You know my thoughts on predictions, right?
I only like the ones I get right.
In 2022, it was tricky to be accurate. People are capricious, you see, and we are ruled by unseen forces.
As we amble optimistically into 2023, I’ll stick with my tried and trusted approach. Naturally, I stole it from the professional forecasters.
For, surely, an object can only be comprehensible to us when viewed at an angle of forty-five degrees
Johann Wolfgang von Goethe
My approach goes like this:
- Start with the big, macro-level trends.
- The Dartmouth professor Ron Adner calls this “the wide lens” perspective
- It’s important because for any innovation to succeed, a supporting ecosystem must already be in place. Google Glass really wasn’t a bad idea, in theory, but it ran into trouble the second it made contact with the real world.
- That means the technology must be ready: We couldn’t have Uber without 4G, and so on.
- It means the right economic conditions: People make different choices in a recession.
- It means the environment: Climate change, for sure, but also the political appetite to address those environmental challenges.
- Plus the competitive landscape will dictate how the main players react. The emergence of TikTok has altered everything from Facebook to Google.
If we have an inkling about the above, we can start to consider the complements to these developments:
- For instance, new entrants will spot opportunities.
- VCs will align their investments accordingly.
- Existing companies might decide to defend their position or innovate into new spaces.
- Of course, we can’t pretend 2022 didn’t happen - even if we’d like to.
- There will be reactions to events this year. For example, the metaverse had a pretty awful 2022.
- In 2023, we will see some actual use cases for the metaverse. They won’t match up to the full vision of a new, virtual world we saw in 2022, but they will be closer to the everyday needs people have.
- For instance, VR for therapy. AR for education.
- NFTs that prove the authenticity of truly valuable, real objects.
Ok, let’s put this approach to the test.
1. It’s the Stupid Economy
Don’t worry, I won’t make my own global economic forecast.
That said, the professionals have a notoriously poor record of predicting recessions.
Weakness in the Chinese economy and geopolitical uncertainty has a high probability (over 60%) of leading to a global recession
This is why contrarians say that if economists are predicting a recession, it most likely won’t happen.
I have read dozens of predictions now by everyone from the IMF to the World Gold Council. They all broadly agree that 2023 will be tricky; inflation is still high and we are experiencing the impact of interest-rate increases. They reckon we’ll see a global economic slowdown and the US may narrowly escape a recession.
Now, you know all too well that hi, tech. is not a reputable economics publication. It’s barely a reputable technology publication.
So let’s cut to the quick.
- Companies build out their ecosystems through partnerships. We will see companies work together across boundaries we would never have expected.
- The logic is sound: From a customer’s perspective, the gap between an airline and pet food is not quite as big as it is in the executive’s mind. Customers make lifestyle choices that fit with their budget, their self-image, and their instant needs.
- But why will businesses do this as a result of the economic climate?
- It provides stability. Customer Acquisition Cost (CAC) has been volatile this year and frankly, it is unsustainable for a lot of businesses that rely on social media.
- Supply chain disruption has provided a further shock to an already fragile customer pipeline.
- Partnerships provide more control and they build a company’s network. (Therefore, an opportunity arises for partnership management tech.)
- Where the companies do not directly compete, there is little risk involved in this strategy. It is not new, but customer data will reveal new links between brands. These links create new ideas for bundling products and services. (And another opportunity: a data science tool that identifies partnerships from raw data.)
- Tech stocks were wildly overvalued and 2022 saw a sharp correction.
- Therefore, VCs are looking for more than “growth at all costs” in 2023. Too many companies run with the fatal formula: CAC > CLV (Customer Lifetime Value) and VCs are finally wise to this.
Of course, this all relates to our second trend.
2. A New Relationship with Data
I wrote about this in more detail in my digital marketing special:
Broadly, there are two things that will happen as we adjust to reduced access to third-party data:
- We will realise that a lot of this data was junk, anyway. This ecosystem was propped up by self-serving ROI calculations, brought to you by the very platforms that serve to benefit from your “positive” ROI.
- We will realise that not all of this data was junk. In fact, it enabled effective targeting that we cannot replicate without access to this data.
Those two points seem contradictory and they partially are. Nonetheless, the bottom line is that the data we are accustomed to using is/was effective - just not in the way we were told. It is not so much about razor-sharp accuracy and much more about blunt force.
The platforms that capture more of the customer journey will retain access to more of this data. Inevitably, this leads to fiercer competition.
- Brands will pump money into “retail media” like Amazon, Walmart, Tesco, and so on. Then, they will realise that they are falling for the same “last-click attribution” trap they fell for with Google and Facebook.
- A retailer’s website can only cater to the full customer journey in a small number of categories.
- Expect new measurement solutions. I will confidently predict the return of econometrics to the advertising world. (hi, tech. special incoming!)
- Social commerce will finally take off. If retailers own the purchase point, social media owns the inspiration/exploration phase. It is more likely that social media platforms will expand into commerce than it is that retail sites will become inspiration spaces. (See Amazon’s repeated attempts to be “more like Pinterest/TikTok” for a case in point.)
- That means one-click checkouts, inventory synced with TikTok, and the inevitable emergence of livestream shopping.
- Superapps: The likes of Twitter, Instagram, and even Google will try to become all-in-one “superapps”. However, keep an eye on Apple here. They own a powerful OS and they continue to add everyday functionality in finance and search. The western WeChat will not look like WeChat at all.
- Where they bundle, others will benefit from unbundling. Stripped-back social networks that do one thing - and do it well - will have a good year. That’s where the customer desire lies.
3. Generative AI Goes to Work
GPT-4 will launch in Q1 2023 and soon after, we will see a huge number of business applications for the technology. I have some contacts in the VC world and I can say they are ready to invest in businesses that put generative AI to work.
There is a lot of optimism about this technology right now, so let’s bring human nature back into it. We’ve had our fun with DALL-E and ChatGPT, so it must be time for a dose of realism.
- Trust will be a major concern: As impressive as the technology will be, will companies (and consumers) really trust AI to act on their behalf? This is not such a probing question right now, since generative AI is only creating blog posts that companies can edit before releasing.
- In 2023, the technology will improve to the point where it can create reliable images and text that surpass the capabilities of the average marketing manager. But how should we work with this newfound capability? How do we get the most out of it?
- This is why Google has not released its generative AI as a product. I think they are too risk-averse and this could cost them, but they do have a lot to lose.
- Microsoft is the one to watch. If anyone is going to turn ChatGPT into a search engine, it’s going to be Microsoft. They are major investors in OpenAI and they are using Bing data to train ChatGPT already.
- We will open our eyes a little more: There are some obvious limitations to a technology that is trained on historical data. It repeats our biases and inaccuracies back to us.
- It is therefore important that generative AI serves our greater domain expertise.
- When I say vaguely that it will “improve” in 2023, I am not imagining a world where we click a button and an AI creates a TV ad campaign that perfectly fits our brand identity. I see instead a technology that can enhance our senses by suggesting new perspectives we would otherwise have missed.
- See also: Low- and no-code development. In 2023, this trend will start to mature and we’ll be able to build full web experiences through user-friendly interfaces.
So, those are my three big macro movements and the accompanying complements.
What are your thoughts? What excites/terrifies you most about 2023?
And, given my limited scope here, what huge trends have I missed?
