What’s ahead in 2023? Defensible ROI spending.

In the face of an economic downturn, businesses are evaluating their budgets against the lens of only the most necessary expenditures. 

With a backdrop of nearly 30% of marketers experiencing average-to-no returns on their marketing investments, which will obviously impact their future budgets, the best business-minded marketing leaders will take the direct line to defensible ROI spending in 2023 (The CMO Survey). 

If you’ve not done a deep marketing program analysis yet, it’s not too late. However, the clock is ticking, and we should all be deep in the planning process right now: focusing our time and energy on adjusting our program spend to maximize our ROI-centric initiatives that will get us through what promises to be a confusing, shaky and purse-strings-tightened 2023.

What does this mean for marketing spend in 2023?

This ROI-centric mindset shift among marketers will result in an uptick in two types of spending:

• Intent based advertising (search, etc.), 
• And targeting built from first-party seed lists. 

The future of search advertising will lean on intent-based data

You can maximize your search advertising budget, according to Search Engine Land, with one simple solution: first-party data. A largely untapped data source to date, this kind of data allows marketers to:

• Focus their budgets on the most effective ads and keyword buys
• And maximize the return on each dollar they spend. 

This year, as many as 76% of consumers will stop doing business with you after one bad experience: making the stakes for mastering ad personalization, engagement, and relevance higher than ever (Invoca, 2022 Buyer Experience Report). Marketers simply can’t afford to retarget converted customers or target the wrong audiences anymore.

By leveraging intent-based behavioral data, marketers can run campaigns that are 86% more predictive of customer action than campaigns using demographic data alone. It makes sense then, while many brands are largely keeping budgets where they are in the coming year, as many as 57% of advertisers are boosting spend, specifically on paid search.

Now, what else does first-party data bring to the table?

First-party seed lists will become the new foundation of ad targeting

At Lytics, we’ve seen that first-party data constructed seed lists have proven ROI against nearly any other method of targeting, outside of pure intent. That’s partly because first-party data is collected directly from your customers through their interactions with your brand, so you never have to worry about working from data you can’t trust. This is especially crucial, as Ad Age reports that as many as 75% of advertisers don’t fully trust their third-party data sources. 

“If third-party data lets you reach a broad persona,” says Hubspot, “then first-party data lets you pinpoint a hyper-specific persona.”

And with more specificity, consent-based data, and better accuracy? You’re bound to see a higher return on your even-more-highly personalized outreach. Using first-party seedlists, you’re building larger, more-likely-to-engage target audiences and expanding your brand’s reach based on a rock-solid foundation.

And while 2023 may not be the year that we see advertisers abandon third-party cookies entirely, 2023 will be the year that every marketer must fully embrace the importance and power of first-party data. Marketers are already seeing the value of data-driven strategies when it comes to: 

• Proving and increasing ROI, 
• Improving targeting and campaign efficacy, 
• Improving customer experience,
• And reducing wasted spend.

Now imagine what marketers could do with more accurate, consent-based, and future-proof first-party data. A strong first-party data strategy is not only proven to help your organization perform better today, but it will also ensure your organization can navigate through whatever changes the third-party data world throws at you.

We’ve seen, over the past two years, multiple changes in timing of commitments, making it hard to predict whether we’ll see any different behavior giving us a predictable roadmap toward the end of cookies. But with so much about the future of marketing up in the air, the best way for brands to get prepared is to be agile: to prioritize the ability to adapt to change gracefully and scalably, without disruption. 

What will ROI-minded marketers need to be thinking about?

The pressure to maximize performance of and ROI on advertising will hit an all-time high. We’ve seen tremendous public market pressure to improve the business performance of advertising initiatives across all of the largest platforms around the world. 2023 will only heighten that pressure. 

In turn, we should expect to see more innovations benefiting advertisers to improve their targeting, and thus improve the platform’s yield: the proverbial win-win. These improvements are likely to come in the form of new and better integrations to improve match rates (first-party seedlists, UIDs, etc.) and deeper integrations with CDPs and identity resolution and management services.

A strong data strategy will help organizations navigate change with agility as we approach a post-cookie world. The core capabilities underlying a strong data strategy that every business should be investing in are:

• To ingest data, store and secure it, and create persistent unified user IDs,
• To translate this data into actionable insights,
• And to execute marketing actions across the channels where you engage your customers.

In recessionary periods, it’s typical to retrench on known and highly performant channels. We are starting to see more research validating that this is the forward-looking view that go-to-market (GTM) teams are taking, and tools like a CDP will enable you to tap into the maximum potential of your existing data, stack, resources, and capabilities — all for the best possible return.