Episode Transcript
Elise Stieferman: Hello everyone, and welcome to another episode of The Loop Marketing Podcast. I'm really excited about today's episode. It's one that has almost become an annual tradition here at Coegi, where we reflect on what's happened in the world of marketing over the course of 2023 and also begin making our predictions on trends and major news to come for 2024. So, today I'm joined by Ryan Green, our SVP of Marketing and innovation, to chat through these topics. Welcome.
Ryan Green: Thanks for having me again, Elise. I enjoy the predictions podcast quite a bit. So excited to get started.
Elise: Awesome. So let's start by talking a little bit about what's happened in 2023. So, Ryan, something that I know you made note of in last year's trends podcast was the expected rise of retail media, in particular for CPG brands, but kind of for all brands out there. So what have you taken note of in terms of RMNs over the last year, in terms of how that channel has played out in the world of advertising? And has it reached the heights that you expected?
Ryan: It's right on pace to what we expected in 2023, and one of the features I like of our prediction podcast is that we actually do go back and evaluate how our predictions were last year.I know too many people in our industry make these bombastic claims the year before and don't go back and have accountability towards what they said. So in terms of retail media, it's right where we thought it was going to be.
If you take a look at eMarketer, they have a stat saying that 26% of CPG brands are using six or more retail media networks today. That's quite the adoption, I think, from where they were even two or three years ago. It's not just Amazon and Walmart Connect now being able to go into the Kroger's and Albertsons of the world as well. And I think one big advantage that retail media networks have is because they're so new, most of them are using data clean rooms. They are using opt in technologies with loyalty programs so that they have very clean, authenticated, permissioned, first party data. So that's a trend that we continue to expect to see, especially going into 2024, where there's a lot of questions and headwinds around cookie deprecation and privacy concerns. Retail media networks are still going to be a place that are going to be safe for advertisers looking to have addressable media. That's not without their challenges. Retail media networks do have some measurement concerns. It's not an apples to apples comparison on how they are attributing credit for sales, how they're being able to make comparisons between one retail media network and the other. But it's definitely a place that we're bullish on and that we're really encouraging our CPG brands in particular to be looking at, but potentially also adjacent categories as well.
Elise: Ryan, I think you bring up a good point that there are high expectations from marketers about measurement of retail media networks. I think it's really true of all marketing channels in general right now. There's a lot of scrutiny on where dollars are being spent and whether they are driving that ROI, and retail media networks are not immune from that. That being said, what have you seen from brands for retail media networks? Are they leaning towards kind of the safer awareness bucket of being able to reach shoppers that they know have purchased products that are their own or adjacent to the category? Or are they expecting to kind of see that one to one ROI? I showed my ad to a known shopper of Kroger or endemically on Walgreens.com, and I expect to see the dollar for dollar revenue generation as a result of that ad?
Ryan: Marketers love to, especially brands, really want that one to one ROI. I know their finance teams are always asking for that. I think a learning curve with retail media networks is that they're not DSPs. They don't have the same robust data sets, the cross channel attribution that's available for DSPs, that advertisers may have gotten used to when they're thinking about retargeting. Campaigns or being able to tie the attribution of a digital out of home ad to a mobile device, those things aren't available with retail media networks. And because the measurement, even for attribution, changes from one network to the other.There's not really an apples to apples comparison that you're being able to make from an ROI perspective.
With that being said, they do have closer ties to understand how inventory is looking from their supply chain. Right. And one of the big gripes about retail media networks is that there is a pay to play perspective as it pertains to end caps and in-store experiences. Advertisers and brands are really looking at Walmart collectively, both on what they're doing on the retail media network and what they're doing in stores. So there is more synergy that's needed between sales and marketing teams, which is both an opportunity and a threat a little bit to retail media networks.It does make it harder to sometimes justify high minimums that are needed to be able to get into, with any relevance, into some of these storefronts. But it does offer opportunities for efficiencies, for targeting advertising where there's a lot of inventory, or being able to pull back on places where you don't have as much inventory in stores.
So I think there's a lot of learning curve still for brands to understand this is not going to operate the same way that a DSP will and it's going to need a lot more synergy between the sales teams.
Elise: So staying in that same vein of accountability, addressability, as well as being able to attribute success to your campaigns, I want to take a little bit higher look at performance media as a whole.
Something that we talked about for 2023 is that we felt that there were going to be shifting expectations of, first of all, what performance media even is, but also how marketing teams are able to show that accountability to their marketing budget so that they're able to at least maintain those budgets, if not grow them. So can you talk a little bit about how you've seen that play out in 2023 with the increased pressures of economic uncertainty and all that comes with that? And I'd also love to get in a little bit early with a prediction for 2024 if you predict that we'll continue to have that increased scrutiny and that shifting expectation.
