, such as those created by GARM.”
Signal loss to heighten the need for first-party data and measurement
Will Ashton, Nest Commerce:
“We have seen evidence of conversion rates on Meta increasing throughout 2022 and this could be an indication that platform data is improving and helping to boost targeting and reporting accuracy. However, signal loss and resiliency is still an issue since iOS 14 and measurement and attribution has become increasingly important in decision-making.
“Brands using first-party data with measurement studies in place will have a competitive advantage. They will benefit from having a better understanding of incrementality and the true value of each channel.”
Emma Welland, House of Performance:
“Signal loss presents new challenges to social media marketers. However, there are also two main opportunities from this: 1) First-party data becomes more important than ever 2) The lack of segmentation means the bidding algorithms can work harder than ever.
“We have been banging the drum about the importance of customer data for a long time, however a lot of advertisers have still not got the basics set up and in place. This should be a number one action to start 2023. When it comes to lack of segmentation, this reflects the data privacy concerns that data is getting “removed.” However, a benefit for advertisers (especially smaller ones!) is that the more data an algorithm has to play with, the more effective it can be in achieving your goals. So, although as advertisers we all love granularity, this can hinder performance in some situations.
“I would say both build into a bigger concern around measurement and attribution. Having a solid data team or agency in place who understand all of your data levers is going to become more important as we continue to be challenged by data regulations. When thinking about the impact on creativity, this forms an opportunity for brands to think outside of the box more than ever. Whilst fewer targeting options are available, there are still enough options for brands to be relevant and authentic through their creative assets.”
Decentralised ad exchanges will aid transparency
Benjamin Dunkel, Vice President, Ecosystem Growth, at Alkimi:
“For too long, social platforms such as Meta have used their monopolistic positions to impose their business models and stifle the voices of advertisers across the board. These walled gardens are starting to feel the effects of not being able to force compliance and consent in their own ways as they grapple with the loss of third-party cookies.
“Any strategies outlined by Meta that enact consent management privacy frameworks to control customer consent and maintain compliance with data privacy regulations are merely fighting a symptom of cookie depreciation without addressing the root cause – a lack of transparency. To optimise their spend in 2023, advertisers should turn to decentralised ad exchanges to reduce fees and access transparent, auditable data to refine bidding strategies while reaching more relevant target audiences.”
Contextual advertising could become a boon for TikTok
Tamara Littleton, The Social Element:
“TikTok is inherently a community-first platform with brands connecting with customers through a creator-centric content model. This is where brands have invested their time and money. Since its launch, TikTok has struggled to attract ad dollars in the same way as other social platforms due to a limited number of ad formats and tools for brands to succeed. The introduction of TikTok Pulse is its answer to becoming a more appealing place to spend this cash.
“As cookies start to fade out, brands and advertisers are scrambling to fill the targeting hole with a solution that is less invasive and more privacy-centric. This kind of contextual advertising offering can allow brands to reach the right audiences without disrespecting the need for privacy by assessing content and placing ads accordingly. And with TikTok agreeing to split half of the revenue with the creator whose video appeared before the ad, it’s clear that its investment in greater ad tools won’t come at the expense of what it does best- facilitating creators.”
Helena Taylor, Paid Social Lead, Space & Time:
“Contextual advertising enables advertisers to build more meaningful relationships between brands and consumers. Traditionally, advertisers targeted users by attributes or interests, hoping they were looking for that product or service at the time they saw the advert. However, contextual advertising is informed by content the user is already consuming. More traditionally used in programmatic, it has not been used within social media advertising until now.
“Contextual advertising provides TikTok with a USP, catapulting its growth and setting it apart from other platforms. It leads the way for more sophisticated targeting methods in a market moderated by data privacy and brand safety.
“TikTok lends itself perfectly to contextual advertising because unlike other platforms it connects people based on their likes, interests, and passions. I believe feed-based platforms such as Meta (Instagram and Facebook) and LinkedIn will find it difficult to adopt a similar approach because users go to these sites to consume content from specific people, brands, or places. In contrast, the content consumed on TikTok’s “For You Page” can be from anyone, on a topic the algorithm believes the user will like, based on content they have showed an interest in previously.
“The only channel that I think could capitalise on contextual advertising more in 2023 would be Reddit. As with TikTok, users build a community over common interests, creating content and gaining feedback from other community members within a feed. Although Reddit’s community groups are as vast as TikTok’s, finding a community tends to be through searching for it oneself or landing on it from a deep dive onto other community channels. Being able to package this up may start small for Reddit with its key categories e.g. gaming, sports, TV or crypto.”
Emma Welland, House of Performance:
“As we move away from specific audience targeting solutions due to the changing landscape, contextual targeting provides an opportunity for brands to put relevancy at the forefront of their creative solutions.
