Metaverse Presents Huge Advertising Opportunities and Challenges This Year

What trends and technology will shape ad spending this year? Check out the opportunities and challenges for advertisers this year.

January 17, 2023

The marketing and advertising landscape saw several changes last year; hence, there were ups and down in ad spending. What trends and technology will shape ad spending this year? IAS and YouGov conducted a study to understand digital media experts’ perspectives on the challenges and opportunities this year.

The last year saw many ups and downs in ad spending owing to various factors, such as the continued scare about the pandemic, the war in Ukraine, and high inflation rates. As we enter the new year, what trends and technology will shape this year? Integral Ad Science (IAS) partnered with YouGov and surveyed digital media experts to understand their perspectives on the opportunities they look to harness and the challenges they expect to face this year. 

The following are a few key takeaways from the study.

Digital Audio and Video Are Top Priorities

The study found that digital audio, followed by digital video, are the top priorities for the respondents. While 53% prioritized digital audio, 50% prioritized digital video. About 48% prioritized social media, 47% prioritized mobile ads, and 26% prioritized ads-supported streaming apps on OTT platforms and CTV.

Decreasing Access to Consumer Data Is the Top Challenge

Regarding inventory buying, the top issue for advertisers is reducing access to consumer data, primarily due to third-party cookie deprecation, privacy legislation, and consumers opting out of in-app data tracking. Another key challenge is ads being delivered alongside misleading or risky content. Eroding trust in major proprietary platforms is also a major problem. 

Major digital media challenges for organizations

Major digital media challenges for organizations

Source: The 2023 Industry Pulse ReportOpens a new window

On the publisher side, the top challenge remains the same as ad buying, i.e., mitigated access to consumers’ data. Publishers also expect problems with the integration of identity systems, monetizing first-party data, and maximizing yield. Another key problem for publishers is ads delivered alongside misleading or risky content.

When comparing challenges by media type, experts believe social media will likely face the most serious challenges this year, followed by the Metaverse, CTV, and mobile web. With the increasing demand for connected TV (CTV) advertising, perceptions of obstacles for the media type grew 10 points year-on-year (Y-o-Y). 

See more: 3 Priority Channels Digital Advertisers Should Have On Top of Mind in 2023

Digital Audio Builds Momentum

About 70% of media experts reported that listeners continue to migrate from terrestrial radio to digital formats. As such, advertisers will follow suit. According to StatistaOpens a new window , digital audio advertising spend is expected to reach $8.75 billion this year. About 61% of experts believe that ad-supported digital audio streaming will become popular among consumers. About 25% will also have audio and voice-assisted devices as a top priority this year. 

All that said, experts expect a few challenges and risks. For example, 66% of experts are worried about ad fraud, and 55% are worried about brand risk. Because of these, industry experts see third-party verification’s value in ensuring media quality in this space. 

Transition From Linear to CTV Will Grow

Similar to audio, more people will cut cords and transition to CTV/OTT platforms, according to 60% of experts. As such, 66% expect a move in ad spending from linear to CTV to accelerate. 

The growing offer of ad-supported CTV services is expected to create new opportunities for advertising. As new avenues for advertising develop in this space, advertising spending will grow faster than other major ad formats, increasing 27% to about $26 billion this year, according to Insider IntelligenceOpens a new window . With a growing base of consumers and advertising opportunities, 44% of experts say that CTV and digital video have great innovation potential this year.

All that said, challenges, too, will grow. According to 66% of experts, as the opportunities grow, ad fraud may grow. Tracking the performance of CTV ads will also be a problem. Hence, verification platforms must unify targeting across various platforms to track performance better.

Similar to CTV, digital videos, too, are expected to face a few obstacles. The top concerns are ad fraud and brand risk. The effect of insufficient transparency in terms of media quality metrics on ad spend is also a concern. Third-party verification platforms will be key in ensuring digital video ad quality.

Social Media Will Remain Essential

Social media will remain a key advertising channel, with 91% planning to advertise using the channel this year. However, this channel has had mixed ad spend for the last few years. That said, according to Insider IntelligenceOpens a new window , ad spend is predicted to show a sustainable 9% Y-o-Y growth this year.

