2023 predictions for SEO, Growth and Tech
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Welcome to my annual predictions
Previous annual predictions:
Scoring my 2022 predictions
As always, let’s start with a review of my predictions for 2022.
Inventory is a competitive advantage
In 2021, we had significant supply chain issues that led to product shortages across the board. My prediction was supply shortage would sustain into 2022 and make inventory a competitive advantage - and I was right. The supply chain problems were too large to disappear within a year.
Even big retailers like Walmart or Gap were struggling to match supply with demand [source]. Amazon performed well in Q1 but felt the impact of supply shortages [source]. Some goods were stored in excess, others couldn’t be reordered fast enough. Astronomical shipping costs for containers shot a big hole into 2022 revenues and profits, especially for D2C (direct-to-consumer) companies like Allbirds, Stitch Fix or FIGS [source].
Two logical 2nd order effects:
- Demand for supply chain software was up to better manage whatever was left of the process [source]
- Reshoring (bringing production back to your home market) has become a trend in supply chain management [source]
Organic traffic reverts back to baseline, in some cases, below
My expectation in 2021 was search volume for pandemic-related keywords come back to a pre-pandemic baseline and maybe even drop below. That was wrong. My thinking was that trends would revert to pre-pandemic status as a sort of recoil effect.
Searches for terms like “food delivery” did drop below their pre-pandemic average.
However, searches for “home workout” came back down from their peak in April/May 2020 but stayed above their pre-pandemic average.
Other keywords I looked at in 2021, like “nintendo switch” and “kettlebells” show the same trend.
Products like dress shirts for men rose to new levels…
… even though remote work is more popular than ever.
So, all in all, I got this one wrong. It will be interesting to see if the economic downturn can change this trend or if some pandemic trends sustain. It would make sense that people keep some habits they were forced to adopt during the pandemic simply because they realized it’s worth keeping (e.g., home workouts).
More companies will grow through M&A
In 2021, I predicted mergers & acquisitions would go through the roof. I couldn’t have been more right here. Economic downturns always open the door to cheap acquisitions, and 2022 is no exception.
Some of the most noteworthy Tech acquisitions of 2022:
- Microsoft bought Activision Blizzard for $68.7B [source] and was sued by the FTC for anti-competitive behavior
- Broadcom bought VMware for $61B [source]
- Elon Musk bought Twitter for $44B [source]
- Adobe bought Figma for $20B [source]
- Take Two, the gaming studio, bought Zynga for $12.7B [source]
- UBS wanted to buy Wealthfront for $1.4B, but the acquisition fell through [source]
- In January, the New York Times bought The Athletic for $550m [source] and Wordle
A lot also happened in SEO acquisitions:
- Semrush bought Backlinko [source]
- Conductor bought ContentKing [source]
- Similarweb bought RankRanger [source]
I expect even more acquisitions over the next 2 years. Economic downturns are the biggest opportunity to eat competitors and market consolidations.
Brand strength will become a success-gateway
In 2021, I predicted that benefits from a strong brand, like direct traffic and better conversion rates, would be even more important in 2022. I think I got this one right.
Companies that grew successfully through performance marketing before the pandemic, like Warby Parker or Allbirds, struggled significantly in 2022 [source]. At the same time, Airbnb reduced performance marketing since 2019 and invested more in brand marketing.
Rising advertising cost and bad macroeconomics in 2022 showed that companies cannot thrive on good performance marketing alone.t
Other noteworthy trends to call out
2022 felt like a full year. Or maybe I’m just getting older, and every year feels full.
In my mind, the 5 big trends of 2022 were:
- The economic downturn
- Apple’s tracking policy
- The fall of social platforms
- Layoffs and the decision to stay remote or come back to the office
- AI instead of Crypto as “the next big thing” in Tech
2022 was also the year of poor corporate governance. Sheryl Sandberg left Facebook after Mark Zuckerberg bet the farm on the Metaverse. The duo ran Meta quite well. Is Mark Zuckerberg now old enough to run Meta by himself, or will he run it to the ground?
