Expectations for 2023

Expectations for 2023

Once again, it has been quite a year. There have been fewer restrictions and more openings of events and experiences, but they have been hampered by lack of staff, inflation, and rising interest rates, making consumers cautious about spending. We saw a continued shift to technology in both rights assets and activations.

We also saw summer 2022 explode with full-fledged events rejuvenated after a year, or in some cases two years, of virtual, scaled back, or no events at all. In most cases, however, the pre-pandemic numbers were not reached.

The “new normal” to which we returned was more “new” than “normal,” but that was to be expected. Many of the organizations that went back to the “same old/same old” from 2019 felt the backlash of “lack of innovation.” It was like using a rotary dial phone or fax machine—definitely behind the times.

Finally, we saw sponsors shift to more defined and tracked ROI measurement. This has put many properties way behind the eight ball!

But that is the year that has past. More important is what the year ahead has to offer. Here are what I consider to be the biggest trends or expectations for 2023.

  1. Technology will continue have the biggest impact on our sector. With more and more automation and use of AI in the marketplace at reasonable investment rates, you will see the sector finally begin to engage with technology in a much larger way. We will see more use of AR (Augmented Reality), as well as QR codes, touchless transactions, and bracelet IDs so that event goers can pay, access, and gather information seamlessly and touch free without delay or congestion. This technology will come about both in signage (digital and static) and online and through activations. Properties and brands that fail to welcome and engage such technology will continue to fall behind.
  1. ROI measurement will also grow exponentially. With more technology, there is better tracking. Better tracking means more effective and less costly investment in ROI measurement. This also means a shift to more rights fees being allocated around pay per performance and activation than ever before. In 2023, ROI measurement will shift from just happening in Tier One and Tier Two properties down to Tier Three and Tier Four properties. Be aware—failure to work with your partner on effective ROI measurement could mean the loss of a partnership.
  1. Data collection will be part of the technology shift. As more sponsors shift to the use of technology such as gamification, QR codes, AI, geo tracking, big data research, and engagement activations, the focus for brands will be on data collection. Properties have never been allowed to share their data bases. But now, sponsors can build their own data bases from the properties’ most engaged subscribers, donors, supporters, and fans through technology. Through big data collection and analysis, properties can pinpoint sectors and specific brands with all the empirical data they need to show a brand why it should be sponsoring that property. Data is king!
  1. As confirmed by industry leader and icon Ian Malcolm and is already clearly showing in the marketplace, brands are no longer always in need of exclusivity. If their brand or product (or both) are strong, they can pay lower rights fees and offer greater revenue to the property through pay for performance programs than with an exclusivity contract. This also means that rights fees will erode away to the aforementioned drop in rights fees levels to pay for performance and activations. Again in 2023, deep relationships that return above normal ROI will be essential in partnerships.
  1. Due to the shift in demand for results, the shift away from rights fees to more activation fees will create casualties in the sector. Those properties that have continued to rely on their “halo” value or inflated rights fees with little marketing ROI will see their revenues shift away. The dollars will move to those properties that can deliver results! We saw this happen in 2001 after the dot-com bust, 2008 recession, and 2015 in Western Canada impacted by oil price drops. As we head into the recession of 2023, those properties that cannot meet the new reality will suffer.

The good news is that, even though we will shift into a recession, brands have been dormant for two full years and 2022 was a slow return to pre-pandemic levels. I believe we will see industry growth to pre-pandemic levels. To fight a recession, brands need to be stronger in the marketplace, and sponsorship and experiential marketing has proven successful for them over the last decade. They will shift more dollars back into our sector and we will exceed pre-2019 gross revenue industry numbers overall, but there will be a seismic shift from rights fees to activation dollars and ROI measurement research investments.

  1. Relationship deepening will continue to evolve. Due to the pandemic, the successful partnerships were forced to deepen their relationships. You knew more about your partner’s personal life as Zoom opened the window into their homes and family lives. COVID allowed us to better understand our partner’s businesses, their strengths, weaknesses, and needs. This was a truly positive outcome. In 2023, the successful brands and properties will continue to enhance and deepen their relationships to understand each other’s businesses even more and to support each other in true partnership.

Thank you for your continued support of the Tuesday Morning Commentary (TMC) over the past year. May 2023 bring you and yours health, happiness, and prosperity.

© 2023 All rights reserved.

Submit a Comment

Your email address will not be published. Required fields are marked *

 
Share This