Agencies have seen record growth over the last two years but nothing is guaranteed. With an unstable stock market, high inflation and a looming energy crisis, brands are cutting budgets and looking for more effective means to get their messages out which could come at agency expense.
Yet, despite concerns about the economy, Magna still projects an increase in ad dollars for 2023, in its latest forecast. This spend will require strategic expertise, and agencies that succeed will need to show their value next year.
“Many experts are predicting a recession, and whether it happens or not, it’s better to be prepared,” says Damaune Journey, global chief growth officer at 72andSunny. “I think there are three critical steps to helping brands thrive in such environments. 1. Rely on and lean into close, committed agency partnerships. 2. Use strategic creativity to your advantage by redefining target markets in ways you can win. 3. Be bold in your creative executions.”
As brands have smaller budgets heading into the new year, agencies will be pitching themselves as strategic partners that help them earn a better return on investment amid tighter times.
“The agency world will prosper in 2023 when it does its thing and leads the way—not by replicating what a client’s superpowers are, but by complimenting them,” says Mick McCabe, global chief strategy officer at Ogilvy. “As the going gets tough next year, agencies indispensability will come from continuing to be tangibly and viscerally in touch with people and customers, deeply understanding their day-in-day-out lives and unleashing creativity in all its forms towards clients hunt for growth. That means the agencies that thrive will be sweating clients’ real business problems, and owning those problems, too—those that do will get imaginative on the answers, sprinting with diverse, cross-functional teams that make magnetic things. True agency and brand impact will be measured by who’s doing all of these things brilliantly and consistently.”
In 2023, brands will be looking for ways to prove their purpose and this could show up in looking for partners that share their values. Whether that means hiring a more diverse staff or partnering with agencies that are committed to fighting climate change, expect agencies to be having conversations with clients about how they are working for a more equitable and environmentally friendly world.
“What we also must consider as responsible digital marketers, is what carbon footprint is created when all these technologies are used at the same time and how the ROI calculation not only accounts for campaign performance, but also for proactive efforts to de-carbonize the marketing technology ecosystem that is often overused,” says Oleg Korenfeld, chief technology officer of WPP healthcare marketing agency CMI Media Group and Compas. “The byproduct of this process can be as bad as other more known factors that affect the global carbon footprint, such as coal and oil. Simplifying the tech stack and pushing everyone who is part of it to be more calculated about their technology and how it affects the overall execution is something I really want to focus on going into 2023.”
Digital investment has escalated rapidly since the pandemic, as consumers spend more time in digital channels. These below the line investments are often cheaper, more personalizable and deliver better ROI. Expect to see brands upping their investments in data in 2023 and agency partners supporting this strategy.
“As consumers settle into long-term, digital-first habits, two things have increased simultaneously: the value of consumer data signals and their awareness of how they are targeted,” says Lauren Hanrahan, CEO of Publicis’ Zenith Media agency. “This results in stronger negative responses to irrelevant advertising, and a wrong move based on poor data interpretation can result in alienation of consumers. At Zenith, our Data Strategy & Platforms (DPS) team works with data to find actionable insights, improving a client’s ability to connect with consumers and improving consumers’ digital experience.”
The metaverse will likely continue to be a hot topic among agencies in 2023 as they look to support and guide brands in these new territories. In 2022, holding companies including WPP and Publicis were among those that launched metaverse practices to deal with growing client demand to experiment in these virtual spaces. Publicis Groupe’s new metaverse and web3 trends report predicts that after a year of experimentation, in 2023 brands will take a multiverse approach to the metaverse, particularly as they look to reach Gen Z consumers.
“For most, 2022 was a year of learning. Establishing core goals, brands built relationships with consumers through virtual and blockchain-connected experiences,” says Keith Soljacich, head of innovation at Publicis Media. “In 2023, we expect to see continued growth and evolution as more of the biggest brands in the world launch their campaigns, using technology to create a seamless user experience. It’s going to be an exciting year.”
While metaverse will likely remain a place of engagement and not necessarily transactions next year, commerce will continue to be at the forefront as a revenue driver for brands. “Agencies will need to have both a product and services mindset to be able to support commerce in the future,” says Amy Lanzi, chief operating officer at Publicis Commerce. “Shoppers, as well as organizations, are complex and we can’t possibly keep up with all of the places consumers shop and ways platforms are transforming without using products to give us the intelligence needed to personalize experiences.”
In planning for next year, Laura Cona, chief growth officer at Wunderman Thompson North America, summarizes it up. “In the face of increasing business headwinds, CMOs are making deliberate choices around where, and with whom, they invest to inspire action and ROI,” she says. “They require partners who bring ambidexterity to flex with them from one brief, or year, to the next to catalyze growth. Partners who can assemble an all-star team to crush big, magnetic creative ideas and a specialist team to build tech, social and commerce experiences.”
