• by J. Walker Smith , Op-Ed Contributor, January 10, 2024

Happy New Year. Or perhaps I should say that it will be happy if we can get a good handle on what will be new in the year to come.

Forecasting is a fraught exercise, so I tend to look askance at the gusher of predictions that pour out at the turn of every new year.

It's better, I think, to focus on the pivot points that will shape the year. There are three big bets facing marketers.

Betting on AI

Everybody expects 2024 to be the year of AI. But the hype is about what marketers can do with AI — not consumers.

Back-office AI can summarize, compose, count, sort, model, monitor, report, code, translate and make lists better, faster and cheaper. Commercial processes will be transformed by smart technologies that are becoming smarter by the day.

Soon enough, a tech firm or two will announce a wholesale transition from people to AI — and ad agencies, financial firms and major manufacturers too. 

Consumers are different, however. AI will improve search and enhance the personal touch of apps and websites. This is good, but incremental, and not transformative.

It’s not clear yet that AI will matter as much for consumers as for business operations — because to date, there is no AI killer app for consumers.

Spreadsheets mainstreamed PCs. Email mainstreamed the internet. The app store mainstreamed smartphones. Browsers mainstreamed the web.

Consumer technologies — tech platforms in particular — live or die by the killer app that takes them to the masses.

A decade ago, I argued that smart technologies would usher in an era of "advertising to algorithms" — completely upending the shopping journey as consumers used them to sort out consideration sets and make buying decisions. What was missing then is still missing today, and that’s the killer app.

Marketers will have to make a bet this year about whether an AI killer app for consumers is in the offing.

Betting on Weight Loss

The big new abbreviation in marketing is GLP-1, which stands for a class of drugs known as glucagon-like peptide 1’s. Think Ozempic or Trulicity or Rybelsus, among others, which treat Type 2 diabetes by lowering blood sugar and increasing feelings of satiety.

It is the latter that also makes them effective in weight loss.

Three formulations of GLP-1’s — Wegovy, Saxenda and Zepbound — have been approved specifically for weight loss. A few early studies have found significant changes in diet and food shopping among people taking these drugs.

So, companies that would be affected by weight loss are paying close attention, from food manufacturers to clothing companies to insurance companies to sports equipment companies to medical equipment companies to surgical clinics to airlines, and more.

Paradoxically, while more people than ever are overweight or obese, lifespans and health spans are longer than ever. (The recent lifespan dip is due to opioids, not obesity.)

Drugs have offset or moderated some of the worst consequences of obesity. Many people prefer to medicate the consequences of obesity when they arise rather than doing without foods they enjoy. Food is at the center of almost every social and entertainment activity.

If weight loss also means the loss or even diminishment of social connection, not to mention some other costs and inconveniences of GLP-1’s, consumers may choose to do without these miracle drugs.

This is the same choice that consumers face today, and consumers have mostly decided against worrying with weight loss.

Marketers will have to make a bet this year about whether consumers will prove willing to make the lifestyle sacrifices associated with GLP-1’s.

Betting on Consumer Resiliency

The past three years have been an exceptional period of consumer spending. Pent-up demand from the lockdown year of 2020 plus excess savings accumulated during quarantines meant a surge of spending.

Inflation soared as supply-chain snarls and labor shortages prevented companies from keeping up with demand.

Lots of companies took advantage of high inflation and robust spending with big price hikes — to the point that for many companies, price increases provided top-line growth even as unit volumes were declining. This is all well and good as long as the money lasts. Which is precisely the challenge ahead.

Inflation has moderated. Job growth remains strong. Real wages are up. And consumer spending was strong over the holidays.

But there are red flags. Consumer sentiment remains weak, even with recent upticks. Only economists seem to feel upbeat about the economy. Consumers report worry, anxiety and struggle.

The rate of inflation is lower, but prices are still rising. Plus, the overall level of prices is higher due to the compounding effects of inflation over the past few years.

Interest rates are much higher than before and will remain higher for the foreseeable future, which has made credit cards and housing a struggle.

The savings rate has plummeted. Aggregate consumer debt is at record highs. And delinquencies, while low by historic standards, are on the rise, as well as bankruptcies.

The cost-of-living crisis of the past few years may soon give way to a cost-of-money crisis.

Marketers will have to make a bet this year about whether consumers will be able to keep leaning into spending.