Another example of poor governance is Elon Musk. Fitting the stereotype of crazy and genius, Musk kept antagonizing people left and right, some of which can influence regulatory decisions over Twitter.
The last example of poor governance is Sam Bankman Fried (SBF), who committed large-scale Fraud with his companies FTX (crypto exchange) and Alameda Research (crypto trading firm). Lots of (popular) investors did no due diligence on either company, which is also a form of bad governance.
This brings me to 2023, which is all about technological progress.
Google launches a Chat GPT competitor, trained on Search data
The hottest topic in Tech at the end of 2022 is Chat GPT and generative AI. It’s by no means perfect, but part of the fascination is that Chat GPT can even answer longtail questions (see below).
The Chat GPT hype has created a lot of buzz for OpenAI, the developers of GPT. While I don’t think Chat GPT or any other GPT model is dangerous for Google right now, it could become a thread in a few years when generative AI has gotten a lot cheaper and models fine-tuned.
Many say AI, in its current state, is like an intern on steroids. But many CEOs started as interns. So, the question is, how fast can OpenAI’s models learn with all the buzz they got from Chat GPT?
Google needs to create its own buzz. It’s one of the biggest investors and innovators in AI. That’s why I think Google will launch an even more impressive Chat GPT competitor in 2023, based on Search data.
One of the weaknesses of Chat GPT is that it never had access to e-commerce, local retail, or other listings. It can’t give an answer to “find me the best plumber in Chicago”, because it has never seen plumbers in Chicago. Google has the data and could use it to train a Large Language Model (LLM).
The obvious downside is Google can’t disrupt its own search results by providing a free model that gives a singular answer. That’s why I think a Chat GPT competitor from Google would simply be a demo that serves a different purpose: demonstrate Google’s AI capabilities. Google’s best bet is to become a platform for trained ML models platform for developers. Google Cloud would become immensely powerful.
“When people dig for gold, sell shovels.”
Most SEOs use at least one AI tool in their day-to-day work
Notion added a generative AI feature for text summarization. Canva has a text-to-image generation feature. Why shouldn’t SEO tools add AI features? I think they will and predict that the majority of SEOs use at least one AI tool/feature in their key workflows by the end of 2023.
I could see features like traffic forecasting, better link and keyword gap reports, content opportunities reports, and alerting systems being powered by machine learning and speeding our work up significantly. I also think AI content tools will be good enough to speed up content creation and optimization work. I don’t think AI writer tools will replace content writers but solve tasks like outlining, brainstorming, and editing.
Mass-created AI content is a disruption to Google’s ecosystem. The announcement of EEAT (the extra E stands for Experience) is a reinforcement of Google Product Reviews Update, which says that reviewers should demonstrate that they used or experienced a product, but also a light shield against non-human content. A lot of companies will have to hire subject matter experts to review and edit “amateur content”, which I wrote about in 2021 in The End of Amateur Content. AI tools will speed up the creation of amateur content but can’t replace subject matter experts.
Fewer crypto millionaires, more creator millionaires
People always followed tastemakers, but the internet lifts this human behavior to a new level. Creators, the new influencers, get so much reach that they can compete with companies. Mr. Beast got as many Youtube views within 24h as the Superbowl in 2022. Even Google addresses webmasters as “creators” now in their documentation and blog articles.
In 2023, we’ll see a lot more creators who make at least one million USD in ARR (annual recurring revenue). The creator economy is estimated to be ~$100B, larger than the film industry [source].
After the crypto meltdown in 2022, we’ll see a lot fewer crypto millionaires. Private and public investors will try to save the money they already put in Crypto but not invest in coins outside Bitcoin and Ethereum, which have the potential to become currency on some platforms. But when it comes to Gen-Z and Millennials, they will prefer spending their time building audiences than trying to get rich quickly through Crypto.
Mr. Best has 120m Youtube followers. But he’s beaten by Charli D’Amelio (149m) and Khaby Lame (152m), who built their audience on TikTok.