Rya: I do think there's been more of a blend between performance, what would have been considered performance marketing, and more awareness and branding tactics.
Many more of our advertisers are talking about those at the same time, they're really looking at a full funnel approach. We just got some results from one of our brands that really did look at awareness, favorability, sales and recommendation over a three year period all in one same snapshot. So I definitely see brands understanding the long term value that branding and awareness and favorability has to increasing customer trust and ultimately bringing more immediate and long term sales.So that's really exciting to see that there's not this Chinese wall between what a performance marketing campaign is and what a branding campaign is. That is something we're going to continue to see. And one of the reasons could be that that was able to come forth is one prediction that a lot of people made last year, that didn't end up being correct, was that we were going to go into a recession.
Now, is that a laggard that we're going to go into a recession in 2024? We'll see. But the economy has been a lot more resilient and, consumer spending in particular, has been a lot more resilient than I think a lot of brands suspected and prepared for. And that's putting some pressure off of CMOs that need to do more with less. And maybe you're going to have some space to have some more long term thinking.
Now, 2024 is going to be a challenging year. There's certainly a lot of geopolitical challenges that are going to potentially take us off course economically. But from the marketing and advertising perspective, I do think we're going to see more consolidation between that performance and awareness thinking and a much more holistic, ecosystem-driven approach, something that we've really been talking a lot about. How do we measure and keep accountable everything that, whether it's a paid search ad to a 30-second video, we're really being able to see that blend of accountability, and we're seeing that across a number of verticals and advertisers, from financial services to nonprofits, all the way to CPGs and QSRs.
Elise: And going back to what you were saying earlier, I think we'll never lose the appeal of being able to show clear ROI from cookie-based targeting or cookie-based marketing and having that attribution be super clear. But I think everyone's kind of accepting that the longer performance play is going to have to become critical, especially as cookie deprecation could happen as early as 2024, and the digital landscape is becoming more complex than ever. And the easy buttons of the past, the easy buttons, quote unquote, are not really present any longer. I think one place where that's more true now than ever is the social media landscape. So the last trend or prediction that we had for 2023 that I want to begin to touch on a little bit here, is the shifting complexity of that social landscape. When we were speaking last year, Musk had just taken over Twitter. Obviously, that has, well, I should say not Twitter any longer. It's now X.
And we were beginning to see the shifts of regulation across Meta and increased scrutiny on whether TikTok would even exist in the United States or not come this time in 2023. So would you want to chat a little bit more about the complexities of advertising on social going into 2024 and thinking back on all those changes of 2023 and how advertisers have had to adapt to all those shifting changes?
Ryan: Yeah, certainly. So this wasn't an explicit prediction that I made last year, but I am surprised at how calm the waters actually are with social, considering how choppy things are with X right now.And I say that because you take a look at TikTok, which had a lot of headwinds on regulation, I think the state of Montana had outlawed that. That's not up in front and center in the news right now, and TikTok seems to be thriving. Then you take a look at Meta, who has had a record breaking quarter, who has demonstrated attributable ROI to advertisers for the first time in quite a while.
There's a lot of strength that, at least in the headwinds that I'm seeing, in the tailwinds that we're seeing from Meta and Facebook and Instagram that are certainly surprising. So if you take what happened with X out of the picture, I think social media actually has an interesting equilibrium right now that certainly is surprising. And I think that going to 2024, I suspect we'll see a little bit more of that.
I think advertisers are going to want to lean into walled gardens when we're looking at cookie deprecation. So playing into the Amazons and Googles and Meta’s of the world is a very safe, familiar place that is going to allow them to transact in ways that they're comfortable with and that are showing results for e-commerce brands in particular.
I was at a happy hour talking to several e-commerce CEOs that are adjusting more budget to Meta and Facebook, and I know that they have a pulse on exactly what is moving the needle for them. So that's not a marketing spin, this is practitioners that are doing that. So that's certainly probably different than what I would have said a year ago.But the stars are aligning pretty well, in particular with the decline of X for Meta specifically.
Elise: So now we've opened the door to thinking about 2024, and you've already brought up the importance of these social networks, or wall gardens really in particular, as we look at cookie deprecation and things like that, what are some other big trends you're expecting or big news stories that you're expecting for 2024, which is going to be here in the not so distant future?
