The Marketer’s Toolkit: what marketers need to know to succeed in 2023 

Ninety-five percent of marketers globally expect to be affected by economic recession, according to a survey for WARC’s Marketer’s Toolkit 2023, an annual report that identifies the most important market trends that marketers should focus on to help drive their business in the year ahead. 

Context 

End-of-pandemic optimism at the start of 2022 faded quickly as the war in Ukraine turned the world on its head. The invasion has had a transformative impact on energy prices, inflation and the cost of living around the world. The IMF is forecasting the weakest growth in twenty years, except for the global financial crisis and the worst phase of the COVID-19 pandemic. 

Five themes for 2023

The following key themes emerged from WARC’s survey of 1,700 marketers worldwide for The Marketer’s Toolkit: Global Trends Report:

1. Marketing in a cost of living crisis: While almost all marketers are concerned about the impact of the economic crisis, more respondents are planning to increase spend than last year, across both brand and performance. However, 36% are planning to cut marketing investment, despite evidence from prior downturns suggesting they should maintain spending levels.
2. Price vs. planet: a false dichotomy: 37% of represented companies expect to continue with their sustainability objectives despite the economic situation, while 35% foresee only “some small compromises.” Brands are also challenging the idea that eco-credentials necessarily result in price increases, with examples of local sourcing and use of the circular economy potentially lowering costs.
3. A reckoning for Big Tech: The majority of advertisers (62%) agree that a range of changing market dynamics are forcing strategic shifts from the tech giants, and respondents concerned about the dominance of the ‘duopoly’ have halved over the past two years. More respondents plan to decrease investment in Facebook than increase it for the first time in six years, which suggests that brands are resetting their relationships with Big Tech.
4. The clash of demand, delivery and disruption: Supply chain disruptions are expected to hit brands in 2023, but not evenly. Sixty percent of marketers anticipate non-trivial supply chain disruptions, but just 26% expect they will be significant or severe. This rises to one in three amongst European respondents. And 52% felt challenger brands would be the hardest hit, as they struggle for profitability. Marketers have an important role to play in managing and minimizing supply chain disruption
5. The era of ‘bubble up’ culture: Media and audience fragmentation was the second biggest concern in our survey, with 34% of respondents picking it. Among North American respondents, it was the highest ranked. Two-thirds of marketers expect to focus more on platforms that allow them to stitch together interest-based communities to create reach in a fragmented media world. Other channels with deeply embedded communities such as gaming and influencers/social media content are also set to attract more investment from advertisers next year.

A sample version of the global report featuring the first chapter, is available to read here.

The full series, available to WARC subscribers, will include the following reports:

• The Future of Digital Commerce (launching December 2022)

• The Future of Media Report (launching January 2023)

• The China Toolkit (launching January 2023)

The reports will be complemented by a series of podcasts. 

Global brands’ carbon offset problem

Many major brands have identified a quick route to low emissions or even carbon neutrality, but a new study shows that such swift and relatively cheap solutions don’t actually work, and don’t replace the profound changes businesses must make to achieve carbon neutrality.

What are carbon offsets or credits?

When there’s a problem to be addressed, it’s more than likely that a business or even an industry will emerge to correct it. A mixture of accounting creativity and clever marketing, the carbon-offset industry is now worth north of $2 billion.

Carbon offsets are effectively packages of support that allow a business to fund environmentally friendly projects to the tune of their own carbon outputs, thereby theoretically negating carbon from their balance sheets and allowing the business to claim a significant reduction or even neutrality.

Do they work?

A new analysis from Bloomberg Green – which also does some good naming and shaming of those buying bogus credits finds that most purchases of carbon credits have favoured low-quality variants – the cheapest – and are often tied to renewable energy projects.

While that may sound good, the trouble is that an offset (which for the green projects are meant to allay the higher costs they face versus non-renewable or non-green projects) has next to no benefit when renewable energy is already far cheaper than coal or gas.

Bloomberg reveals that around 40% of the transactions analysed for 2021 went to these cheap and largely useless carbon offsets. In order for them to have any value, they have to cost money because they must be verifiable and have to be measured on effectiveness, not their cost efficiency. Funding effective (usually expensive, cutting edge) carbon reducing projects is hard.

It is on this basis that Salesforce recently created a centralised marketplace for carbon credits with a layer of centralised measurement to give peace of mind. Other services are also emerging to help businesses move their carbon offsetting practices to the much tougher task of reducing the business’s own emissions across their supply chain.  

This all looks very familiar

Those with experience of securitisation through collateralised debt obligations in finance, or the murky digital ad supply chain in marketing may notice that something similar is going on.

According to Bloomberg’s analysis, 47% of transactions studied didn’t have enough information to link them back to a buyer. It is, effectively, an opaque market when buyers and sellers need it to be.

 The trouble is that this confirms many people’s – often correct – perception that they can’t trust what most brands tell them about their carbon footprint. Greenpeace goes so far as to call it "greenwashing", and the extensive use of low-quality credits is likely to become more scrutinised and more embarassing.

What to do

Ad Net Zero is a good resource to understand where carbon credits should fit into a reduction plan. Effectively, they should only be used if they are totally unavoidable and should only seek to offset 10% of a business’s baseline emissions. The rest of those reductions should come from within the supply chain.

Sourced from Bloomberg, WARC

Canyon Bicycles aims for urban drivers, spotting cultural shift

Canyon, the German bicycle manufacturer that supplies some of its higher-end models for the WorldTour, is seeking to double sales of its urban bikes by the middle of this decade amid changes to mobility.

Why it matters

How people get around is big business, with brands such as Canyon and upstart Van Moof rethinking what they consider their competition and going after car buyers, mostly in urban locations.

From a marketing perspective, the automotive industry is a big spender on high-reach premium video and audio advertising, as well as the search advertising that befits high-involvement, deeply researched categories.

As people look to their own carbon footprint as part of a wider set of sustainability changes, bikes may well start to eat into a chunk of that spending.

What’s happening

In an interview with the Financial Times, Nicolas de Ros Wallace, CEO of Canyon, explains that one of the company’s key priorities now lies in urban cycling, an area where the brand sees “huge growth”. It aims to make this segment account for 20% of the firm's total sales.

The plan is to service this growth with chunkier models built for durability and cargo rather than speed or downhill performance.

With cities investing heavily in bike infrastructure, the CEO feels that urbanist trends fit in with sustainable transport. He also notes how even an extremely high-end bike is cheaper to run than a car – “you don’t pay insurance and you can park it anywhere”.

New techniques

E-bike growth is well documented, but the techniques to sell them appear to borrow increasingly from automotive. Canyon, for instance, nabs the term SUV for its €4,199 Pathlite SUV bicycle.

The new golf?

The SUV model differs from the kind of pared down racing machines favoured by middle-aged men in lycra (MAMILs) who have made the sport of cycling their new favourite, moneyed pastime. But the presence of a well-to-do audience of enthusiasts suggests there may yet be an opportunity to add more vehicles to these cyclists’ fleets.

Sourced from the Financial Times, Cycling.CC, WARC.

[Image: Canyon]