Technological advances are not slowing down, and neither are customer expectations. Digital begets convenience, especially over the last few years, and that trend isn't going away. Customer experience (CX) is getting more personal, seamless, and demanding, and companies must constantly evolve to keep up.
Improving CX is a way to unlock value in your customers' journey and technology investments. And to do that in 2023, we think there are five trends we'll see, centering around marketing budgets, data collection and privacy, consumer spending, and revising marketing tactics to address the consumer landscape.
Unlocking Value in 2023
1. Optimizing & Doing More with Less
A lot of predictions address the next 5-10 years. That said, the real investment happens now so impacts can compound over the next decade.
The double-edged sword is that 2023 budgets are fragile, and selecting the best tech for your company that will deliver internal efficiency and value to end consumers is crucial. You want that balance in your tech stack: keeping spending low while positioning your business to be ready to pivot, respond, and thrive.
Marketing budgets will be scrutinized, but leaders will still invest in marketing even during a recession.
In a recent Optimizely survey, 91% of marketers felt marketing investments are still important. With companies spending cautiously, marketing strategies will focus on what's most important, delivering customers value, and strengthening the brand.
Some trends that may gain in popularity in the coming year include consolidating suppliers, platforms, or systems, moving toward SaaS options, and looking for optimization opportunities. For example, while there's an upfront investment in moving to a cloud-based SaaS content management system (CMS), it should improve ROI and profits long-term. Sitecore shared that some large companies realized 20%-50% in savings annually from increased productivity, minimized IT efforts, and decreased maintenance costs when they moved to a cloud CMS.
2. An Evolving Privacy Landscape & Security Scrutiny
Data is critical to enhancing and optimizing a digital experience. However, consumer awareness around data privacy has risen, and so has consumers' unease.
We're in a world of expressed consent and tolerance for surveillance is decreasing. Consumers feel as though companies should solely use first-party data and are expecting greater privacy from brands.
Marketing teams must get creative in delivering experiences that accommodate privacy regulations while successfully breaking through the noise. More consumer-driven businesses will be forced to respond to the disrupted landscape, and we'll see continued efforts around adopting new data collection practices.
Data will still be crucial to reach audiences and meet their needs. So how will brands go about collecting customer information? It'll be worth thinking outside the box on how to obtain first-party data to keep up.
Many companies will turn to loyalty programs. According to Gartner, establishing one in the next few years will help frame up first-party data collection in hopes of retaining high-priority customers and focusing on them. Loyalty programs are expected to expand to other industries outside of hospitality and retail brands.
3. Consumer Expectations: They're tuning out the noise while you're trying to break through it.
Not to harp on data collection changes, but that also means targeted ads are changing.
A ruling in the EU prohibits businesses like Meta (fka Facebook) from monetizing data collection, use, and sharing. Targeted brand ads based on third-party data are banned. While it's not a worldwide rule yet, it's a trend toward privacy regulations shifting how we think about advertising.
To add to that, just as businesses are cautious with their spending, so are consumers. However, that doesn’t mean they're not going to keep spending. Where they spend their money is the real question.
Consumers are working on ways to tune out the noise. Anyone with the financial means to pay for subscriptions that aren't ad-supported will do so to avoid advertising entirely. But still, even though they don't want to be targeted constantly, customers expect speed, convenience, personalized recommendations, and seamless digital experiences - all while feeling connected to the brands they buy from or interact with.
4. A New Way to Search Online
To market in the digital space, you have to play by Google's SEO rules and pay for ads. That's not going anywhere. However, studies show that cost per lead has gone up and that price increase will likely continue if Google loses market share to new search engines and technologies like GPT AI, a search bot technology (ChatGPT) with more potential than we know what to do with right now.
Additionally, online reviews are losing their status as reliable sources. In a global study, over the last two years, consumer trust in online reviews dropped 11% leading to a change in consumer behavior toward researching products and services on social media platforms. Younger generations turn toward video reviews, like TikTok, and are turning away from traditional search sites.
Consumers have also lost trust in "Influencers" who aren't authentic. To stay relevant in the space, take note of the paid "Influencer" getting a rebrand to "Creator". Most consumers spend their time on social media platforms and can detect when someone who is #advertising your brand isn't authentic and is just there for a quick buck.
As more brands use social media platforms for advertising, they should align their social endorsers with their target audience and brand values.
5. Going Back to Basics
With LinkedIn predicting a 50/50 budget split between sales activation and brand building over the next 10 years, we may be rethinking the influence of long-term to brand building.
Airbnb announced they'll eliminate performance marketing channels and solely focus on brand building. While that may not make sense for all businesses out there, we think there's a less extreme option in which there's a seat for everyone at the table. There will be a considerable cultural shift toward more long-term branding building vs. short-term sales activation tactics.
Let's get a little nostalgic for a moment. If brand-building is predicted to have a reprisal in its place of importance, so might traditional advertising. A reinvention of models that worked in the past but were sidelined as digital grew might make a comeback to help capture mindshare:
- The TV model is still strong and is an avenue where people's attention lasts for hours, especially binging content. Streaming services like Netflix now offer an ad-supported lower-end subscription option for viewers.
- Marketers will select out-of-home advertising, monopolizing places where people are already forced to engage such as during Uber rides or airports and in-flight entertainment.
- We'll see an increase in entertainment product placements, a little idea that came on the scene in the 1980s with Reese's Pieces in Steven Speilberg's E.T. Gartner says that by 2024, brands will assess the budget share so that at least 10% of their media budget goes toward product placement in entertainment content.
It's important to note that testing will be critical for evolving with the market and digital trends. And depending on your industry, some traditional ads may not be economical, scalable, or have a big enough return worth your time and resources.
We stated in the beginning that technology is rapidly changing and so are consumer expectations and behaviors.
Budgets may be trimmed as the year progresses and consumers are continually outsmarting tech, but there's still good news too. Most marketers are accustomed to change. It's not the first time rising customer expectations have been the impetus for experimenting or changing things up entirely from a marketing perspective.
We're looking forward to responding to and leaning into trends that continue to shake up the digital experience landscape for consumers and brands.
Want to shake things up? Start a conversation with us and unlock the value of your customer journey.