Ryan: I have several. One that we've been starting to talk about for a long time, but really have honed in on is this movement towards niche marketing and in a way. That's brands trying to play it safe a little bit, make sure they really talk to their core base customer really intelligently and very specifically, and try not to be everything to everyone. There's still a lot of residual effect of the Bud Light controversy for brands.Generally that still maybe has plateaued, but there's billions of dollars of loss from the way that that was handled and that scares a lot of CEOs that are going to be encouraging marketers to play it safe a little bit. It's safer for them to talk to niche audiences. It's safer for them to play in channels that they're familiar with and to be a little more close to the vest, especially as we're running into a presidential election year in 2024.
There's certainly, I think, going to be fewer CMOs that are going to try to do cause marketing for better or for worse. I think you're going to see a lot more conservatism as far as the chances that brands are going to be wanting to take, especially those multinational, bigger shops. That leaves an opportunity for brands that do want to speak to a passionate, polarized audience in a specific way, right? That there may be an authenticity gap when you're trying to be a little bit too vanilla. I think there's going to be opportunities for smaller, nimbler brands to be a little bit more bold, really lean into the zeitgeist of some of the conflict and challenges that we're going to be seeing coming into a challenging election year.
Elise: Well, let me ask you this, Ryan. Do you think that this trend towards more niche communities is being driven by kind of this proliferating, creator based economy, or this influencer based economy that has gained a lot of traction over the last few years? Do you think it's Gen Z that is demanding more authenticity and a lot more genuinity from brands? Or is it just the shifting expectations of a more personalized digital landscape? Where do you think a lot of this movement is coming from?
Ryan: It comes from the opportunity to speak to specific audiences through things like influencer and content marketing, personalization that's available on digital. But that's almost an expectation now that consumers have. This isn't new, right? There's been a shift towards more personalized niche marketing for ten years now at least. So this is not - I don't think it's necessarily just Gen Z that's demanding that. I do think millennials and Gen X are also wanting to be spoken to in align with brands that have similar values.
Another part of it, too, is the disintegration of mass media.Maybe disintegration is a little bit of a strong word, but there's a lot of headwinds in linear TV. There's also a lot of headwinds in streaming television, too. Linear, that had the big challenge between Charter and Disney, the headlines were saying that was the final throes of linear, trying to be able to muscle their way into a negotiation. You saw the strikes in Hollywood. That had a lot to do with a changing business model for streaming and with artificial intelligence that I know we'll be getting into momentarily.
Linear is not - you were talking about the easy buttons earlier, Elise - linear television is no longer an easy button to be able to reach a broad audience with one stroke. At the same time, streaming is also not necessarily on strong footing either. For the Disney's and the creatives of the world to be able to put forth great content there from an advertising perspective, the delivery of streaming still leaves a lot to be desired in the way that ads appear. The targeting that's available and the repetition that you see with the same frequency being able to be shown or no ad being shown at all, right? Which there's blocks of time that just aren't even being filled in. Streaming television generally, whether it's from linear or streaming, has a lot of challenges, both in the audiences and attention that is given to those and in the delivery and execution of advertising experiences. Right? Affluent audiences have blocked ads on the majority of the streaming content that they're getting, whether that's on YouTube, Premium, Netflix. HBO does have an ad supported model but the affluent audience is skipping that same with Spotify. Right?
So being able to, as we move to a digital first execution in a digital first world, being able to find those affluent audiences becomes more challenging.
I think that's part of it, too - is even having the opportunity to speak to who you're wanting to in an environment that captures full attention.
Elise: So I think something that we've seen really build up over the last few years, but I'm feeling it even in my own household. It's how many different streaming services there are. And if you have shows that you enjoy watching, they're very isolated to only being able to be seen on Hulu, or only able to be seen on Paramount. And to your point, even myself, as an advertising practitioner, oftentimes choose the ad free version, but obviously that gets more and more expensive as you add different streaming services. So do you think that these affluent communities will continue to invest those extra dollars to make sure that they are continuing to be in an ad free environment, or is there going to be a little bit more acceptance of ad supported environments to be able to have the proliferation of the ten different streaming services, to have access to content at your fingertips at all times, and kind of spinning off of that, I'd also be curious to hear your thoughts on the world of ad-free social that is beginning to show up a lot more in news headlines and how they are similar or different from the world of streaming.
