2023 wrap-up part two: Retail media and CTV soared as ad budgets tightened

For part two of my trip down 2023’s memory lane, I’m looking at the economic forces beyond our control, how they steered the course of ad tech and the areas of the industry that thrived despite turbulent conditions.

And, if you missed my recap on AI and big tech in part one, click here to catch up: Click Here

Economic uncertainty shrank budgets and pushed performance

The cost-of-living crisis, ongoing supply chain disruption, rising interest rates and inflation, labour shortages and strikes — it’s safe to say this has been an economically tumultuous year.

Despite a string of glory years and resilience during the pandemic, the tech world has not been immune from these economic shockwaves.

At the time of writing, layoffs in the industry have almost reached a quarter of a million, and their relentless pace means that milestone — for lack of a better word — has likely been passed by now.

The struggling economy has also resulted in a sharp slowdown in ad spend growth, with knock-on effects throughout the advertising supply chain and the technology companies that keep it running.

Brands and agencies have become increasingly performance-focused as they try and squeeze as much bang as possible out of a shrinking buck. Accurate measurement and attribution, along with direct audience access, have become top priorities.

Retail media networks, with their ability to connect brands directly to exclusive and price-conscious audiences, have been the big winners in this context as consumers abandon long-standing loyalties for brands that offer value or durability.

The supply side went from strength to strength

Retail media has been the star of the advertising show in 2023, and it’s hard to think of any major retailer that hasn’t launched its own platform by now. This year saw the seeds being planted for widespread off-site targeting as retailers incorporated unified ID solutions and data collaboration capabilities.

CTV has been the other winner of the year, continuing to benefit from the slow and inevitable transition from broadcast and cable infrastructure to streaming. Fragmentation remains the word of the day, dashing hopes of ubiquitous measurement, but big brands pour in regardless to capture TV audiences.

But the story we should pay attention to is not just the growth of these channels, but the ways in which they are crossing over with one another.

Streamers have the attention, but viewing history alone is a flimsy basis for audience segmentation. Purchase history, on the other hand, is gold for connecting audience and advertiser, but on-site retail media placements can’t match the big screen for attention.

Bring the two worlds together, and we see a mutually beneficial partnership that allows each platform to overcome its respective shortcomings. And as both offer services exclusively to logged-in authenticated users, it’s a best-case scenario for audience matching.

Partnerships so far have included Walmart and Roku, Kroger and Disney, and Sainsbury’s Nectar360 and Channel 4. Expect many more in the coming year.

Out in the wider web, frustrations with open programmatic’s complex and leaky pipelines have seen advertiser and agency interest gradually shift to curated marketplaces and direct connections with media owners.

It’s early days, and we won’t know how far the balance in power will shift until third-party cookies are finally history (fingers crossed 2024), but it seems that it is SSPs’ time to shine.

I couldn’t possibly include all the news and trends from 2023, so please let me know in the comments what stood out for you in what has been yet another challenging and exciting year for our industry.