2023 Predictions: The rise of connected TV, data sovereignty, and next-generation CDPs

In the face of an economic recession, every brand is scrambling to prepare for what’s to come. They’re hoping to do more with existing budgets in a time of advertising slowdown and cost-cutting—especially on opportunity-rich social media platforms and YouTube. Hubspot predicts, in fact, that 45% of marketers expect their budgets to stay about the same in 2023. 

But top ad channels like Meta have gotten more expensive, and it’s become more challenging for advertisers to reach the right audiences on the right platform with the right message, in a cost-effective way. 

How will advertising change in 2023?

On TikTok alone, CPM (cost per thousand) prices are up 185% over last year. Between 2020 and 2023, nine more platforms have or will become billion-dollar advertising businesses in the U.S. (including Snapchat, Spotify, Yelp, Roku, Walmart, and Instacart). And each of them, according to eMarketer, “has what it takes to power big advertising initiatives, with tens of millions of highly engaged, known users, along with access to the valuable first-party data needed to target them.”

Change is in the air — and it’s inevitable. Brands’ best bet for getting prepared lies in knowing what’s next, and making the most of their budgets accordingly. They’ll need to make their buys, every buy, as efficient as possible. Here are some predictions for 2023 that may help.

1. The next dominant driver for customer data and customer data applications? Data sovereignty.

Privacy, security, and compliance are the most critical components to making a decision about what we’re going to do with customer data in the future (i.e. how, when, and where we can use it). Right now, a big part of that is being driven by governments, both country and state. But it’s not just affecting governments and citizens. It’s also carrying massive implications for advertisers and how they can reach their customers, and on the other hand, for the customers themselves. They’re finally on the verge of being more in control of how their data is collected and used. 

When it comes to data privacy for businesses, every company needs to think about storing processes and protecting data on a country by country basis. The major players are already making strategic moves. For example, Apple is making a play to be a much bigger part of the ad ecosystem — they’ve shut off access to identities in their ecosystem and are acting as a gatekeeper. As such, companies like Meta have lost the ability to connect identities and get a full understanding of the people they’re targeting. 

We’ll see greater adoption of data clean rooms.

This has catalyzed a greater demand for data clean rooms, as more brands want to, instead, advertise directly on retail media networks like Target. As the team at Lytics shared in a recent blog post, “while not yet widely adopted, data clean rooms are on their way to providing the type of aggregate environment where companies can review and analyze collected advertising data without risking exposure of personally identifiable information (PII).”  

The demand for flexibility in platform deployment will grow.

In 2023, data balkanization and private cloud deployments will dominate enterprise discussion about customer data and how companies can self-host data products like CDPs. Flexibility in deployment options (such as the option to deploy single tenant, in any region, and/or deploy self-hosted by an organization in their own environment) will dominate the new adoption curve. We’re headed toward a world where data centricity won’t, and can’t, exist without foolproof data privacy.

The next generation of CDPs will break through the noise.

Composable, data-first CDPs change the model for how companies can collect, manage and activate customer data. These next-gen CDPs offer a new, build-and-buy approach that is open, modular, flexible, and fits with your brand’s existing data infrastructure.

• In 2023, the composable, modern data stack will challenge the closed proprietary data networks that are being created by Adobe, Salesforce and Oracle: leveraging the cloud data warehouse as open platforms.
• CDIs, Reverse ETL tools, and CDPs will create a new level of connectivity and data democratization that will challenge the old proprietary data models and networks of the closed marketing suite systems.

2. The reign of YouTube and connected TV

Despite TikTok’s boom in the last few years, the influencers driving its popularity are moving to Youtube in droves for its more creator-friendly platform. And where the  creators go, their fans will follow. 

Logically, if YouTube is where their audience goes, then advertisers will too. It also doesn’t hurt that Youtube dwarfs all other connected TV offerings out there, or that Google is making it easier than ever to activate on the YouTube platform. 

In 2023, connected TV (CTV) will continue its takeover and Youtube will assert itself as the dominant platform for advertisers. Why?

• Netflix doesn’t have a proven ad model yet. Right now, its platform will be more about experimenting than anything else, so most advertisers remain in a “wait-and-see” phase.  
• We should expect continued tumult with Twitter and TikTok to remain unknown. The likelihood that the U.S. government could shut down TikTok should be on advertisers’ minds, and they should be thinking about their backup plan, should that happen.

And the opportunity for CTV at large? It lies in the fact that 74% of the U.S. TV-owning households have at least one internet-connected TV device, including connected Smart TVs, standalone streaming devices, and connected video game systems. It’s due to that extensive market penetration that by 2023, CTV spending will grow to $14 billion. If it does, it would mean that advertisers will allocate 5% of all paid media budget to CTV placements in 2023 (eMarketer).

The role of data in connected TV success for advertisers, in particular, is critical — and stands to be pretty lucrative. “It’s a game-changer,” says Jeff Green, CEO of The Trade Desk. “As more viewers access TV content via connected devices and smart TVs, and as more content providers build and launch new streaming platforms, advertisers can apply data to their TV campaigns for the first time.”

Even better news? That’s not the only thing data ensures is newly enabled for advertisers.

How do we move forward?

As we approach the new year, it’s just a matter of time until budget-conscious, data-driven brands start looking for new, more efficient, and more effective ways to connect to consumers with the data they already have. For many, this will mean leaning on a CDP like Lytics as the foundation of their data-driven strategies — and tackling privacy, identity management, data quality and other long-standing challenges with one powerful tool serving as your source of truth.