As we approach years’ end, there’s some uncertainty in the air.

Supply chains are still recovering from a global pandemic and the war in Ukraine is still on. There’s political unrest and inflation pressure pretty much everywhere. That environment shapes IAB’s predictions for 2023.

From a topline perspective, marketers will demand flexibility, fluidity and frugality. Budgets will likely stay controlled, flexible and fluid throughout the coming year, and competition for those dollars will be fierce. In addition, we see a number of additional trends for 2023:

Retail media gets real

Amazon has built a $31 billion dollar business delivering ads instead of packages. Pundits place the overall retail media market to be well north of $50 billion this year, with significant double-digit growth to follow in 2023.

The ability to build more powerful retail media networks offering higher-margin revenue streams than their core business has become a factor in M&A. The Kroger/Albertsons merger, as just one example, would reach about 85 million households nationwide, rivaling the reach of Walmart.

Competition is heating up across other industry verticals, especially travel/hospitality. Marriott International announced their Travel Media Network, powered by Yahoo. Watch for more data partnerships between retail media networks and publishers, following fast on the heels of partnerships such as Kroger and Roku, and Walmart and Paramount.

A question for 2023 is: Does retail media networks as a name survive? When do they just become another media channel or arrow in a marketer’s quiver?

2023 is the year of attention

After 60+ years of looking at reach, frequency, ratings points and incrementality—the game is changing.  Increasingly marketers and agencies are looking beyond the “opportunity to see” and onto attention metrics, business outcomes, sales and sales surrogates. In the new year, attention will get the attention it deserves.

The creator economy will continue to challenge the Hollywood economy

The creator economy is redefining what is must-see TV. YouTube accounts for more than 50% of ad-supported streaming watch time on connected TVs among people ages 18 and up. Where once brands had to buy TV spots in the Hollywood economy to generate awareness, there’s now a serious alternative economic engine that arguably has equal or greater power among consumers.

How powerful is that engine, really? As just one example, consider Forbes’ Top 50 creator Charli D'Amelio. Her family now owns a consumer product company (D’Amelio Brands) valued at $100 million as a pre-revenue, pre-employee and pre-product company, not to mention a $25 million venture capital fund to back nascent companies in everything from insurtech to consumer brands.

Podcasting’s flexibility will accelerate already high growth

U.S. podcast ad spending—which already accounts for nearly one-third of digital audio services ad spending and is projected to surpass $2 billion in 2023—might grow even faster. Dynamic ad insertion, enhancements to transcription technology and emerging solutions from IAB and IAB Tech Lab to support brand safety and suitability make it an even more attractive and flexible medium.  

The currency conundrum continues

While it’s clear that Nielsen alone will no longer be the sole video measurement currency, it’s still unclear which of the many multiple currencies will eventually become part of a widely embraced industry toolkit. Expect greater clarity to come in 2023 as the results of numerous tests come to light. We believe the industry will settle on 2-3 primary providers.

Forget the hype; the metaverse will be a commerce platform

No set of predictions would be complete without reference to the blurring lines between the physical and the digital … so-called “phygital.” According to Gartner, 25% of people will spend at least one hour in the metaverse daily by 2026—and the No. 1 thing consumers are interested in doing when they get there is shopping. It’s not just for Gen Z, either: nearly half of baby boomers are aware of the metaverse.

More walls equate to a greater need for standards

Walled gardens are growing in video, retail, audio and gaming. The problem of so many walls becomes obvious when you realize the industry has already lost more than half of the data signals from third-party identifiers due to steps taken by Apple, Firefox and others.  IAB Tech Lab has already begun work on developing new standards for interoperability—critically important, since measurement itself is all but certain to get more difficult.

Polarization and populism drive privacy

In the current political environment, one of the few issues where there is alignment is anti-tech and anti-advertising sentiment. With privacy as a populist issue, there is the potential for dozens of new state laws. Five are already on the books for 2023. Coupled with the lack of federal legislation, this makes running a business or offering a product or service on the open internet harder and more expensive. What’s more, enforcement of privacy laws is getting more aggressive; Sephora recently paid $1.2 million in penalties for alleged violations related to its advertising practices.

Sustainability: you need more than purpose—you need proof

Sustainable investments are more important than ever to investors and have reached $4 trillion. But advertisers who hope to win consumer loyalty with adjectives instead of action need to be wary. The FTC is filing suits against greenwashing efforts, as the advertising industry continues to gear up to do our part. Expect sustainability and responsibility to be front and center in 2023.

The opportunities and challenges facing the industry in 2023 are different than we’ve faced in years past, but the answer remains the same. Everyone across the digital ecosystem needs to rise to meet the demands of the future, and that always works best when the industry comes together.