This article originally appeared on SEM World

In terms of the economic outlook, we have not had a great start this year. The global recession has spurred several layoffs, while banks are trying to curb inflation by raising interest rates and reducing market liquidity.

However, we can derive some comfort from knowing that this isn’t the first recession we are facing. We’ve done this before, and we’ve come out on the other side- the question now is how we’ll continue to face these turbulences which come right behind a pandemic and yet find opportunities that can help us sustain growth.

In that context, the retail industry can and should expect some amount of turbulence, as preferences shift from wants to needs, and even the most discerning customers tighten their belts. But as we have seen time and again, when a market emerges from tough times, it tends to spend a lot more than it did before the event came to pass.

One trend we anticipate when it comes to retail is the shift in focus to emerging markets. The global economic outlook may not necessarily apply evenly across all regions. South East Asia, which has seen about an 11% penetration of online commerce so far, is still ripe and ready for growth as a market. The region has a population of 450 million who are over 15 years old. Of this, 82% are digital consumers. For brands considering expansion, this may actually be the best time to move quickly and capitalize on opportunities in this region.

Changing face of advertising

The other trend we expect to see is the changing face of advertising. On one hand, several large consumer brands have indicated that they will be increasing their marketing and advertising budgets, with digital advertising expected to go up by over 30%. The story may be different when it comes to smaller, mid market brands, with limited financial muscle. Many might consider cutting down on ad spends right now, and the reasons for this shift are diverse, from platforms themselves becoming unwieldy, to a lack of clear visibility into what exactly every dollar spent is doing for the brand, its reach, or its revenues.

We’re already observing a clear shift from spending on search and social channels to spending on marketplace ads. It may not be long before marketplace ads dethrone Facebook and Instagram as preferred marketing channels for consumer brands. It also makes sense to allocate budgets to marketplaces that are already receiving footfall from curious customers.

Another aspect to consider around targeting is the most recent iOS update that gives people the option to opt out of their data being used to serve ads. New buyers on iOS are now a huge blind spot, as are existing buyers who opt out of being tracked. This problem of discovery is another reason why high-intent channels like marketplaces will be the best places to invest ad budgets in.

Speaking of discoverability, companies that have managed to build trust and loyalty over time will be pleasantly surprised by the leverage that a brand’s value can hold. When fear dominates, consumers tend to make choices that feel safer. Investing in building and maintaining brand equity is not just about influencing consumer preference and loyalty. Brands are increasingly seeing the benefit of a higher, and steadily increasing, customer lifetime value as a means to improve revenue margins.

In the age of AI?

Battling economic headwinds, what we at Graas expect to see heavily this year is brands’ focus on profitability. This is where algorithmic eCommerce has a powerful role to play, in being able to optimize across parameters and at scale, with a greater degree of accuracy than ever before, allowing them to realize more effective outcomes and a definite positive impact on their bottom line. As Andrew Ng, the founder in some ways of the modern AI movement says, “There are surprisingly clear paths for AI to make a big difference in every industry.” The time for a retail-AI partnership and the era of algorithmic eCommerce has well and truly arrived.

Authored by : Prem Bhatia, CEO and Co-Founder of Graas

-Prem Bhatia is the CEO and Co-Founder of Graas, a company offering Growth-as-a-Service to eCommerce businesses worldwide. Prem is a serial entrepreneur and investor, with a career spanning over 20 years. He has worked closely in the areas of advertising, media and technology in several countries, including USA, UK, India, UAE, Singapore, and China, amongst others.

Authored By Prem Bhatia, Co-Founder and CEO, of Graas.