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1、Outlook for Advertising,Marketing and Data 2023:Clouds On The Horizon?Bruce Biegel,Senior Managing PartnerJanuary 18th,2023AboutWinterberry GroupA specialized management consultancy that offers more than two decades of experience and deep expertise in the intersecting disciplines of advertising,mark
2、eting,data,technology and commerce.Winterberry Group helps brands,publishers,marketing service providers,technology developers and information companiesplus the financial investors who support these organizationsunderstand emerging growth opportunities,create actionable strategies and increase their
3、 value and global impact.2The Evolving WG Spend Model 2019-20233Annually,WG evaluates its models to see what has changed or needs to be added.During the COVID period(2020-2022),the industry continued to undergo significant changes including the growth of new digital channels warranting inclusion and
4、 update.2023 Channel CoverageOffline MediaDigital MediaNew Digital Channels Added 2020-2023Linear TVDisplayCTVAddressable TVSearchGamingRadioEmail/SMSInfluencerNewspaperDigital Out-of-HomeAffiliateMagazineDigital RadioB2C Lead GenerationTraditional OutdoorDigital VideoDirect MailPaid SocialExperient
5、ial/SponsorshipIn-StoreJan,2019 Channel Coverage Offline MediaDigital MediaLinear TVDisplayAddressable TVSearchRadioEmail/SMSNewspaperDigital Out-of-HomeMagazineDigital RadioTraditional OutdoorDigital VideoDirect MailPaid SocialExperiential/SponsorshipIn-StoreNote:In 2019 several categories from the
6、 2018 model were consolidated,including Mobile moving into Display and Cinema into Digital Out-of-Home.Also removed from the 2019 model are the Teleservices,Lead Generation and Affiliate spend categories as data had not been updated for several spend cycles.Looking Back at 2022:A Tale of Two HalvesW
7、hy Did the Hyper Growth of 2021 Fizzle in 2022?5Inflation soared primarily driven by the supply sideInterest rates increased 7 separate times as the Federal Reserve fought to stem rising inflationEquity markets worst year since 2008-2009,mortgage rates stalled,housing market boom Unemployment stayed
8、 low,as the supply of workers remained constrainedFear of a recession came back into the conversation for 2H22 into 2023Consumers,faced with higher costs slowed spending growth,GDP growth slowsBenchmark:2x GDP GrowthEconomic and Geo-Political Headwinds Impact Marketing Growth Are We Heading Back to
9、The Old Normal?62.8%2.3%2.6%-1.5%5.7%2.0%0.2%6.0%5.2%4.0%-3.4%20.8%9.4%5.9%20020202120222023PUS Marketing Spend Growth Benchmarked to GDP Growth2020-2023PUS Advertising/Marketing Spend GrowthUS GDP GrowthForecastSource:Winterberry Group Spend Analysis(2023),US Bureau of Economic Analysis(
10、2023),Conference Board(2023)$376.6$363.8$439.7$480.8 20022US Annual Advertising and Marketing Spend2019 2022($BB)Review 2022:Its Not Where You Start But Where You End Market Expansion Slowed in the Second Half7Source:Winterberry Group Spend Analysis(2023)+20.8%-3.4%+9.4%Review 2022:As Usu
11、al More Spend Captured by Digital,But Offline Held On 8$222.7$183.7$195.4$203.5$154.0$180.1$244.3$277.3$376.6$363.8$439.7$480.820022Offline Marketing SpendOnline Marketing SpendUS Marketing Spend on Offline and Online Channels2019 2022($BB)CAGRs(2019-2022):-2.9%+21.7%+8.5%TOTALSource:Wint
12、erberry Group Spend Analysis(2023)Review 2022:Offline Growth,Powered by Political Ad Spend,Return of In-Person Shopping and ExperientialLinear TV$61.5Addressable TV$3.5Radio$12.2Newspaper$6.6Magazine$6.8Direct Mail$41.7Traditional Outdoor$.7.7Experiential/Sponsorship$17.3Shopper Marketing$22.3+13%+7
13、.7%+2.5%+2.5-5.6%-9.1%Source:Winterberry Group Spend Analysis(2023)+4.2%+1.6%US Offline Marketing Spend,2022($BB)Total:$203.5BB9+3.9%+24.3Review 2022:Direct Mail Volumes Increased,Cost Pressures Began to Abate,A Ramp in 1H22 Was Not Sustained Into Year End1081,413,57669,653,43972,191,81972,930,83720
