A note from IAB Canada President, Sonia Carreno
Last week, the Canadian Chamber of Commerce hosted the Canada 360 Economic Summit. The annual event delves into the current state of the Canadian economy and focuses on issues like business and consumer sentiment, inflation trends, and politics. As our industry continues to face headwinds entering 2023, we took note of some macro-trends that will undoubtedly have an impact on the digital advertising sector.
Data presented by both the Chamber of Commerce as well as Nik Nanos, Founder of the Canadian Research Insights Council, showed that overall consumer sentiment is relatively low. In 2020 16% of Canadians were worried about housing costs, the latest poll showed an increase of 12% indicating that 28% (8.7 million Canadians) were worried about mortgage and rent costs. Further, the data told a concerning story of Canadians making tough choices at the grocery store with a noticeable population reporting that they are eating less or trading down from brand names to generic, no name brands. The squeeze is being felt most with younger cohorts who report feeling insecure in their jobs.
Meanwhile, businesses across most sectors are feeling the crunch. Most are engaged in scenario planning and preparing for reductions in revenue and introducing cost cutting measures. With the anticipation of a dip in ad revenues, the ad tech sector specifically, has felt the impact. While we have seen lay-offs over the past few months, some companies are implementing alternative labour strategies in an effort to “labour hoard” like hour reductions and hiring freezes. Given the recent talent shortage in our industry, companies are warding off a secondary wave of staff recruitment and the costs associated with re-training.
With inflation having peaked in 2022, we are slowly in a phase of disinflation. Rate hikes have been aggressive, and we are facing some risks of recession. Central banks are trying to slow down demand while looking at the weakness in supply. The biggest concern here, is that with consumer uncertainty and low confidence, we may create a self-fulfilling prophecy situation.
The overarching theme is one we are all too familiar with – uncertainty. From whether we believe real estate investments will drop in value to what our “back to work” situation will look like in the coming months; our industry is not alone in feeling a bit foggy. On the ground, IAB Canada members’ concerns are magnified due to the unpredictability of consumer spending and whether advertising budgets will feel an intensified pinch. Meanwhile, employers in our sector are still struggling with talent shortages amid an ecosystem in major transition.
New entrants to the competitive landscape like Netflix and the rumble of monetized AI bots coupled with accelerated legislative activity like the streaming bill, the Quebec privacy law, the re-emergence of the marketing food and beverage to kids bill and the looming federal privacy law, is wreaking havoc on mid to long term business strategies. With these changes to the landscape comes a relentless review of operational structures. Talent has been a number one priority for our members – hiring, training, and culture-building top the list of concerns. The industry must now brace itself for a major learning curve as we introduce new addressability models, tame down omni-channel measurement and implement a slate of privacy-enhancing technologies.
This year IAB Canada is committed to aiding our industry in its efforts to adapt. While we face the headwinds, we must also focus on the opportunities. Our sector stands to gain from identifying the diverse new skillsets and training tracks we’ll need to build out a sustainable future. Education is at the foundation of our growth. We invite you to participate in our discussions which are designed to break down in detail, the various new technologies and trends that will help insulate our growth. Check out our upcoming discussions and join us as we batten down the hatches and get smarter together.