Ryan: Well, let's tackle the streaming first. I don't see a future where there's ten competing streaming services that have a 10th of the quality content that people want. There is going to be consolidation. It's a complicated business model for - let's use Disney, seems like the most obvious example, right? Very complicated business model. But you see some type of technology gap there that an Apple could fill. Right? So in knowing how large the buying powers of the Apples and the Googles and the Amazons of the world and their forays into content - remember Pixar was first brought to this world from Apple and then was purchased by Disney. Right? I definitely think that there's going to be some tech players that are already making a lot of inroads with content. That is a natural place where you would think you would be able to see consolidation. The FTC may run rampant with any merger between an Apple and a Disney, but I don't see Paramount being able to compete for your attention and ad dollars next to a Crackle, next to a Roku, next to YouTube Television, next to YouTube's standard offering, next to Netflix.
There's going to be some consolidation here. I'm not predicting that happens in 2024. And I also don't necessarily think there's going to be a big lean in yet into ad free social, at least not amongst 90% of people. We're so trained to getting free social and having that ad experience that social advertising is probably the easiest to avoid and to skip. And I don't see necessarily Gen Z signing up to get ad free social. At least through 2024. If there does become regulation against a tech in 2025 or you start to see some consolidation, maybe if you see Meta buying one of these content companies that we were talking about here, and there is a true integration between the technology and the social media platforms and the traditional content and linear television providers. Maybe there is going to be someplace where there's going to be more subscription models, but the dollars have to come somewhere.
Somebody that I've looked up to for a long time has been a gentleman named Nate Silver. He's owned 538.com.He was a professional poker player the same time that I was. Similar trajectory. He sold 538 to ABC Disney, was with them for about ten years and they gutted 538. There's only 20% of the staff left there. He has left there now and he's going to Substack and is going to monetize his Substack, right, in a subscription model. So I have a feeling that the truth is going to hide behind a paywall. That there's going to be a lot more subscriptions coming, whether that happens to social media in 2024 or not, I doubt it. But I do see more content creators demanding that you pay for access to their content, whether that's a Disney or a Nate Silver. That's certainly a future that we're headed towards.
Elise: So thinking about content, I mean, think content is king is a phrase we've heard over and over over the last few years in particular. But I think that's probably going to be especially true with all that you just mentioned for 2024. We talk a little bit about where you see long and short form content going. And in particular, I'd love to hear your take on how generative AI will influence that landscape, for better or for worse.
Ryan: Well, let's tackle those in two different parts. Right. Looking at content, one of the things I was mentioning before was affluent audience is paying to get around content. A place where affluent audiences are living, that you are able to reach them with advertising today? Podcasts, influencer networks, custom content partnerships that have a more native and organic feel. I think those are places that are underutilized that advertisers really should be taking a serious look into. Not 2-3% of their budget if they have a little bit extra to throw to voiceover from a podcast host, but potentially as a big awareness play for them. This isn't just for the website development companies like SquareSpace. Podcast is a place that is really aligning with a lot of long form, deeper content, that's where you're getting a lot of concentration, you're getting a lot of attention, and where you know that as a consumer, that you're supporting somebody who's giving a lot of valuable information, a lot of themselves to you. You almost feel an obligation to listen to the voiceovers and the readovers on podcasts. So I do think those places are very adjacent to influencers, a place that's going to have a lot of trust that you're going to be able to have some breakthrough and should become a larger focus.
And long form content, I don't think gets upended quite as much from artificial intelligence.There is a deepness that's needed and authenticity that generative AI isn't able to use. But generative AI clearly is making a marked change to the marketing community. I think that the adoption is probably going about at the rate that I thought that it would, given how big of a bomb it was in November 2022 to have generative AI come onto the scene the way that it has. Coegi has been so well positioned to be able to handle this because we've been doing artificial intelligence and machine learning to buy media the entirety of our existence. Right?
The change with Generative AI is really about automation of certain tasks, but certainly around the creative process as well. And if you look at your feed within social or within Instagram or within LinkedIn, about 10% to 20% of the content that you're seeing has some sort of artificial intelligence that is at least starting the brainstorm of that. And again, marketers are being able to put their spin on that. I don't think anybody is copy and pasting a result that comes from Bard or Chat GPT and making it into a headline on social, but it certainly is automating quite a bit of mundane, repetitive tasks.
Amara's law says that when a new disruptive technology emerges, that predictions on the changes that that technology make are always overstated in the short term, but are usually understated in the long term, and that's certainly, I think, true with generative AI. That was the headline for four straight months in any major news organization as it pertained to technology. But the adoption of that hasn't happened as quickly as the prognosticators would have thought.
But that being said, this probably is the biggest technology shift that I've seen in the last ten years. The opportunities for people to be able to go into Midjourney and put in a prompt and to create an image already are having some big effects on the way that we conduct business.
