Uncertainty is the bane of getting deals done. And the last few quarters have had their fair share of uncertainties, from supply chain issues to the possibility of a recession, leading to a slowdown in scaled ad tech and mar tech mergers and acquisitions.
But how strong are the fundamentals of the digital ecosystem for longer-term growth? Michael Harrison, managing partner at Winterberry Group, joined Adweek’s NexTech 2022 summit to give his insights into the future of the industry.
Getting over the speed bump
Harrison calls the market outlook “very cloudy” as ad spend hits a speed bump amid fears of a recession. However, Harrison said it might not be as bad as most are expecting.
Despite the economic uncertainty, marketing spend in the U.S. is still expected to grow faster this year than pre-2020 levels.
“Marketing spend has historically been two times GDP growth. That happened in 2018, 2019, even in 2020,” he said. But in 2021, spending went off the rails. “All of a sudden, we saw four times GDP growth in marketing spend—part of that being pent-up demand from 2020. You would have thought we would have come back down in 2022, but we are anticipating five times GDP growth in marketing spend.”
Harrison cited a recent Winterberry Group survey in which 30% of CMOs said they plan to decrease spend in 2023, 40% plan to maintain, and 30% plan to increase.
“In uncertain times, marketers lean on performance media,” he said. “So we’re going to see search, paid, social, affiliate, influencer, digital video and CTV drive spend in 2023.”
Creating an integrated experience
Although integrated marketing is not a new concept, Harrison said marketers are finally focused on bringing an integrated customer experience from end to end, both online and off. He said businesses with digitally led value propositions will continue to attract strong levels of buyer interest in 2023 and beyond.
“Investors are primarily interested in digital-first businesses, not digital-only organizations,” he said. “They’re not looking at large-scale transformative businesses. They’re looking at tuck-ins that are able to enhance capabilities, geographic region, or client base.”
Navigating new privacy regulations
As marketers brace for the deprecation of the third-party cookie, Harrison expects national privacy regulations in 2023. But he said marketers shouldn’t worry about the death of the cookie and instead shift their focus to consumer/business relationships and helping clients navigate a new regulatory environment.
“The benefit here is that first-party data is king now—the reason we’re spending on CDPs,” he said. “Everybody is trying to focus on how to get more and more PII so that we can drive opted-in targeted communications.”
