Yes, it is true that marketing is going to be horrible in 2023 because data offers a pretty bleak picture of the future of marketing, at least in the near term. But There’s Hope.
For instance, if the Federal Reserve keeps raising interest rates and corporations start to make cuts, we might enter a worldwide recession, especially in the area of advertising.
Just take a peek at the most recent earnings calls from major advertisers. Although YouTube declined by about 2%, Alphabet only marginally gained overall ad income. They are also witnessing significant backlash in certain significant industries. For instance, there has been a reduction in ad spending on cryptocurrency, mortgages, insurance, and even video games. For Meta, it’s much worse. Their user revenue average has decreased from $9.83 to $9.41.
Additionally, they said that their Q4 revenue, which is primarily comprised of advertising and ranges from $30 to $32.5 billion, was less than most analysts had anticipated.
While Pinterest increased 8% a year, which was higher than experts predicted, Snap had a similar story to the other online advertising platforms.
Nevertheless, it is reasonable to assume that the advertising business is experiencing a slowdown regardless of the platform you use to see it.
The marketing industry is going in a downward direction fast. I’m no economist, but most of it is related to external factors none of us can control… such as rising interest rates, supply chain issues, increases in oil and energy prices, issues with real estate across the world, and worst of all, war.
And when you have the S&P 500 down 18.67% it means companies have lost a lot of money… and I mean a lot.
Just think of it this way, the companies in the S&P 500 have a market capitalization of 30.12 trillion dollars.
In December of 2021, the S&P 500 had a market capitalization of 40.36 trillion dollars. That’s roughly a 10 trillion dollar loss.
To put it in perspective, if Apple, Amazon, Google, Facebook, and Microsoft didn’t exist that would only be 6.8 trillion dollars (based on today’s stock price).
When the market goes down, the value of which companies are worth goes down, which means companies cut back on spending. Marketing happens to be the first thing that gets cut in a bad economy.
And when the value of companies goes down, a lot of people’s net worth goes down. Just in America alone, 43% of the population owns stocks.
So, when people’s net worth goes down, eventually they start spending less. It’s already started to slow too… when you look at data from the first half of this year (inflation-adjusted) spending increased by 1.5% compared to 12% last year.
But what about marketing?
Here’s what’s interesting…
According to NP Digital, because they work with companies of all sizes we see data from both small and medium businesses as well as enterprises.
Plus we have offices and employees throughout the world such as in Canada, Brazil, Germany, India, Australia, etc… because we work with companies in multiple regions and help them with their global and local marketing campaigns.
That in combination with working closely with some of the big advertising platforms and having tools like Ubersuggest that tracks millions of domains we really see a lot of data and trends.
Here are the 3 main trends we are seeing (keep in mind the data below is from what we can see and track, as we don’t have data on the whole web or even a large fraction of it):
Trend #1: Ad costs are decreasing
Overall, the global costs for ads have been going down by 4%. Some industries like real estate have gone down much more, but with other industries like B2B SaaS, we haven’t seen much of a change with our clients as they optimize for lifetime value.
A lot of this is because businesses are cutting back on their spending in addition to many sectors such as real estate not having the same demand that they had a year ago.
Trend #2: Buyers aren’t converting at the same rate
We aren’t seeing conversion rates as high as they used to be. We’ve seen a drop of 7.13%.
Keep in mind that different websites have different conversion goals. Such as one website may focus on leads while another may focus on a signup or another may focus on a purchase.
Conversion rates are also affected by many other factors such as companies increasing prices due to inflation costs, shipping costs, and supply chain delays.
Or conversion rates being lower because some people aren’t spending as much because they may have lost their job.
Trend #3: Companies are fearful of the unknown
We are seeing some companies pulling back on their total marketing budget because they are afraid of what lies ahead.
But we are also seeing companies shift their budget to digital marketing because it is easier to track than let’s say traditional TV or radio advertising.
Now we don’t manage traditional budgets for our clients, but we handle the digital side. In a good or a bad economy, companies tend to spend on digital marketing (things like SEO, paid ads, email marketing, social media, etc) as long as it is profitable.
The silver lining in marketing
As I mentioned earlier, we see a lot of data. There’s a pattern that we have seen with the companies that have been growing this year (the ones we work with at least). To be clear, when I say growing, I mean companies that are generating more revenue and profit.
These companies are also taking advantage of the current economic climate to double down on their whole business, not just marketing, to gain more market share.
So, what are these growing companies doing in this economy?
- Conversion optimization – 83% of them have doubled down on conversion rate optimization. If you can get more of your visitors to convert into customers through copy, images, or products you can generate more sales. A great example of this is Legion which will grow around 40% this year mainly due to conversion rate optimization, while a lot of their D2C competitors are flat or declining.
- Influencer marketing – 49% have either doubled down on their influencer marketing budgets or started influencer marketing. Rates for influencer marketing have gone down. They can convert well too if you focus on micro-influencers that have your target audience. They tend to be both cheaper and generate more revenue. You just need thousands of them to really build scale (not hundreds).
- SEO – SEO is a long-term play, but it provides a massive ROI. Only 2% of the companies we work with that have grown this year have slowed down on their SEO efforts. 98% of them continued their current budgets or increased them when it comes to SEO.
- Global expansion – an easy way to generate more revenue is to add new regions to sell your products and services in. 19% of the winning companies we work with have expanded into new regions. This creates more revenue generation opportunities, and you’ll find that marketing is much cheaper in most regions compared to the U.S. or U.K. Sure you won’t generate as much revenue, but the ROI tends to be higher from what we are seeing.
- Email marketing – it’s rare that we work with a company that isn’t collecting emails or already doing email marketing. But what’s funny is companies assume that if you just send out promotional emails every once in a while, or a few educational ones… that’s considered email marketing. Sadly there is much more to it. For example, segmenting your lists and sending different campaigns to different people. Or optimizing your open and click rates. 77% of the companies we work with that grew this year doubled down on email marketing and fine-tuned their campaigns.
- Omnichannel marketing – there is multi-channel marketing and there is omnichannel marketing. 100% of the companies we worked with that grew focused on omnichannel marketing and continually expanded. What I mean by this is when a company uses omnichannel marketing, the channels work together and they are also using learnings from each channel to maximize others. Versus multi-channel marketing where each channel just sits in a silo. TikTok has been massive for ecommerce… and channels like Snap, Pinterest, Reddit, Bing or even Quora that people don’t really talk about have been effective too.
You can still grow even if the economy isn’t doing as you would like it to.
And even if you have significant challenges, as the mortgage sector does, you can still make a number of improvements that will position your business far better when the economy begins to rebound.
Start thinking creatively, in other words. Don’t spend all of your time reading the news, watching unnecessary videos on Tiktok, Youtube, spending all your time on church activities, While it’s a good idea for you to keep up with current events, the majority of your time should be spent thinking of methods to solve problems and develop yourself.
Check out my digital agency, Rabteq, if you want my team to assist you to grow your business at this time.
So, what are you seeing in this economy? let us know your opinion in the comment section below.