14、022Direct Mail Volumes2019-2022Source:USPS(2022)+3.6%-14.4%+1.0%Review 2022:CTV and Video Out-Performed Through the Year,Yet Growth Decelerated in Most Online Channels11Email/SMS$6.0Display$15.4Digital Video$47.0Affiliate Network Fees$3.8Search$98.4Digital Out-of-Home$3.6Digital Audio(Rad
15、io/Podcasts)$6.1CTV$21.2Paid Social$60.0Video Game Advertising$5.2Influencer$5.9B2C Lead Generation$4.8+5.7%+6.5%+16.1%+15.0%+9.3%+46.5%+3.9%+2.4%Source:Winterberry Group Spend Analysis(2023)Note:Display refers to banner ads that appear on desktop;affiliate network fees exclude media and platform co
16、sts+13.5%+17.5%+9.4%+4.0%US Online Marketing Spend,2022($BB)Total:$277.3BB+27.9Review 2022:Digital Performance Media,Platform Transformation Analytic Use Cases and First-Party Demand Accelerated Spend12Direct Mail$5.6Email$2.8Digital Media(Display,Video,Social)$17.8TV(Linear,Addressable and CTV)$5.5
17、+16.1%+21.3%Source:Winterberry Group Spend Analysis(2023)Note:Digital Media includes display,video and paid social;TV includes linear,addressable and CTV;Data,Identity,Data Services and Platforms includes analytics(modeling,measurement and attribution),spend on CRM,CDP and DMP platforms,database man
18、agement and hygiene,excludes cloud hosting services+32.2%US Spending on Data,Identity,Data Services and Platforms,by Channel,2022($BB)Total:$31.7BB-4.0%+0.9%Digital Media/Commerce$72.9(1,105)Marketing Technology$40.3(1,247)Agency&Marketing Services$8.1(491)Traditional Media$17.2(211)Digital Advertis
19、ing$5.8(237)M&A and Investment Activity,2022($BB)Marketing,Media and Technology Industries(#of Transactions)2022 M&A:Rising Interest Rates,Equity Market Declines Led M&A and Investment Activity Down Across Market Segments 13Source:Canaccord Genuity(2023)Total deal value of$144.2BB decreased 61.3%,do
20、wn$229BB Y/YVolume of deals decreased by 18.7%,with 3,291 transactions vs 4,050 prior yearBuyer Activity in 2022But valuations have declined since beginning of the year,correlating with the realities of a diminished equity market and higher interest rates needing to increase debt costs(and lower ava
21、ilability)Marketing-related dealmaking is still active,notably at the mid-market level on targets of up to$1BB,focused on businesses with tech-enabled models and/or proprietary data and media toolsAlthough SPAC and IPO markets are at standstill given public volatility,higher interest rates and broad
22、er economic uncertaintiesDealmaking Remains Active Across Middle Market Despite Public Market Volatility(and Lower Valuations)14Source:Canaccord Genuity(2023)BuyerDeal Value%of Value#of Deals%of DealsStrategic$53.58 37%1779.0054.1%Private Equity Buyout$19.98 14%149.004.5%Private Equity VC Growth Cap
23、ital$70.54 49%1362.0041.4%Agency Holding CompaniesData and TechnologyPrivate Equity2022 M&A Themes:Focus on Commerce,Tech-Enabled Media,Customer Experience and Measurement 15February 2022Identity resolution and consumer intelligencefor$225MMJanuary 2022Acquired:for undisclosed amountCustomer data in
24、frastructure solutionMarch 2022Invested in:TV-viewing app and analytics company for$325MMMarch 2022Acquired:for$160MMMeasurement and attribution platform for converged TVAugust 2022Invested in:Platform for creative intelligenceSeptember 2022Tech-enabled insight and strategy companyfor undisclosed am
25、ountInvested in:October 2022Acquired:Performance marketing agencyDecember 2022Acquired:Account-based marketing platformfor$750MMfor undisclosed amountAcquired:Real-time,AI-powered SaaS platformfor undisclosed amountJuly 2022October 2022CX and Insights PlatformMay 2022Acquired:SaaS ecommerce intellig