TikTok gets banned in the US; Bytedance either sells TikTok or spins it out
TikTok is one of the best consumer products on the market, but its ties to the CCP (Chinese Communist Party), in combination with excessive tracking, make it a spy tool and dangerous weapon [source]. If people were outraged by the Cambridge Analytica scandal and what happened on Facebook, they will lose their minds about TikTok.
The US government will ban the app in 2023 until Bytedance spins TikTok out as a US subsidiary or US regulators are convinced the CCP cannot access servers with data from US citizens. If you think the US government “cannot do that”, keep in mind they already have. In mid-December, the US Senate voted unanimously voted to ban TikTok on government phones [source]. India has already banned TikTok, and Australia and Taiwan are looking into it.
The TikTok case also adds a new axis to antitrust: international companies. So far, antitrust was mainly a concern for US companies. Now, the game has changed to also include international companies. There is a difference between US companies and the US market. The FTC and DOJ will need to take the implications of regulating US companies on international politics into account.
Meta, the former throne steward of social media, meanwhile faces other types of challenges.
Meta monetizes Whatsapp with either ads or a subscription
In 2022, Meta’s profits shrunk through a double-whammy from a $10 hole by ATT (Apple Tracking Transparency) and another $10b investment in the Metaverse. The stock lost ⅔ of its value, and the US market is saturated. Instagram, specifically Reels, is one of the few growth drivers the company still has.
In 2023, Meta will monetize Whatsapp harder. Whatsapp is estimated to have over 2 billion users (more than TikTok). Meta launched a business version in Brazil, The UK, Indonesia, Colombia and Mexico that lets users browse local directories of businesses and message them for support [source]. In some countries, Whatsapp has the same utility as email.
While I don’t think Whatsapp will charge users directly (tried and didn’t work), Whatsapp leans harder toward charging companies for in-app analytics and other services and Whatsapp payments. 2 billion users is too much attention and also too much infrastructure cost to pass on, especially when Meta is struggling.
One former Meta employee has what it takes to turn the dumpster fire that is Twitter around.
Sherly Sandberg becomes CEO of Twitter
Twitter is a dumpster fire. At some point, Musk will get tired of the constant backlash and problems and realize that he has more important work to do at Tesla, Neuralink, SpaceX, OpenAI and The Boring Company. He will look for a neutral CEO with a proven track record. Who could be better than Sheryl Sandberg?
After Elon banned journalists from Twitter, European Union lawmakers warned about crossing a line and violating the DSA (Digital Services Act). Twitter is not the only company they’re looking into.
Apple gets a lot more regulatory heat
Apple has lived in regulatory shadows for too long. Tim Cook used privacy as a shield to take tracking capabilities away from 3rd parties with iOS 14.5 while seeing no issues when Apple tracks users because it’s the 1st party. But that’s not even the problem here.
In 2023, regulators will look into two issues and potentially sue Apple for anti-competitive behavior. One is the 30% tax on apps living on Apple App Store. Apple Music and Spotify are competitors, but even if Spotify has the better product, they have to share 30% of revenue from Apple devices with Apple. The case reminds me of Microsoft’s antitrust lawsuit from 2001, in which Microsoft was charged and prosecuted for abusing its platform power.
The second issue is Apple’s $20b deal with Google to make it the default search engine on Apple devices. Every year, Apple receives a growing fee from Google that is 4x of Netflix’s 2021 profits, 2x the 2022 budget of the CDC and roughly the GDP of Bosnia. Google’s competitors either can’t afford that lever (DuckDuckGo, Neeva) or aren’t invited to the table (Bing).
The recession hits the world hard; more layoffs, bankruptcies and acquisitions
Lastly, I predict a continuation of one ugly trend for 2023 that started in 2022: a global recession. In Q4 2022, we saw more layoffs than in Q2 2020, but 2023 will beat them all. Tech companies still have too many employees relative to their revenue, and rising interest rates will suppress consumer spending to a level that will drive companies that struggle today into bankruptcy tomorrow.
What do you think about next year? Where am I wrong; where do you agree?