You can set up an Etsy store and create templates for wedding invitations in 30 seconds and be able to sell those as digital assets for $3 a pop and people are making hundreds of thousands of dollars doing that. So this may challenge Amara's viewpoint to see how fast and substantial that change comes to. But in terms of marketers, and certainly in terms of regulated industries, that's a lot of what Coegi handles. We're very trepidatious in being able to ensure that we're using customer data in the right way, using our clients data in the right way, and not putting guardrails on how we're going to leverage and what data we're putting into generative AI tools, while understanding that there are clear efficiencies that we're able to bring to bear that we already have been for years and years through machine learning and artificial intelligence for technology.
Elise: And I would say that the general sense I've gotten from most of the marketers I've spoken to about generative AI is there's quiet excitement, but also a lot of caution, a lot of protection of the skills that have been built up by marketers over the years, and the fear that non marketing practitioners will dismiss the amount of work and care that the human eye can bring to the table with marketing collateral and marketing processes.
There's fear that that will be kind of swept away by generative AI. And I certainly don't think that the tools are there yet to be able to just replace the human in the process.
I'd love for you to chat just a little bit about how in 2024, you think we can marry kind of those creative processes that generative AI can simplify and maybe helps eliminate some inherent biases that humans can bring to the table, but also the importance of weaving in kind of that human intuition and skill that helps keep it grounded in reality to an extent.
Ryan: So the bar for creative content in 2023 and in 2024 is probably about as low as it's been since I've been in the industry, to be honest. Part of that is just the volume of content that is needed to be able to fill the airwaves, so to speak, in how many disparate places that people are viewing advertising. It was hard to make one 30-second campaign in the 1960s. It's really hard to make 25 iterations of that to fit influencer and podcasts and banner ads and mobile and 15 different social platforms, right? So because of that, there has been a spray and pray approach, and the quality of the content that users have gotten, I think has gotten diluted.
So to me, when you look at generative AI tools, can that replace a lot of the low quality content that has been produced by our industry for a long time? Absolutely. Will it replace great? Absolutely not. Will it help inform elements of what may make an advertising piece great? Possibly. And if used in the right way, maybe there's a lot of ideation that can come to bear.
But our industry needs to be able to have a much higher bar for the type of content that is being produced. That's the problem. So for me, I take a look at where the bar needs to be. And if we're going to meet that bar as an industry. The campaigns that we influence truly differentiate in a sea of sameness, in a sea of, what, 14,000 ads that a human sees every week. What is breakthrough, what is differentiated, what is great has changed, whether that idea comes from generative AI or from Don Draper getting paid $3 million to sit in Madison Avenue, right?
That's the bar that we need to look at and if Generative AI does it better, then you weren't doing very well to begin with, to be honest. So, hopefully this is a wake up call to a number of marketers that they need to step up, that they're going to need to think about the long term and think about their work in a different way, think about what they're able to do to really bring quality to an industry that is not seen as having a whole lot of trust amongst consumers, that is seen of producing a lot of noise pollution, and rightfully so. How are we going to use this as a Clarion call to be able to do better?
Elise: Ryan, something I really appreciate about our conversation this year about 2024 trends, is that I feel like you've created an ecosystem of trends in itself. I feel like there is a lot of interconnectivity between the three things that you've called out here, which is thinking about these niche communities and being able to appeal to them. And the way we build that appeal is through really high quality content. And whether that comes from an idea produced by Chat GPT or by the Don Drapers of the world does not matter as long as we can all be willing and open to accepting the best idea that's being put out. And then where that gets placed is a huge factor in that - thinking about where these niche communities are most engaged. Maybe it's some on linear, but maybe it's a lot of tens of hundreds of other platforms that people are engaged with. So I think those are all great insights that marketers can begin to weave together when putting together their 2024 strategy. But to wrap up, I'd love to hear the key takeaway that you would like listeners to take away from this conversation.
I think the key takeaway is to think about and to focus in on who your core niche customer is and try to be great for them and try to show up in a great way every place that they may be. You need to still have an omnichannel approach. You need to have a very strong sense of who you are as a brand, what your core customer cares about, and deliver a substantial message to them that's going to meet the bar, the increasingly high bar of what they expect from a modern brand.
Elise: All right, well, I think that's a perfect place to stop. Ryan, thank you so much for your time today, and I hope our listeners were listening intently so that they can apply a lot of these pieces of thinking to their 2024 strategies.
Ryan: It's going to be an interesting year in 2024. I'm excited for it. There's a lot of change in the air, and we're going to have to be nimble and focused as an industry to be able to best react.
