How tech innovations like AI and AR/VR will change advertising in 2023

Sauer forecasts that the headline at the end of 2023 won’t be about the introduction of new immersive technologies, but about the story of the continued work of the thought leaders in the space, with the rest of the industry playing catch-up.

The ROI of AI (and other tech)

For many agencies, despite operating during trying economic times, the cost of not investing in new technology is greater than the price of adoption.

“With many recruitment budgets slashed, IT budgets don’t always go the same way because the cost of delaying technology implementations can be greater than the cost of investment,” said Julia Linehan, CEO and founder of The Digital Voice. “AI, for instance, has come on in leaps and bounds and can reduce manual processes and budget waste. Meanwhile, disruptive programmatic ad buying is helping to open the doors to premium advertising for all advertisers, democratizing access to high-quality qualified traffic at wholesale prices for merchants without the deep pockets of household names.”

Linehan also pointed to the growth of CTV in 2023, with Netflix adopting programmatic advertising in recent months, allowing brands to track users from their sofas.

“Ultimately, embracing and growing from necessary change requires flexibility and a willingness to let go of old ways of operating,” Linehan said. “And it’s important always to marry technology capabilities closely with business goals and strategies, rather than rushing to technology for technology’s sake.”

But when that technology means cost savings and revenue growth—especially against the backdrop of a looming recession—the rush may be worthwhile, noted Adam Helfgott, founder and CEO of Madhive, the streaming TV infrastructure powering efforts for broadcasters such as Fox, Scripps and TEGNA.

“In times of economic uncertainty, the ad market starts to get squeezed and the focus is on efficiency,” he said. “To optimize spend on TV, we’re helping advertisers take a business outcome-based approach, similar to social platforms like Facebook and Instagram,” he noted. “This means mapping every dollar to a KPI, such as reach, awareness, website visits, app downloads and even sell-through.”

Helfgott also noted that unlike social, TV is often experienced on a shared device within a household, so you have to identify “who is on the couch.” That’s why panel data is having a moment because when you overlay it with automated content recognition (ACR), you can start to understand who is watching within the household, he said.

“Bridging the gap between panel and ACR data is going to be integral in the year ahead, as the entire TV industry tries to solve this ‘co-viewing’ problem and move beyond being just an awareness channel,” Helfgott said.

Creator content: Let’s get small

As brands find themselves needing to get increasingly creative with budgets, stretching spending as much as possible, the importance of creator-driven creativity has likewise grown.

“Right now, we see our clients leaning into creator marketing to help fuel efforts across paid, owned and earned,” said Tim Sovay, chief business development and partnerships officer at CreatorIQ, the influencer marketing platform powering efforts for advertisers like Unilever and AB InBev . “One of the big reasons for this is that creative content consistently outperforms traditional brand creative. Not to mention, it’s also more efficient to produce at scale.”

Sovay observed that once creator content is developed, real-time data analysis can enable an always-on approach to monitoring campaign impact, which gives teams insight into performance every step of the way.

“And forward-thinking technology like machine learning is optimizing campaign amplification by allocating ad spend behind creator-driven creative against business outcomes in real time,” he said.

Others point to the importance of micro-influencer content within this context of budget tightening, offering more accessible ways for brands to reach customers.

“With brands looking to do more with lower budgets, I see the rise of micro-influencer marketing emerging as a prominent tactic,” said Steven Blutstein, head of marketing at The Social Standard. “Brands will work less with celebrities and influencers with large followings and more with authentic customers, employees and fans for future content needs.”

Blutstein said that brands need a great deal of vertical video and will have fewer marketing dollars to get there.

While no one has a crystal ball, the future looks exciting to agency leaders like Brian Yamada, VMLY&R’s chief innovation officer, who sees the following three trends taking shape in the year ahead:

• Embedded AI. Yamada noted that walking the floors at CES 2023 recently, AI was everywhere, powering the experiences and seamless services. AI is embedded into the devices paired with evolving hardware and sensors to enable incredible new experiences. Detecting breathing abnormalities using connected stethoscopes, identifying intruders via AI analysis of Wi-Fi waves, driving autonomous baby strollers and much more. GANs and ChatGPT are accelerating AI into how we creatively concept and create. There will be an explosion of use cases across our industry.

• Spatial matters. Yamada observed that we’re moving from a 2D to a 3D world as we move into XR/AR/VR experiences that can be spatially aware and accurate. That’s been happening in select categories like furniture, to see exactly how a piece fits in your space. That will extend into more functional categories, so you won’t have to guess how the clothes or shoes fit. And it will extend into more creative spaces this year. There will be emerging tools like Google’s Geospatial API to drop experiences at a specific location and react to the space around it. The key question is, where does space and dimension matter to your customers?

• Metaverse shifts to utility, value. All the technologies powering the metaverse are getting better, faster, smaller, so it’s not going away—but will adapt. Following the cryptocrash, we’ll see an era of utility and access where brands focus on building community and value. And we’ll move away from the speculative era where brands rush in to explore and consumers come to get rich quick.

The future is fast approaching

Ultimately, the innovation that lies ahead in the coming year may look different from what we’re used to seeing. With a baseline now firmly established for the proliferation of artificial intelligence, we can likely expect progress to happen at an accelerated rate.

“Traditionally we are used to thinking and operating on a linear scale, a continuous progress in everything we do,” said Diederik Veelo, founder of Ambassadors and Lab & Cube. “But today it becomes more and more clear that what looked like linear progress was in fact just the lower end of an exponential curve. The effort it took us to go from A to B last year, will only take us six months this year.”

Veelo went on to ask where this leaves us in the advertising space. Veelo expects the first fully automated ads, unlocking scale and speed of iteration, allowing us to pull video scenes out of thin air with just a few prompts.

“Once that happens, the ad-serving platforms will get disrupted by ad-generating platforms,” ​​Veelo said. “By that time general AI will have passed the Turing test and we will have accepted it as a natural part of our society.”

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