The study also shows that YouTube and Facebook will be the top platforms for content monetization and advertising. Twitter rose to the third position. WhatsApp has become a platform showing growth in usage intent this year. 

Platforms on which organizations will buy advertising or monetize content

Platforms on which organizations will buy advertising or monetize content

Source: The 2023 Industry Pulse ReportOpens a new window

Media quality remains crucial for social media campaigns. Sufficient transparency w.r.t media quality metrics will improve advertisers’ confidence in the ads being served. However, experts are less worried about brand risk and ad fraud than audio and video. 

Consumer trust will impact ad spending on social media. About 77% agree that crumbling trust in major platforms will affect their ad spend. Facebook will most likely see adjusted ad spending due to declining trust, followed by Twitter and Instagram.

Experts will also demand transparency in media quality metrics. About 66% believe insufficient quality metric transparency will negatively affect media spend. Media spend adjustments will most likely affect Facebook, YouTube, Instagram, and Twitter this year. 

Virtual Spaces Offer Disruption Opportunities

As technology advances toward more immersive environments, experts see the potential to advertise in these spaces. About an average of 33% agree that Metaverse offers substantial potential for innovation and opportunities as it continues to evolve. Regarding challenges, about 29% say that Metaverse will face tough challenges this year. Yet, 15% already plan to become early adopters in content monetization on this platform.

Video games are another upcoming environment for advertising. Publishers are specifically optimistic, with 34% acknowledging the potential for opportunities this year.

New Ad Formats Are on the Horizon

New ad formats, such as 3D ads, are here, which enable brands to showcase their offerings in 360 degrees. This brings advertising opportunities in 3D and virtual environments. The emerging format has much potential to innovate the ad experience as well as create immersive experiences in VR platforms. Even still, 19% of experts intend to prioritize advertising in video game environments, and 15% will prioritize 3D ads. 

See more: 5 Advertising Predictions for 2023 That B2B Marketers Should Know

Experts Plan to Prioritize Media Quality

According to the study, experts intend to prioritize media quality this year. About 58% prioritize contextual advertising, 57% prioritize driving attention toward ads, and an equal percentage prioritize driving outcomes, such as clicks and conversions. Improving the quality of media can drive attention and outcomes. Other top priorities are reducing brand risk and ad fraud.

The digital environments considered most vulnerable to brand risk this year have remained almost steady since last year; social media is an exception. Brand risk is further considered a growing problem across display formats and the growing video game environment. The perception of accountability for mitigating brand risk falls on experts across the entire supply chain. Buy-side, publishers, and verification platforms are considered the most responsible.

Similar to brand risk, the digital environments considered highly vulnerable to ad fraud have remained almost steady, with the exception of social media. Efforts toward mitigating ad fraud are again considered the combined responsibility of experts along the entire supply chain. Yet, verification providers will be held more responsible for preventing ad fraud, followed by agencies and brands.

Looking Toward 2023

As we enter the new year, advertisers will have digital audio and video, including CTV, high on their list of priorities regarding channels, followed by social media and mobile. Simultaneously, mitigating brand risk and ad fraud, as well as contextual advertising, will be high on their priorities. Innovation will be something to look for, with advertisers keen to lead disruption in new formats like 3D and Metaverse while maximizing efforts in already established formats. Overall, advertisers can expect familiar challenges and a slew of new opportunities to overcome this year in their advertising efforts.

What do you think are the top trends, opportunities, and challenges for digital advertisers this year? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

Image source: Shutterstock

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Karthik Kashyap
Karthik comes from a diverse educational and work background. With an engineering degree and a Masters in Supply Chain and Operations Management from Nottingham University, United Kingdom, he has experience of close to 15 years having worked across different industries out of which, he has worked as a content marketing professional for a significant part of his career. Currently, as an assistant editor at Spiceworks Ziff Davis, he covers a broad range of topics across HR Tech and Martech, from talent acquisition to workforce management and from marketing strategy to innovation. Besides being a content professional, Karthik is an avid blogger, traveler, history buff, and fitness enthusiast. To share quotes or inputs for news pieces, please get in touch on karthik.kashyap@swzd.com
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