*This report was created together with Rareview and Parse.ly.
Rareview and Parse.ly transform your raw data into actionable insights, helping brands like HelloFresh and Wired boost traffic and revenue. Both long-term supporters of our newsletter, we’re happy that together with our readers, we can all shed more light on the current state of online advertising.
If 2023 was a road, it definitely wouldn’t have been smooth.
Uncertain economy, cautious consumers, rise of AI, the grip of law around privacy and data tracking… It all disrupted the marketing environment and made this year’s Q4 particularly interesting.
To understand the state of the marketing on the frontlines we’ve turned to you—our readers—to compile a thorough report on what this hectic period was actually like.
And what can we all expect in the year to come—from ad budgets, to robot hugs. Buckle up!
Report Background
To give context—and transparency—here’s a quick rundown of our respondents:
- Total surveyed marketers: 230
- Type of work: 36.3% in-house, 24% agency, 20.8% brand owner, and 18.1% are freelancers.
- Type of business: 44.7% advertise services, 32.3% physical products, while 23% market digital products.
🫡 Once again, thanks to all our readers who took the time to share their views and help fellow marketers get a better understanding of the environment they’re in.
Key report takeaways:
🟦 Ad budgets increased compared to Q4 2022, with 35% of marketers ramped up the spend compared to 19% who toned it down.
🟦 Almost 29% of marketers spent more this Q4 compared to other quarters, with 50% maintaining the same budget throughout the year.
🟦 Most digital product advertisers decreased their budgets this Q4 compared to last year, while physical product advertisers decided to spend more.
🟦 Meta and Google continue to dominate the ad market share while most respondents surprisingly decided to allocate more funds on LinkedIn Ads than TikTok Ads.
🟦 AI is here to stay, with 33% of marketers saying they use AI tools in their operations daily, compared to just 10.5% who never use it.
🟦 More than half of all respondents state that lower demand and a troublesome economy will be the main challenge in 2024.
*Note: Embedded charts might load slower on some browsers and devices.
How Q4 Ad Spend Changes Compare to Other Quarters In 2023
*To have a better overview of the report, you can press the full-screen button on the bottom right.
The responses confirmed what was more or less a noticeable trend—this year’s final quarter was less a sudden spending overdrive and more of a cautious endeavor.
Half of the respondents maintained the same spending pace as in previous quarters and—while the chart is still in favor of increased spending—most marketers upped their budget only by 10 to 25%. At the same time, there’s a small chunk of marketers who decided to cut their spending in half.
Now let’s see that same spend by category:
*You can choose to see results for other categories by clicking on the top-right menu of the report
As it stands, physical products have seen the biggest budget increase as most categories have seen the same spend or a slight bump.
On the other hand, services and digital products are feeling the crisis more, as displayed in the following:
“Some digital products might experience lower demand in Q4 due to spending patterns or changes in consumer behavior. It may also lead to reduced service demand since it’s period for completing existing projects, rather than starting new ones. On top of that, service-based companies might see a decline in demand during Q4, prompting a decrease in budgets.”
– Rob Pearson, Rareview
How Q4 Ad Spend Changed In 2023 Compared to 2022
Overall, there’s been an uptrend in ad spend year-over-year, which matches a slight ad growth forecast made in late Q3.
More than a third (35%) of respondents said they’ll spend more this year compared to last—but there’s a possibility this is pushed by inflation, higher costs, and competition.
What might be more telling is that almost half of marketers will keep the same budget as last year, as a reminder that the ghost of frugality is still looming over.
Breaking it down to different categories tells a similar story to quarter-over-quarter change:
The same goes for product type:
Which Channels Get Most Ad Budget In Q4?
The Meta and Google ad duopoly is still going strong. Most respondents will allocate at least some budget to the channels, with some not even thinking about other platforms.
Also, YouTube on third spot shows that the combination of Google’s data and video ads is getting tougher to ignore.