“If we think about how the algorithm works on platforms like TikTok, users tend to be shown certain categories of video based on how they interact with them, showing your ads alongside these make it less obvious that it is an advert and in theory enhance the consumer experience on the social platform rather than interrupting it. Clever brands will utilise contextual targeting options to stay relevant and targeted and talk to their consumers successfully.”
Stephen Cutbill, Yieldmo:
“Across the advertising industry there will be a greater emphasis on advanced contextual, using real-time attention metrics to reach the right audiences, with the right creative, in the right environments. By focusing on what consumers actually engage with in real-time, marketers will gain a more accurate understanding of optimum ad placements and effective creative to enhance performance.”
Strong community engagement will drive spend
Tamara Littleton, The Social Element:
“The very best social advertising campaigns are ones that combine pure advertising investment with social activation and engagement. Social media is not a broadcast platform, it’s a place where communities form and thrive and brands can build genuine human connections with customers. That’s why it’s critical that creative teams work together with the social media team to define an engagement plan that maximises the ad spend.
“Users value genuine interaction and conversation, and getting this right is critical for elevating brand spend and elongating the campaign lifecycle. Placing an ad on social and calling it a day risks minimal impact, but a strategy that connects campaigns and paid spend with engagement can maximise it.”
Helena Taylor, Space & Time:
“To succeed, brands need to develop content with the channel’s community in mind and not be afraid to jump on trends or leverage new features, both organic and paid. Research suggests that polished, overproduced content is causing “perfection fatigue” and low-fi content, produced on smartphones, resonates more with consumers.
“Brands should look to blend into the content already on the platform to reap rewards in 2023. It is also important to have a diverse channel strategy, not solely relying on one channel to meet objectives. We find using two or more channels works best to ensure brands are visible and top of mind for the consumer. Finally, it is important that marketers keep on top of any changes in the economy and industry to be prepared to adapt their strategy to the market.”
USG and influencers will feature heavily amid rising living costs
Will Ashton, Nest Commerce:
“There are a number of strategies we’d suggest for brands to get the most out of their paid social advertising strategies in 2023. Providing your brand is in a position to continue advertising through the recession, there will be a significant opportunity to capitalise on a less competitive ad environment on Meta. We are already seeing the benefits of this strategy with a better return on ad spend for our brands this Black Friday.
“Expanding your brand’s channel mix by experimenting with TikTok will help brands to scale and find new audiences. TikTok has its own creative language, and with Meta shifting more impressions to Reels, learning how to produce lofi influencer content will diversify your advertising.
“Meanwhile, we suggest a strategy of investing in brand marketing alongside performance. With significantly lower in-platform costs, this allows Meta’s algorithm to learn faster and feeds retargeting, driving a 28% lower cost-per-acquisition according to our data. Finally, ensuring your accounts are structured according to best practice and investing in paid-social-first creative will ensure you get the best return on ad spend during a period when budgets will be tighter.”
Sue Azari, eCommerce Industry Lead, EMEA & LATAM at AppsFlyer:
“Social media attracts a vast community of engaged users, making it a prime space for activating shopping experiences and sharing product information. Moving into 2023, brands can seize the potential with user generated content (UGC). From short, attention-grabbing videos to connecting consumers with real shoppers who look like them, brands can use UGC to drive consideration.
“Rising living costs are making consumers even more attentive about what they buy, so they will be researching products and services before they purchase. Marketers will need to consider the role of influencers in their strategies, optimise creative for the native format of each social channel, and ensure that informative, captivating, and relevant content reaches their consumers.”
Customer data and testing is key for success in 2023
Emma Welland, House of Performance:
“A good customer data strategy is a key asset that you have and your competitors don’t. You want to make sure you are utilising this to target existing customers, website visitors, engagers etc. with creative assets that resonate to those audiences. Making sure this is a key part of your strategy becomes even more important as platform audience data declines.
“You need to ensure you have diversification in your social ads strategy. You want to make sure you are talking to your customers where they are, and that is constantly evolving. The majority of brands invest heavily in Meta, which still makes sense, however you should be considering other platforms like Pinterest, TikTok, LinkedIn, Twitter etc. as part of your social media strategy. Don’t let your own bias prevent you from finding incremental sales and new ways to talk to your customers.
“If you don’t have a clear testing plan in place for 2023, you aren’t going to learn as the marketplace continues to change. Make sure you are maximising the 12 months of the year and are testing different assets, targeting, placements etc. as the year goes on. The marketing strategy you write in December 2022, will need to adapt as the digital sphere changes. Make sure you are regularly checking in on your plans and adapting them to maximise the opportunity and ensure growth!
“Finally, you need to have a clear measurement solution in place for all of your performance channels. Investing in data analytics is more important than ever in the social space to understand incrementality and the true value of the social ads you are working on. This should be a key objective for every social advertiser in 2023.”
For more up-to-the minute social trends, read the latest edition of our Social Quarterly report.
And for much more on 2023 predictions, don’t miss our Digital Marketing and Ecommerce Trends 2023 briefing – taking place on 24 January 2023 at 3pm GMT.