It’s that time of year, the silly season is nearly upon us and we begin to look towards the future to determine what might be on the horizon for 2024....
1. GenAI accelerates adoption as cost and efficiency are front & centre
It wouldn’t be possible to develop a trends piece for 2024 without mentioning GenAI. Whilst GenAI dominated the headlines in 2023, brands were really only getting started. In 2024 we will see adoption continue to accelerate, in part due to the need to drive cost efficiency within organisations. By 2026, Gartner predicts that over 80% of enterprises will have used GenAI APIs and models and/or deployed GenAI-enabled applications in production environments (up from less than 5% in early 2023). These APIs and models will be utilised to serve a myriad of use cases across marketing, sales, eCommerce and more.
Martina Steinman, ex Head of eCommerce at Officeworks predicts:
“The use of AI will bleed into all facets of eCommerce. GenAI will support greater personalisation, content and insights generation. GenAI will increasingly replace human content generation, from a cost point of view the business case stacks up. The key however will be for organisations to balance cost savings with managing brand experience. The brands that will win are those that maintain their brand experience and tone of voice. Whilst AI in eCommerce more broadly will continue to spread in its use for fraud detection and stock management (through prediction of stock needs etc)."
2. A year of reckoning on privacy & 3rd party cookie deprecation
2024 will be a busy year for brands as Australia looks to legislate significant changes to the Australian privacy act. In 2023 the government agreed to 38 of 116 recommended changes to the act, and a further 68 were agreed to in principle. Those that were agreed to in principle will undergo more consultation to determine how to progress with the recommendations and what form they will take.
With consumers set to receive greater powers from the government around control and transparency of their information, and many brands still grossly ill-equipped to tackle the challenge, we expect that 2024 will see brands really step up to the plate on privacy as legislative changes force their hands. Privacy, however, won’t be a one-and-done fix for brands. Legacy technology, disparate data sources and a need for brands to shift their mindset will take years; as the evolution of the privacy act is material and evolving, the customer experience and backend processes and technology are complex.
But privacy isn’t the only data challenge brands are facing. With Google finally set to deprecate the cookie, starting in Q1, many brands that are ill prepared will need to address the challenges that deprecation has left in its path.
Martina Steinman, ex Head of eCommerce at Officeworks believes:
“Loyalty strategy and first party data will continue to be front and centre into 2024 driven by 3rd party cookie deprecation. If you are not on the bus, get on it now and for those that are on the bus, the question is are you driving it or just an idle passenger? In Q2 we will really start to see the true scale and scope of the change. Many businesses will still need to understand the full scope of the shift that they need to make in spaces like audience strategy. This will be crucial to manage the commercial risk and seize the opportunities that arise from 3rd party cookie deprecation, and it will pay off to get ahead of the changes sooner.”
Vanya Mariani, Commercial Director at Carsales mediahouse also believes that the road ahead in 2024 might be less than smooth when it comes to 3rd party cookie deprecation and privacy - but it will lead to significant shifts in the way media is traded.
With Google confirming the Jan 2024 phase out date of 3rd party cookies - it is expected to have significant consequences on media buying habits. Advertisers and marketers will likely face challenges in audience addressability and measurement. This may impact the efficiency of media buying that is reliant on 3rd party cookie targeting and tracking. This transition coupled with privacy law reform will most certainly lead to a more privacy-centric and personalised approach to media buying.
3. B2B eCommerce on the rise
According to Forrester, buyers aged 25 to 44 will make up 75% of business buying teams in 2024, and as a result we will see B2B eCommerce adoption continue to grow and accelerate. Whilst B2B has traditionally lagged B2C, the way B2B buyers shop is changing. They’re turning to online channels to research, compare and purchase products. According to eMarketer, e-commerce is the fastest-growing channel for B2B product sales. US B2B e-commerce sales are forecast to exceed $2 trillion by 2024, and is anticipated to reach $3 trillion by 2027 (Forrester). In recent years, B2C has seen an explosion of new marketplaces as retailer after retailer leapt onto the bandwagon to launch marketplace offerings of all types and sizes, in order to grow audiences and create stickiness within their ecosystem. Now we are seeing similar trends in the B2B space, with B2B brands launching specialist marketplaces or ‘one-stop-shop’ platforms, providing their customers with suppliers under one roof, digitising the transaction process, and providing time savings. Whilst some of these are purely eCommerce platforms, others are offering a combination of software, products and services solving needs beyond the transaction.
4. Data platforms continue to see growth, whilst consolidation remains a focus
Speaking of privacy, the significant shift organisations will need to make in order to comply (compounded by realisation of the challenge caused by 3rd party cookie deprecation) will further propel brands to invest in a multitude of data platforms - to enable brands to manage privacy, improve identify management & resolution, aid 1st party data capture and enable smart data sharing. Already we see the beginning of the trend of stack consolidation. 2023 data from Gartner demonstrated that 76% of brands are under pressure to cut marketing technology spend to deliver better ROI. As cost of living pressures continue to drive plateauing growth – the pressure of marketers will continue to demonstrate return, or to consolidate.
