Where Does the Marketing Industry Stand at the Midyear Point?

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July 18, 2023

Looking back at the first six months of the year, we are reminded of things that captured our attention at the time—in many cases, things that will continue to shape the marketing and eCommerce worlds for the foreseeable future. Here are a few.

amazon

The list of Amazon-related developments in recent months is a long one, making it difficult to single out the most significant story.

For one, it’s entirely possible that 2023 will be remembered as the year that Amazon truly embraced its advertising capabilities, especially in the realm of video ads. Although these capabilities predate the current year, the company is clearly in the process of increasing its investment in them. Areas of focus include Amazon DSP, a demand-side platform that helps advertisers build out comprehensive campaigns, and Amazon Marketing Cloud, which brings the latest tech to ad-related analytics.

Here at Compass, we were fortunate enough to receive a special look at these capabilities from Amazon Ads rep Peter Shin back in April.

other players

Although Amazon remains the dominant force in eCommerce, it’s not the only player in the game. The early part of 2023 saw serious growth for the eCommerce side of Walmart in particular. For example, the company’s Q1 share of online shopping searches increased over where it was a year earlier, while Amazon’s share decreased over the same period¹.

This Walmart success story reflects the company’s recent efforts to transform itself, at least partially, into something more than a physical chain where people go to buy relatively inexpensive groceries. Components of this digitally friendly strategy include click and collect, where orders are placed online or via app; Spark, a delivery service powered by gig workers; and, of course, the Walmart Marketplace, which hosts third-party sellers.

Look for these trends to continue into the months ahead—and note, Kroger is launching a similar initiative².

2022 proved to be a difficult year for agencies, as eCommerce platforms reached points of saturation and clients made cuts to advertising budgets. These challenges continued into 2023, but the story of Compass in the first half of the year was one of finding new ways to serve our clients.

Generational differences

Understanding what makes Generation Z’s digital habits and shopping preferences so different from older generations could be a full-time job. But at least one thing is clear: Gen Z is heavily geared toward digital buying. For example, in early 2023, 71% of adult Gen Z shoppers said they were likely to make purchases directly from Instagram—a number that dropped to a mere 40% when all adult shoppers were included³.

This, in turn, dovetails with an emerging trend that has been particularly evident on the reigning Gen Z social app of choice, TikTok: livestream shopping events. For older people who are unfamiliar with this phenomenon, imagine something like QVC or the Home Shopping Network, but streamed entirely on smartphones and speaking the language of the current generation.

Judging from these trends, an understanding of how to market through platforms like Instagram and TikTok will continue to be crucial for brands looking to capture an increasing base of younger consumers through social marketing.

AI

Now let’s address the elephant in the room. Artificial intelligence became a much more common topic of conversation toward the end of 2022 thanks to the launch of ChatGPT—but only as the new year gained steam did the extent of AI’s reach become clear. The controversial technology is changing everything about marketing, and every major platform is looking to capitalize on it in one way or another.

From an eCommerce standpoint, consider the fact that online shopping searches will increasingly occur with AI assistance. For example, Google has been experimenting with a Search Generative Experience (SGE) feature, which provides AI-generated snapshots of products—including up-to-date reviews, prices, and images—in response to searches⁴. It also embeds ads within these results⁵.

Then there are the effects of AI on full-service marketing agencies like Compass. Creative Director Maggie Stark notes concerns over the reliability of online sources from which AI tools pull content, as well as template-like visual results that often fail to match the unique branding made possible by human designers. That said, Stark still sees value in the tech, so long as it is harnessed with sufficient oversight.

“I don’t think we will get to the point where AI tools replace people,” she said, “but instead more and more professionals will need to evolve to be able to use them in their work.”

And speaking of Compass…

The agency perspective

“Advertising tactics, PDP layout, and even catalog management help differentiate our clients from their competitors—both other brands and third-party sellers of their items,” said Chief Digital Officer Julia Flood. “When profitability becomes an issue and advertising isn’t an option, we’ve found other ways to drive customers to the detail pages. When budgets shrink or other channels need more support, we’ve created more granular advertising plans to make the most of what we’re given.”

So, it is a spirit of innovation—not to mention the accompanying feelings of trepidation and excitement—with which we venture into the remaining months of 2023. We hope you will be along for the ride.

Sources

Arielle Feger, Walmart closes in on Amazon’s retail search lead as its ecommerce bets pay off, Insider Intelligence (April 17, 2023). https://content-na1.emarketer.com/walmart-closes-on-amazon-s-retail-search-lead-its-ecommerce-bets-pay-off
Sam Silverstein, Kroger sees e-commerce as future profit engine, Grocery Drive (March 16, 2023). https://www.grocerydive.com/news/kroger-sees-e-commerce-as-future-profit-engine/645201/
Sara Lebow, Gen Z prefers to spend its time on TikTok, but its money on Instagram, Insider Intelligence (June 26, 2023). https://content-na1.emarketer.com/gen-z-prefers-spend-time-tiktok-money-instagram
Elizabeth Reid, Supercharging Search with generative AI, Google (May 10, 2023). https://blog.google/products/search/generative-ai-search/
Jeremy Goldman, Google’s latest step into AI-powered advertising: Integrating ads into its conversational generative AI, Insider Intelligence (May 25, 2023). https://content-na1.emarketer.com/google-s-latest-step-ai-powered-advertising-integrating-ads-its-conversational-generative-ai

Contributors

julia flood

Chief Digital Officer

ERIC MILLER

Copywriter

Sam Paciello

Art Director

maggie stark

Creative Director

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POST TAGS: #COMPASSMARKETING, AMAZON, Amazon DSP, AMAZONADVERTISING, ECOMMERCE, GenerationZ, GenZ, Instagram, MARKETING, marketingagency, TikTok, Walmart, WalmartMarketplace

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