What’s also surprising is that TikTok—touted as the one who can most likely get a bite of the ad market pie—has fallen behind LinkedIn. The popular business platform that had an algorithm revamp recently and added a ton of ad features, so there might be something more to it…
“Look, TikTok is definitely a platform with some worth. However, it doesn’t quite hit the mark when it comes to conversion value. The issue? It’s all about the short format and content that doesn’t always ring true. It just doesn’t have the staying power you’d find on platforms like LinkedIn and YouTube”
– – Rob Pearson, Rareview
How did advertisers track their data during Q4?
Google Analytics 4 might’ve been a hair-puller for many advertisers at the start of the year, but it’s still the undisputed number one data analytics tool for advertisers.
In fact, GA4 is used more than all the other analytic tools combined, which makes sense given the seamless integration with other tools in Google’s suite and most importantly Google Ads.
A bit down the pecking order Adobe Analytics, Triple Whale, and Supermetrics are among the most popular alternatives.
“Sure, GA4 is free and it integrates well, but to be honest, we found it a bit too generic for our needs. That’s why we prefer tools like Parse.ly. It’s great because it lets us really dig deep into how our clients interact with our content. We can see what content is attracting different segments and how they use that content throughout their customer journey. Imagine this scenario: we know you found us through a LinkedIn post, then you checked out our blog, and a few days later, you came back searching for the same topic but couldn’t find what you were looking for. With the insights we get from Parse.ly, we can then target you on LinkedIn, focusing on that specific topic you were interested in. And just like that, you’re part of our community. Pretty cool, right?”
– Rob Pearson, Rareview
Beyond Q4: The State of AI In Marketing
It looks like the year will end the same way it started—in the embrace of artificial intelligence.
And now it seems that most marketers think that AI is not a passing fad with 36% of all respondents saying they’ve incorporated AI in their daily marketing operations.
Digital products advertisers are leading the AI adoption with 42.3% using it daily, while physical product marketers are “resisting” AI the most, as 12.3% say they never use it.
Kinda makes sense, with digital products adopting AI tools in a bid to streamline and automate the processes in a fast environment. Plus, some might be AI tools themselves!
“We’ve been integrating AI into everything we do. We use it across our content, creative concepting, ad testing, predictive analytics, personalization, and some minor automations”
– Rob Pearson, Rareview
🤖 If you’re still dwelling on AI, Rob from Rareview shared some tips to smoothen the adoption:
- Start small and use it for content and content ideas during the creative process
- Meanwhile, start integrating it with your current toolset as most tools have it built-in now, allowing you to adopt at your own rate.
- Focus on quality, it doesn’t have to be used across everything you do, just integrate it slowly and make sure there are some key quality checks along the way.
The Challenges Ahead
Not surprising. More than half of surveyed marketers feel that consumer frugality and tougher economic conditions will extend to 2024—making it another challenging year.
Linked to that, almost 19% think high advertising costs can be a bottleneck, while 12.5% are weary of competitors having better deals.
“We need to focus on maximizing the Lifetime Value (LTV) of our existing customers, while simultaneously identifying potential customers with promising LTV. This is also the perfect moment to address any issues with our ad performance, particularly if it’s contributing to over half of our Direct-to-Consumer (DTC) revenue. Let’s create a more engaging and satisfying experience for our current customers. We strongly recommend that we channel significant resources in the coming year towards enhancing customer retention, engagement, building trust, and strengthening brand efforts. This is a strategic move that will pay dividends in the long run.”
– Rob Pearson, Rareview
Looking at 2024
It’s too early to be gloomy…and doomy. However, signals point out that 2024 will be a continuation of the bumpy ride.
The best thing you can do is try to stay ahead—by setting up your tracking tools to extract the most value from your ads, embrace new technologies, and pay close attention to underrated marketing channels.
And if you’re subscribed to Stacked Marketer, you’re already well-equipped!
