4Ps are key as e-commerce players look for profit

Marketers for companies that sell goods online should return to the 4Ps of product, price, place and promotion to counter the changing fortunes of e-commerce, according to a new WARC exclusive report by JP Castlin and James Hankins.

Why it matters

Brands in retail and many other sectors have increased their focus on direct sales to customers online in recent years. But the rise in online sales has – according to the authors – had a negative impact on profitability. In a gloomier economic climate there has been a shift in emphasis from growth to profit, increasing the pressure on businesses that sell principally online – the collapse of Made.com in the UK is an example.

What do they recommend?

Castlin, a strategic management consultant, and Hankins, Global VP Marketing Strategy and Planning at Sage, argue in the white paper that marketers in these companies can mitigate this pressure. For example:

• Optimising fulfilment – for example, by developing a 'marketplace' approach that brings additional products or brands into the mix offered to consumers;
• Rethinking pricing, including delivery and return fees;
• Investing in proprietary ad networks (retail media);
• Using brand-building advertising to soften price sensitivity among consumers.

Where can I find out more?

The full report is available to subscribers of WARC Strategy and WARC Digital Commerce via warc.com. For one week only it is available to download to non-subscribers here.

Final thought

"Companies that fail to mitigate the cost of e-commerce will find themselves dangerously exposed. Not only is consumer demand shifting, but capital is, in the wake of rampant inflation and subsequent interest rate hikes, becoming increasingly expensive and difficult to come by."

Ad Net Zero USA seeks to drive industry climate action

Ad Net Zero USA, a program seeking “collective industry action to decarbonize ad operations” and promote sustainable habits, has launched with the backing of various leading trade bodies and marketers.

Five key goals

Five goals for Ad Net Zero USA are:

• Brands committing to reducing their emissions in clear, measurable ways.
• Clients, agencies and production companies using tools and training to track, manage and reduce the environmental impact of ad production.
• Media agencies, working with clients, achieving similar goals for media distribution.
• Event organisers incorporating sustainability credentials into their entry criteria and minimising the carbon footprint of industry gatherings.
• Using the power of advertising to encourage more sustainable consumer choices and habits.

Big-name backers

• Ad Net Zero USA is spearheaded by the Association of National Advertisers (ANA), American Association of Advertising Agencies (4As) and Interactive Advertising Bureau (IAB), three leading industry groups.
• More than 50 other organisations have signed up to this program, which hopes to bring change to a market that is responsible for 40% of global adspend.
• That list includes consumer packaged goods manufacturers Reckitt and Unilever, and media owner Vox Media.
• Agency holding companies dentsu, Havas, Interpublic Group, Omnicom, Publicis Groupe and WPP are also on board.
• Further representation comes from tech giants Meta and Google, programmatic ad company PubMatic and trade body IAA, as well as WARC and Cannes Lions.

Further details

• Ad Net Zero was launched in the UK by the Advertising Association, in partnership with fellow trade bodies ISBA and the IPA, in late 2020.
• An initial commitment is to deliver training which is tailored to the US market and helps industry professionals understand the steps they can take in tackling climate change.
  
• Several US working groups, focused on tools and techniques for reducing carbon emissions, will be founded around the five priorities shaping the Ad Net Zero agenda.

The big idea

“The time is now to unify the advertising industry to solve one of the toughest challenges facing our industry and the world.” – John Osborn, director, Ad Net Zero USA.

Google steps up AI arms race with Bard

Following the cultural success and early commercial promise of ChatGPT, Google has announced its competitor with access to up to date information and a far larger language model to draw on, just one of the major search companies now coming to market – here are a few ideas about what makes Bard’s release different.

Why it matters

OpenAI’s ChatGPT was exciting and novel, but it was based on Transformer technology (the T in the GPT) invented by Google, which also has a much bigger and more developed language model in the shape of LaMDA.

However, powerful applications at the scale of Google are difficult to do, so it is interesting to see the company treading carefully in the space while also leaning on its existing leadership in search, and adding a little detail to the AI promises of its most recent earnings announcement.

This said, the announcement so hot on the heels of ChatGPT’s smash hit demo does a lot to confirm reports that Google had been in a ‘code red’ situation – it’s worrying that such world-changing technologies could come down to a rushed arms race.

Introducing Bard

In a blog post, Google CEO Sundar Pichai introduced the new product as a conversational AI service intended to outflank ChatGPT in one key dimension: “It draws on information from the web to provide fresh, high-quality responses.” This is an area that ChatGPT’s public demo has been unable to do and will be far more difficult for the smaller company to emulate.

Conversational AI will also start to bleed into the search experience “soon”, Pichai writes, noting that lots of searches are moving beyond the factual and into the space of insights – he gives the example of asking which instruments are easier to learn, which requires an engagement with different perspectives.

But it’s worth thinking about some of the other issues that Pichai addresses:

• Bard will initially run on a lightweight version of LaMDA. This is interesting because it lets Google attack the space at scale, potentially without much of the throttling that has hampered users of ChatGPT at peak times.
• Ultimately, these systems are very costly to provide at the level of computing with some estimates suggesting natural language searching is seven times more expensive than a traditional search.
• Like ChatGPT’s public release, this iteration of Bard is a test and user feedback is critical. Arguably, Google’s reputation raises the bar that Bard’s accuracy and truthfulness must meet far higher than that of the startup.
• There remains a significant question, however, about how these services will affect how Google monetises its services should it pivot further into AI.

Baidu and Ernie

IT publication The Register adds more colour to the rumours of Baidu’s new chatbot, which will be known as Wenxin Yiyan in China and ERNIE outside China. Based on a language model larger than GPT3, and born bilingual, the chatbot could turn out to be extremely important in the development of the field (and to the operations and fortunes of global brands operating in China) once it completes testing in March.

Sourced from Google, WARC, The Register, New York Times