26、ence platformfor$200MMDecember 2022Acquired:Canadian commerce agencyfor undisclosed amountAcquired:December 2022Acquired:US-based commerce agencyDecember 2022Acquired:Customer insights and advisoryfor undisclosed amountfor$50-60MMleading in$110MM investmentMacro Trends:Whats Driving the MarketTrend:
27、Increased Emphasis on Customer Experience to Drive Retention,Tightening Marketing Spend Management17Consumers focus to value from brands as post-Covid re-opening,buying channel selection matures;the shift to digital is not the trend the shift within digital consumption is the key.TrendMarketers stil
28、l optimistic yet seek shorter term marketing commitments to manage recession risk.Optimization,personalization and omnichannel integration guide strategies and tactics.ImpactTrend:Retail Media Marketing(and Marketplaces)Continuing to Take Share of Mind and Wallet18Retail/vertical media marketplaces
29、spend has raced ahead($20BB to$45BB 2020-2022),newforecasts see$100BB in 2026.Search and display drive spend with budgets moving across media and shopper/trade promotionTrendSource:McKinsey(2022)Product metrics,measured by cost per order as important as ROAS.Understanding the true impact of incremen
30、tality and the alignment of media sales teams objectives with merchandisings needs will become a focus in 2023.ImpactTrend:Is Direct Mail Suddenly Interesting Again?19Inflation Driving Cost of Digital Media and Shifting Budgets Towards Direct Mail20Rising cost of digital performance media will likel
31、y encourage marketers to shift spend from prohibitively expensive channels to offline channels delivering higher(and more predictable)returnsMetas CPM(cost per thousand)has increased 61%YoY,averaging at$17.6/CPM+61%TikToks CPM(cost per thousand)has increased 185%YoY,averaging at$9.4/CPM+185%Googles
32、programmatic display has increased 75%YoY;search ad CPC(cost-per-click)has increased 14%YoY+75%Instagrams CPM(cost per thousand)has increased 23%YoY+23%Source:LinkedIn(September 2022)Interest in Behavioral/Event Driven Use Cases,Online-to-Offline Automated“Trigger”Mail,Rising Steadily 21Sources:Wint
33、erberry Group Analysis(2023);Magna/Matterkind(IPG)(2022)Demand for digital-to-DM solutions is increasing as digitally native DTC brands seek to retarget customers with physical mail pieces US spend on programmatic direct mail campaigns driven by web-based triggers or behaviors is estimated at$317MM
34、in 2022 and is forecast to grow at a+27.4%CAGR through 2026 Robust growth forecasts reflect a shift towards direct mail campaigns that connect the online buying journeys with offline messaging$96$138$159$242$317$380$459$523 200212022P2023P2024P2025PProgrammatic Direct Mail Spending(2018-2
35、025P,$US MM)CAGR:27.4%0.6%of total DM Spend1.3%of total DM SpendTrend:B2B The Adoption of ABM,B2B Demand Generation Continues to Reset the Balance of Sales and Marketing22Improvements in the use of B2B data enables ABM to gain significant traction with enterprise marketers seeking to optimize the bu
36、yer journey,better leverage sales resources.ABM platform spend was forecast to reach$350MM in 2022,up 13%from 2021.TrendAs marketers seek to deliver better qualified leads(MQLs),the B2B lead generation coupled with improved B2B data integration to target then nurture prospects continues to rise,heig
37、htened demand for marketing automation,ABM and an increased role for data services providers.ImpactSource:Demand Generation Report(2022)Trend:The Convergence of Linear&CTV Speeds Along,Though Not Seamlessly 23Video engagement and media consumption continues to move across places,channels and devices
38、 with spend to consume$141BB(2023E),accounting for28%of digital spend(+3%)and 30%(-2%)of offline spend.TrendThe bundling of linear and CTV video buys increases along with investments in measurement and more alignment around multi-currency models.Challenges to integration remain with issues around fr
