Marketer's Toolkit 2023: A new pattern for global advertising investment?
Marketer's Toolkit 2023: A new pattern for global advertising investment?
The coming 12 months will potentially usher in a new pattern for global advertising investment as digital investment growth slows, media planning is re-assessed and pressures for industry reform continue to grow, according to the latest instalment of WARC’s Marketer’s Toolkit 2023.
Why it matters
Against a backdrop of economic crises, geopolitical complexity, spiralling inflation, supply chain disruption, and structural technology shifts, marketers are re-evaluating their approach. Ad spend is growing but at a slower pace.
WARC’s latest forecast anticipates a $90bn reduction in global ad market growth for 2022 and 2023, meaning digital media owners are likely to fight harder for ad revenue growth – and, increasingly, will compete with one another for ad dollars.
Meta’s first-ever year-on-year quarterly revenue decline – announced last July – may one day be seen as the moment the digital advertising industry tipped into a new, less expansive phase.
Key trends
The Future of Media report, part of WARC’s annual Marketer’s Toolkit, highlights key trends in three vital areas: advertising investment, media planning, and industry reform.
- Digital investment reaches the top of the ‘S’ curve
Nearly a third of WARC’s Marketer’s Toolkit respondents expect 2023 marketing budgets to be lower than 2022. WARC has downgraded its global advertising investment forecast to $880.9bn, removing $90bn of growth potential for 2022 and 2023.
Retail media is increasingly favoured by advertisers, and is now the fourth-largest medium by ad spend, with global investment totalling $110.7bn in 2022 and forecast to reach $121.9bn in 2023.
Marketers are rebalancing their ad budgets, decreasing investment in offline channels and increasing spend in online video, social media and gaming. TikTok ranked top for increased investment in 2023 by 76% of marketers, according to WARC’s Toolkit survey.
- Fragmentation calls for more fluid media planning
More than a third (34%) of survey respondents identified media and audience fragmentation as one of their biggest causes for concern when drawing up plans for 2023. The situation calls for advertisers to adopt a more fluid approach to media planning and branding, and one that emphasises the importance of communities over basic demographics in segmentation.
While over half (52%) of survey participants expect to increase investment with social media influencers and creators as a whole, two-thirds (65%) are planning to work with content creators to connect with communities “aligned with specific interests authentically tied to the brand”.
- Fixing the media ecosystem
More than half (54%) of US respondents to the Marketer’s Toolkit survey said that media planning recommendations in 2023 will include more diverse publishers, reflecting the importance of minority audiences in that market.
However, with only a third (34%) of advertisers planning to include more low-carbon alternatives in their media plans in 2023, it is clear more work must be done to persuade marketers of their role in combating climate change.
WARC says
“While the breakneck speed of growth in ad investment witnessed in 2021 could never have been maintained, media owners like Meta, alongside brands and agencies, are also challenged by other fundamental issues – from cleansing the ecosystem of misinformation, using ad dollars to promote greater diversity and inclusion, attracting and retaining the right talent, to saving the planet from catastrophic climate change” – Alex Brownsell, Head of Content, WARC Media.
The Future of Media is the third in a series of four reports that make up The Marketer’s Toolkit 2023. Based on exclusive data from WARC Media, findings from a global survey of 1,700+ marketers, and interviews with with senior marketing leaders, the report is a guide to help brands focus, survive and thrive in 2023 and beyond. A complimentary sample of this report is available here. WARC clients can read the full report.
Kimberly-Clark looks to innovation and the long term
Kimberly-Clark looks to innovation and the long term
Kimberly-Clark, which owns hygiene brands including Kotex, Kleenex and Scott, is increasing its advertising spend back to 2020 levels as it backs new product innovation to make inroads in highly competitive consumer packaged goods categories.
Why it matters
In difficult economic times, many brands cut back on advertising and adopt a more aggressive discounting strategy. But Kimberly-Clark is bullish, investing in its brands now for long-term growth pay-offs down the line.
Leveling up ad spend
On a Q4 earnings call, chairman and CEO Mike Hsu explained that the business was “taking advertising back up a little bit more” after some pandemic-period reductions. “We’re excited about the programs that we have and we want to invest behind them,” he said. “And at this point, we’re pretty good at evaluating the returns of our investment and making sure that they pay out.”
Turning away from discounting
After several months of a highly promotional pricing environment, Hsu is less inclined to continue down that particular path, preferring to invest in advertising and brand building, which he believes are better for the long-term health of the company’s brands.
