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Challengers have rarely come close to competing with Facebook and Google for any meaningful length of time. And regulatory and government bodies' actions have been so far behind technologically, they haven’t exactly been able to hugely impact.
But could this change? Let’s look at why 2023 may finally be the year we see the start of seismic shifts.
The past 10 years have seen several emerging platforms looking to gain market share. Most have failed to sustain a user base long enough to develop an ad platform that can pay advertisers back with meaningful results. The ones that had the most potential were either copied (Snapchat) or bought out (Instagram & YouTube).
TikTok: a serious challenger but with challenges of its own
TikTok's unprecedented growth has seen it move from an emerging platform to playing a huge part in influencing culture and user behaviour amongst a younger, but ever-maturing audience base. Previous challenger platforms never hit the user base or platform engagement levels that TikTok has achieved. It reached its one billion users in half the time it took Facebook and now commands more time per user than any other app. We are even seeing new purchase behaviours emerging, with many young people using TikTok to conduct research instead of Google.
Google and Meta are reacting in similar ways, using their old blueprint of taking what’s working and squeezing out the competition. So far Reels, and even more so, YouTube shorts, are failing to make a dent in Tikotok’s momentum. Google is making moves to make its results pages more visual, but this isn’t addressing new ways users consume material.
But TikTok has a long way to go if it wants to compete with Meta or Google for lower funnel e-commerce and lead generation budgets. Because it’s by nature such an engaging, fast-paced platform, it’s extremely difficult for many brands to cut through the noise. Of course, there are exceptions, but this still leaves TikTok with an uphill struggle building algorithms clever enough to drag user attention away from the platform and to a brand’s site.
We also see many brands terrified to embrace TikTok best practices, as many of them are counterintuitive, or they need help knowing where to begin with approaching content on the platform.
Several brands we work with that embrace user generated content are seeing excellent results on the platform. However, brands that opt for content that technically fits a creative spec but is based on old, worn-out brand guidelines are struggling.
Brands are right to not be flippant with the identity that they’ve worked hard to build over years or decades, but many are facing a tough decision around how to re-evaluate their branding in a new world context. This ultimately will mean brands may have to let go of some of the polished veneers which no longer captivate or hook new, younger audiences
Is TikTok the only serious challenger?
Twitter, if it doesn’t implode, will take a while to gain the same traction TikTok currently has. In-app engagement is currently through the roof though, so it’s worth keeping an eye on looking ahead to 2024 and beyond.
BeReal may already be losing momentum after being the new hot property in the latter half of this year and mainstays like Snapchat and Linkedin don’t match up to the scale and performance of Meta and Google.
Programmatic is the next biggest threat, continuing to grow at a steady rate as areas like connected TV, and audio continue to boom, but this places more of a challenge to offline budgets than social or search.
Regulatory action will provide shake-ups
Meta and Google have a litany of past and ongoing scrutiny from regulators. Anti-trust regulations have so far failed to cause any major concerns, but privacy regulation is having a much more visible impact on the industry, largely impacting every platform in the same way.
There are, however, a few big shake-ups on the horizon. The most notable is the EU’s Digital Marketing Act, which will give regulators keys to some of tech leaders’ black boxes. This impact won’t be immediate, with designations for ‘gatekeepers’ being made by September 2023, with the deadline to comply with any new requirements being March 2024.
The Act currently only applies to how these businesses operate within the EU, and it remains unclear if tech platforms will split their business models geographically, or adopt the changes globally. This could lead to a very fragmented digital landscape, or the beginnings of a more standardised global approach.
It does not help that governments are not all following suit either. The UK looks set to u-turn on GDPR in favour of a more ‘business friendly’ model, India is reviewing a bill to allow China levels of state surveillance and the USA is passing an executive order that (at least temporarily) will allow businesses to pass EU data to the US again.
M&A will be scrutinised more than ever
Amid all this uncertainty, mergers and acquisitions are undergoing far more scrutiny than ever. This is likely due to regulatory bodies being able to more easily apply existing frameworks for evaluation, rather than tackling new digital technologies. It looks increasingly unlikely we will see platforms like Meta and Google stamp out the competition in this manner, as they once did with YouTube and Instagram.
Despite heightened activity across many areas, the fragmented global approach means that for early next year at least, nothing looks set to change. Looming changes however mean 2024 looks set to cause the biggest shake-up in the industry we’ve seen in a long time. It will be crucial that advertisers keep a very close eye on developments and begin discussions around prioritising resources to allow for agility when changes do eventually get implemented.
Getting ahead of cookie changes
We have already seen iOS 14.5 having a big impact on performance amongst Meta campaigns and they look to be further impacted in smaller areas, such as the removal of special ads lookalikes earlier this year.
The best brands and advertisers are leaning into additional measurement solutions like marketing mix modelling and multi-touch attribution for a more holistic understanding of what advertising works best. Others rely on tools like Google Analytics which commonly plays heavily into Google Ads campaigns’ favour when it comes to attribution
One subtle, but significant change within GA 4 is the standardisation of certain urchin track module parameters, removing the ability to customise channel groupings. In theory, this gives Google standardised data across the industry. Insight no other competitor will have. This, coupled with Google being a market leader in almost every aspect of the digital buying process, gives them an undeniable advantage with any upcoming changes.
When the cookie finally gets deprecated, Meta will face the same challenges as every other advertiser besides Google. The most likely change would be Google making its position even stronger whilst its rivals play catch up with industry changes.
The metaverse is still emerging
It’s been just over a year since Mark Zuckerberg announced the shift in focus towards the metaverse. Has enough changed to make this a priority for advertisers in 2023?
User adoption of these new spaces isn’t taking off as quickly as Meta may have hoped. And right now, tech capabilities are still emerging, making it an expensive option. This will likely prove too big a barrier for entry for most advertisers, at least until solutions become more widely available, or until user usage reaches a critical mass to deem it a necessity.
Marketing beyond 2023 – but act now
Overall 2023 represents the beginnings of some potentially seismic shifts in the industry. The status quo isn’t set to shift too dramatically at the beginning of the year.
But regulations, channels and new tech will undoubtedly begin playing a bigger factor moving into 2024 and beyond. So it will be ever more important to closely monitor industry news and begin planning for various changes that may come into play.
Alex Coyle
Account Director
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