39、aud,frequency capping compounded by buying path complexities.ImpactSource:Winterberry Group Analysis(2023)Complexity Compounds With a Fragmented Delivery Landscape Where Buyers Must Navigate Multiple Video Buying Paths Targeted Buying PathsStreaming Apps for VOD Broadband ISPSet-top-Box ProvidersGam
40、ing and Streaming DevicesSmart TV OEMSDefinitionStreaming video content that can be watched anytime and anywhere without the limitations of linear TV broadcasting schedulesThe connection providers who stream entertainment(movies,videos,music,etc.),delivering content via an internet connection to a s
41、ubscribers desktop,mobile or TV without having to download contentA device from a cable/satellite provider that allows users to view video content from specific internet providers by converting a digital television signal to analog to be viewed on a TV setInternet connected devices used for gaming t
42、hat bypasses cable,broadcast,and satellite television platforms for connection to programming Manufacturers of TVs with integrated internet connectivity that allows users to stream music and videos,browse the internet and view photos bypassing an external tuning device Source:Winterberry Group surve
43、y of brand marketers and media agency buyers in the US and UK,May 2022;n=12124Additionally,the Need for Both Identity Standards and Interoperability of Solutions Limit the Ability to Optimize Spend65.5%50.0%47.6%34.5%28.6%23.8%59.5%62.2%48.6%48.6%35.1%29.7%Number of paths onto the TV set(set top box
44、(STB),streaming device,TV OEM,App,etc.)Complexity of measurementLack of identity standardsInteroperability of identity solutionsDisconnected media buying platformsPrivacy leading to loss of identifiersUS RespondentsUK RespondentsWhat are the barriers to growth for the use of identity in advanced TV?
45、(June,2022,%of respondents)Source:Winterberry Group survey of brand marketers and media agency buyers in the US and UK,May 2022;n=12125Trend:The Loss of Identifiers,Privacy Regulation and the Race for First Party Data Relationships 26Multi-state regulatory adoption without national standards,enforce
46、ment coming but with guidelines open to interpretation elevate the need for trackable consent across the value chain.TrendWith continuing loss of identifiers,the“death of the cookie”is just taking longer,but its not news.First-party relationships,identity solutions driven by consent,will remain hard
47、 to scale,resulting in greater of adoption of contextual and analytic driven solutions.ImpactPrivacy Regulation in House and Senate Dead in 2022;Maybe In 2023(As Long as it Aligns with California)and an Activist FTC27 GeoNames,Microsoft,TomTomPowered by BingUS State Privacy Legislation Tracker(2022)
48、Inactive BillsNo Comprehensive Bills IntroducedSignedActive BillsTrend:Expect Continuous Investment in Data Infrastructure-CDPs,Clean Rooms and Cloud Provider Solutions28As first party data sets grow the demand for connected data management solutions that are compliant and secure increase.Integratin
49、g 1st and 3rd party data and identity evolves the data infrastructure landscape.TrendProprietary and open solutions,from scaled cloud providers to early entrants enable the market for data collaboration and analytics;CDPs feed decisioning for personalization across owned properties;investments in da
50、ta infrastructure accelerate to power next generation AI/ML driven solutions.ImpactTrend:The Complexity of Managing Talent Rises29WF Home,WF Office,WF Anywhere will be a non-stop discussion at all levels of the organization for another year.Wage inflation moderates from the rapid 2020-2022 increase,
51、how will this be managed?TrendKey questions include how best to improve collaboration for strategy,creative,execution and the need to(re)learn personal interaction skills.Look for the adoption of new collaboration/productivity solutions,new metrics for measuring productivity and more discussion abou
