After some tumultuous last couple of years, the digital industry is finally and gradually back on track.
According to Gartner 2022 CMO Spend and Strategy Survey, the marketing budget have mostly recovered, seeing an increase from 6.4% to 9.5% in overall revenue. In other words, close to a full recovery.
Which brings us to the question; where will all this go and will this recovery continue in 2023?
The Acceleration of Digital Transformation
When Covid-19 first swept through the world, all major cities across the globe went into lockdown; forcing their residents to stay at home for weeks and months. It was then that digital adoption and transformation were accelerated — to purchase groceries or meals, people had to fully depend on online shopping and cashless payments. While those who still had jobs adopted work from home and use video conference applications such as Zoom, or Skype to communicate.
Though the lockdown has been lifted and things are gradually returning back to how it was, digital transformation doesn’t seem like it will slow down. Instead, it is accelerating even faster. This is probably because most of us by now are used to doing things digitally, thus an increase in demand for a more stable and faster Internet connection, as well as digital content and services.
Because of this, many companies have accelerated their digital transformation plans to meet consumer and industry demands, modernising their strategies to be delivered in an omnichannel capacity and; in simpler terms, to deliver a seamless online experience to their customers — whether they shop online or brick-and-mortar.
According to Gartner, the top three investments in 2022 are:
- Campaign creation and management
- Brand strategy
- Marketing operation
Also, a report shows that 56% of the marketing budget is used for digital marketing, with social media being the most spent. Followed by social advertising, paid search and digital display.
However, it is important to remember that 44% of the marketing budget in 2022 will be spent on offline marketing channels, this means that in 2022, most companies will deliver and use hybrid marketing strategies. The reason behind companies using hybrid marketing is to stave off consumers’ digital fatigue.
For those unfamiliar with the term digital fatigue, the term only recently surfaced and it refers to the mental exhaustion individual experiences due to an intense amount of screen time.
Thus, companies are taking steps to help ensure their consumers would have reduced screen time to lower their mental fatigue. That is why most companies employ a hybrid marketing strategy, to ensure their loyal consumers get a rest from digital fatigue but can still get an update.
Where and How Will The Digital Industry Budget be Spend in 2023?
With digital transformation accelerated and increasing digital-centric behaviour among consumers, industry players are putting their money into investing in marketing technology solutions that will help optimise and automate their operations, to communicate more effectively with their customers across multiple channels in real-time optimise their marketing campaigns.
Hence, when going forward, it is expected marketing technology to focus on the deployment and use of artificial intelligence in various software applications. For example, one of the most used and well-known artificial intelligence in a software application is natural language processing (NPL), which is used to create more relevant and effective chatbots.
Virtual, augmented, and mixed reality are currently being adopted and deployed for various marketing strategies and business initiatives. One example is augmented reality (AR) being used for clothes, furniture and other products. Virtual reality (VR) is becoming more viable and widely used in the gaming industry. Game developers are slowly developing video games that can use VR technology, providing players with a more immersive experience.
Also, according to the CMO survey in 2022, there was a 37% increase in the number of companies investing in data analytics, while companies currently use AI or ML (Machine Learning) 12% of the time. It is projected that both AI and ML will triple to 38% in the three years.
Though advanced marketing technology is the major focus currently, it does not mean that it is the sole focus moving forward. Companies are not forgetting traditional marketing strategies such as brand strategy and activation; according to the Gartner survey, brand activation accounts for 10% of the marketing budget for 2022.
In addition, it is predicted that next year, 2023, companies should expect to allocate and increase their budget for digital marketing activities by 16%.
What and Where Are The Gaps?
Marketing data and analytics were identified as the top capabilities gap by 26% of chief marketing officers, followed by customer experience and management at 23% and marketing technology at 22%.
In general, chief marketing officers feel resource-challenged; 58% of the chief marketing officers report that their team lack the capabilities and tools to deliver their strategy in the coming new business world in 2023.
About 30% of marketers stated they are experiencing average-to-no returns on their marketing investments, which means they are likely to face funding issues in the future if they cannot show ROI.
And according to Forrester, buyers have a limited attention span to marketing messages, hence the difficulty in connecting with their audience. Furthermore, the recent worldwide pandemic that forced people to stay in their homes for weeks only accelerated digital fatigue. The reason why companies adopted hybrid marketing strategies as a prominent part of their plan and budget.
And 76% agree that digital engagement tactics are dropping, and 78% agree that traditional marketing strategies or analogue touchpoints have seen a performance boost.
Also, direct mail usage is predicted to increase next year, 2023, as companies work to streamline and make their touchpoints have cohesive engagement across different platforms, physical and digital. Though some have already started spending on direct mail; 64% of companies stated they had increased spending on direct mail. While the balance 69% mentioned they are expecting to spend more by next year.
Marketing Spending Across Industries
|IT & Business Services||5.9%||9.6%|
|Travel and Hospitality||5.4%||8.4%|
Investment to Increase Efficiency
As marketers ready themselves to head into a new business world in 2023, there are a few things that they believe will no doubt affect businesses; politics, public health, weather/climate changes and extreme economics. These things will disrupt and impact how businesses operate and market their products or services in 2023.
So to prepare for the mentioned events, brands and companies are expected to spend their budget on investing in marketing technologies that will help their business and marketing campaigns more efficiently, improve the performance and ROI of their marketing campaigns, and smooth customer-business communication using omnichannel capacity.
While business leaders believe there will be a capabilities gap in their team to execute digital marketing strategies; hybrid marketing strategies will allow them to leverage the best of digital and physical marketing strategies. What this means for businesses is that they can invest in both, not reducing the capabilities gap in their team but also ensuring meaningful and successful communication across all channels — in an omnichannel capacity.
However, it can be time and resource-intensive to train or hire a new talent if a team doesn’t have individuals with the required capabilities. Fortunately, you can look to MaaS to fill in the area that you are lacking. For example, if your team doesn’t have individuals that are experts in data-driven digital marketing such as SEO, you can contact and consult us at SEO Solutions to assist you. We will offer you data-drive tidbits during the free consultation session to help you get an idea of how to move forward with your marketing campaigns.
And if wondering which areas within the digital industry in Malaysia will be strengthened in 2023, you can find out about it here.