5. Shoppable TV coming to a lounge near you
Under threat from the growth of retail media and social media platforms alike, big players within the TV and streaming space are stepping up to the plate. They're introducing new innovations to rival the shoppable media that is now becoming a staple of the social media world. In October 2023, Paramount announced the trial of new shoppable TV next year. Paramount has partnered with KERV to trial the innovation - first in Australia and on 10 Play, before rolling it out across Paramount globally. Using their remote control, viewers of Australian Survivor will be able to pause the show and explore Survivor merchandise available in the Paramount Shop. A shoppable screen will expand once a product is selected, providing detailed information and a QR code directing viewers to ‘Shop Now’ via their mobile phone or tablet to complete the transaction.
Further afield Roku, a streaming platform, recently invested in a shoppable ads program with their partner Walmart, which enables them to host interactive shoppable ads on the Roku Channel. This also enables one-click purchasing on a product if the user’s payment details are already integrated. In 2024, expect to see more innovation in shoppable TV formats and greater adoption of brands as eCommerce continues to grow.
6. Slower growth will fuel “value based” innovation
According to a recent study released in September 2023 by CommBank, rising living costs are prompting significant behavioural and lifestyle adjustments, with 9 in 10 Australians adopting deal-seeking behaviours and reviewing their spending choices. Even discerning consumers are making more cautious choices and researching more before they buy according to the study. With the mortgage cliff now reaching its destination and interest rates continuing to rise, 2024 will see brands needing to work harder to innovate and maintain loyalty as switching behaviour heightens. In the CommBank report, General Manager Business Banking Channels, Marcel Klassen said “while some people are under more pressure than others, a value-driven mindset is more pervasive. That’s heightening the demand for retail and hospitality experiences that instil trust, while saving time and money.”
Bridie Cowell, General Manager of Retail Media and eCommerce for Bega believes:
“Online will continue to play an important role to consumers, particularly during an inflationary period where consumers will use it as a mechanism to control their basket spend. Online affords the ability to see costs upfront and control their spend in real time. Discovery and inspiration will be key as people more actively seek out value, and we will also see consumers more actively engaging with and utilising loyalty programs to extract greater value. Personalisation plays a real role in this as well for people to surface the right value that meets their needs. A shift to value however doesn’t mean consumers won’t still prioritise convenience for certain occasions. I believe some consumers will continue to buy and pay for premium delivery services where convenience trumps cost.”
7. Conversational commerce is starting to emerge from the shadows
Conversational commerce will begin to take root in 2024. It’s a trend that’s been talked about for many years, but it’s really not until now — with generative AI and the latest advancements in large language models (LLMs), that a genuine conversational experience could be achieved digitally. Conversational commerce leverages, messaging apps, chatbots and other AI assistants to interface with customers and answer their questions and support commerce.
Whilst brands like Pizza Hut, Lyft and others have been experimenting in the space, conversational commerce experiences will become more widespread and device adoption drives brands to more actively play within the space. Conversational commerce is huge in Asia, however with growth of messaging platforms in Australia, such as Whatsapp now reaching approx. 10 million users down under, we will see more brands experimenting in the space.
8. Retail media growth rolls on, but players need to lift their game on measurement and reporting
It’s been a big year locally for retail media, with David Jones launching its network and the majors doubling down on their efforts to drive growth.
Globally we are seeing that retail media will more than double in size from now to 2027. This significant growth will come from shift in spend away from linear TV, search and social as well as from innovation and new formats.
As networks seek to grow their slice of the pie, we will see continued expansion into off-network offerings in the year ahead to increase addressable audiences alongside of format innovation.
Vanya Mariani, Commercial Director Carsales mediahouse believes that there is still a lot of innovation to come in the retail media space. When asked what the next frontier is for Retail Media, Vanya says a study from Path to Purchase Institute and CVS Media Exchange (CMX) suggests it is shoppable video content, increase personalisation, omni-channel audience tracking and in story digitisation.
However, innovation won't be the only focus for retail media networks. The year ahead will also see greater pressure on retail media networks down under to demonstrate return, as margin pressures drive suppliers to double down on investment to maximise return.
Bridie Cowell, General Manager of Retail Media and eCommerce for Bega said:
“if I look ahead, suppliers will be pushing harder to make more informed investment decisions and that requires more sophisticated data and reporting from the networks. I also think digital commerce leaders will need to shift the mindset of the organisation to demonstrate that eCommerce spend doesn’t just drive eCommerce outcomes, but rather total business results."
Need some support in 2024? At Arktic Fox, we partner with B2B and B2C businesses to create and deliver growth in a rapidly transforming marketing landscape. View our advisory & consultancy services in digital, eCommerce & data.