52、t the right model(s)to adopt based on company and roles.ImpactTrend:If Marketing Spend is Slowing Why is Agency Spend Increasing?30In most years,the rate of marketing spend aligns with spend on agency services which grew at 8.5%.However,in 2023,services is forecast to exceed marketing growth with a
53、7.4%run rate.TrendMarketing complexity,with spend shift across channels is an opportunity and challenge to marketers carefully managing internal investments increased outsourcing benefits agency growth,talent(and margin)pressure leads to investments in internal and execution automation.ImpactSource:
54、Winterberry Group Jan 2023 Analysis of Agency Spend,Ad Age(Oct 2022)AI and Machine Learning:Moving to the Core of Marketing 31Defining:AI,Machine Learning,Conversational AICategoryDefinitionMarketing Use CasesArtificial intelligencePerceiving,synthesizing,and inferring informationdemonstrated by mac
55、hines,as opposed to intelligence displayed by non-human animals and humansMachine LearningThe use and development of computer systems that are able to learn and adapt without following explicit instructions,by using algorithms and statistical models to analyze and draw inferences from patterns in da
56、ta.Paid mediaWebsite optimizationPersonalizationMarket researchPredictive and prescriptive analyticsMeasurement and attributionData hygiene and enrichment Conversational AIRelies on natural language processing(NLP),automatic speech recognition(ASR),advanced dialog management and machine learning(ML)
57、,and can have what can be viewed as human-like interactions including conversations between humans and computers.Conversational AI also uses deep learning to continuously learn and improve from each conversation.Customer serviceContent generationCreative developmentTrend analysisSearch32Adoption of
58、AI/ML Presents a Plethora of Challenges Including Transparency,Accuracy and Ethical Concerns33ChallengesProliferation of misinformationEthical concerns and managing organizational compliance.Privacy and Federal/State regulationPerception of computer-generated content-how accurate are the data inputs
59、?Lack of trust/transparency in AI software“When an AI doesnt have an answer to something and instead tries to come up with something plausible that might not be right.”-Fergal Reid,Director of Machine Learning,Intercom“For us its still automatically generated content,and that means for us its still
60、against the Webmaster Guidelines.So we would consider that to be spam.”-John Mueller,Google Search Advocate“It is a dual-purpose tech.If you dont monitor and control have the right governance,policy or compliance in the way you give access to these tools to everyone and anyone on the internet,thats
61、where it starts to get really tricky.”-Justin Davis,Co-Founder and CEO,Spectrum LabsIts Not the Future -Its Now as AI/ML Based Solutions Proliferate Though Maturity Varies Significantly34Programmatic Creative IntelligenceMarket ResearchMachine learning models leverage any available data including re
62、al-time contextual behaviorsPrimary use cases of ML in programmatic media:oAudience insights,targeting and segmentationoStreamlined campaign optimizationoFraud detectionoMeasurement and attributionCreative intelligence platforms and services include:Self-serve solutions that provide ad creative perf
63、ormance across platforms,insights/suggestions to improve creative effectiveness and tools to determine which elements drive optimal resultsTechnology-enabled service providers which offer creative content and performance analysis for campaign optimizationPrimary use cases of ML in market research in