“I’m not a fan of driving the business through promotion,” he stated. “We can do it effectively, because we know our ROIs on trade promotion as well as we know our advertising ROIs.” And while the returns on both are satisfactory, “I like the advertising ones better,” he added. “That’s my go-to, and I think it’s better for the long-term health of the brand.”
Looking for long-term category growth
Kimberly-Clark’s retail customers aren’t keen on passing price increases to consumers – an unpalatable but often necessary decision in inflationary times – and are more focused on long-term category growth and how the company’s brands plan to deliver it.
“Part of what they’re looking for from us is to make sure that we’re bringing commercial programming to grow the category for the long term,” Hsu said.
“They’re excited about our innovation and they’re excited about the commercial ideas that we’re bringing this year. They want us to bring it, and so that’s probably the bigger reason why we’ve ticked up the investment in our advertising.”
Sourced from Seeking Alpha
[Image: Kimberly-Clark]
Diageo backs its effectiveness plan, increases spend
Diageo backs its effectiveness plan, increases spend
Diageo, the alcoholic beverage company, is seeing the benefits of proving marketing effectiveness, with increased transparency on quality, and performance of its marketing campaigns convincing executives to further boost marketing budgets.
“We built a lot of sophistication in the data, analytics and tools we now have to assess marketing effectiveness,” said CEO Ivan Menezes on its recent Q2 2023 earnings call.
“As we look to the second half [of the financial year], we see very good opportunities to step up the investment behind our brands. This is built up by market, by brand and very much with the degree of confidence on returns,” he said.
Why it matters
By building a data and analytics operation to better understand its marketing effectiveness, Diageo has been able to make more informed investment decisions with clarity around what is working and what isn’t. This experience offers a case study to other brands on the same path.
By the numbers
- Net sales up 9% with growth across all regions.
- Volume grew 2% even as brands implemented strategic price increases.
- On a constant basis, Diageo is 36% bigger than pre-Covid.
- Strong growth in Scotch, up 19%; tequila, up 28%; and Guinness, up 17%.
Thinking long term
Marketing at Diageo is not just to make the second-half sales numbers, it is about the next three years, Menezes said.
“Everything in our business – upweights and marketing – are not for short-term return alone. You do get some short-term impact, but the bulk of the impact really comes down the road and in line with our goal to be a very reliable top-tier compounder,” he explained.
“This flywheel of Diageo [is to] upweight investment, drive efficiency and get quality top-line growth…We want to ensure we’re setting ourselves up well for the quality of growth through the medium term, but it’s going [with] very specific brand opportunities where we have a high degree of confidence in the return that we will get for this investment,” he added.
“The quality of our marketing continues to step up significantly, and I feel really good about that.”
Sourced from Seeking Alpha
[Image: Diageo]
It’s time for brands to prioritise climate change
Last year, brands were criticised for greenwashing, others for not doing enough, with only a few making positive changes, but new legislation could push brands to finally take concrete steps to tackle climate change but it'll need to go beyond mere compliance.
Why it matters
People are spending less time online but more time on social
People are spending less time online but more time on social
Online behaviours are changing again, with people around the world cutting their average daily internet use post-pandemic, even as they up the amount of time they spend on social media so it now exceeds the time spent watching broadcast and cable TV.
That’s according to Digital 2023, the latest annual report on social media and digital trends worldwide from socially-led creative agency We Are Social and social and media intelligence firm Meltwater.
Key stats
- Average daily internet use has declined almost 5% over the past year and now stands at 6 hours 37 minutes.
- Average time spent on social platforms has increased to more than 2.5 hours per day — 40 minutes more than the time spent watching broadcast and cable TV.
- 16- to 34-year-olds are now more likely to visit a social network when looking for information about brands than they are to use a search engine (48% vs. 45%).
- Half of the world’s social media users say that they actively visit social platforms to learn more about brands and see their content.
- The rise of TikTok search has grabbed headlines but the latest data suggest that Instagram is social media users’ preferred destination when researching things.
- TikTok tops the global list of social media platforms when it comes to time spent per user on Android devices, followed by YouTube and Facebook.
Why it matters
The study suggests that people are looking for more purposeful internet use, with a focus on quality over quantity. That seems debatable given the rise of algorithmically-powered platforms like TikTok; but it’s certainly the case that they’re spending more time on social, the platforms they use are changing, and how they use them in relation to brands is also shifting.
Marketers have to better understand the role of different social platforms in the customer journey and deliver relevant content that can capture attention and engagement, both there and in other digital channels.
Sourced from We Are Social