64、clude:Insights to support segmentation,customer journey,usage and attitudinal and persona development Product innovation to support product ideation and development,concept testing,voice of customer analysis and target market analysis Go-to-market optimization to support channel selection,user exper
65、ience testing and cannibalization assessment Representative ProvidersRepresentative Providers Representative Providers+Outlook 2023:Follow the Money35Outlook 2023:Spending Growth Expected to Moderate With Lower GDP Growth,Chance of Recession Looms Over Forecasts 36YearSpend($BB)YoY Growth(%)2019$376
66、.62020$363.82021$439.72022$480.82023P$509.2-3.4%20.8%9.4%US Advertising and Marketing Spending(20192023P,$US BB)Source:Winterberry Group Analysis(2023),Conference Board Economic(2022),CNBC(2022),Federal Reserve(2023),Goldman Sachs(2022)US GDP growth for 2023 is projected to be 0.2%Interest rate hike
67、s moderate in 2023 with benchmark rate expected to climb to 4.5-4.75%Unemployment rate projected to increase to+4.6%FTC keeps the pressure on“controlling”the major social and adtech/digital platforms in pursuit of privacy,security and competitive marketsOther factors to consider:Regulatory enforceme
68、nt may bring clarity,could bring pain more privacy regulations coming despite a split Congress-headwind or tailwind but for which channels and providers?Overall advertising spend continues,de-coupling from historic 2X model;is it a permanent shift?Russia-Ukraine Wars,China return continue to impact
69、on supply chains,European growth and commodity prices.Is it going to be a short/long or shallow/deep recession?5.89%US Offline Marketing Spend,2023P($BB)Total:$201.9BBLinear TV$56.9Experiential/Sponsorship$43.0Direct Mail$43.1Shopper Marketing$22.5Radio$12.1Traditional Out-of-home$7.7Magazine$6.4New
70、spaper$6.2Addressable TV$4.0Outlook 2023:Offline Spend Declines,Led By Secular,Not Cyclical Shifts in Linear TV to Digital Video37Source:Winterberry Group Analysis(2023)-7.5%+4.3%+0.9%+12.2%+0.4%-6.0%-5.0%-0.7%+3.3%-1.0%Outlook 2023:Growth Rate Decelerates But Still Strong,Watch for Shifting Spend B
71、etween Channels,Providers and Platforms38Email/SMS$6.1Display$16.6Digital Video$53.7Affiliate Network Fees$4.1Search$107.6Digital Out-of-Home$3.9Digital Audio(Radio/Podcasts)$6.7CTV$26.9Paid Social$64.1Video Game Advertising$5.8Influencer$6.9B2C Lead Generation$4.8+1.3%+8.0%+9.3%+10.0%+9.8%+27.2%+0.
72、9+6.8%Source:Winterberry Group Analysis(2023)Note:Display refers to banner ads that appear on desktop;affiliate network fees exclude media and platform costs+10.8%+14.3%+9.9%+10.0%US Online Marketing Spend,2023P($BB)Total:$307.3BB+17.5Outlook 2023:Economic Uncertainty Likely To Slow,But Not Stop Inv
73、estments Focus On Analytics,Data Infrastructure and Identity39Digital Media(Display,Video,Social)$20.2Direct Mail$5.4TV(Linear,Addressable and CTV)$5.3Email$2.8US Data,Identity,Data Services and Platforms Spend,by Channel,2023P($BB)Total:$34BB+7.4%+1.3%+9.8%Source:Winterberry Group Analysis(2023)Not
74、e:Digital Media includes display,video and paid social;Web Personalization includes web and app;TV includes linear,addressable and CTV;Data,Identity,Data Services and Platforms includes spend on licensed marketing data(lead sales,mailing lists,etc.),predictive/prescriptive analytics(modeling,measure
75、ment and attribution),database management and hygiene,CRM,CDP and DMP platforms;excludes spend on cloud hosting services+12.5%-2.7%Outlook 2023:Future Growth Expected to Align More Closely to the Historic Patterns Linked to GDP$183.7$195.4$203.5$201.9$180.1$244.3$277.3$307.3$363.8$439.7$480.8$509.1
76、2020202120222023P Offline Marketing Spend Online Marketing SpendTotalUS Marketing Spend on Offline and Online Channels(2020-2023P,$BB)%of total spend(2023P)39.7%+60.3%Source:Winterberry Group Analysis(2023)40.Thank you.Bruce Biegel,Senior Managing P(212)842 6030 WinterberryGrp Dallas London New York Miami