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3 in 15: Drivers of brand growth

In this episode of the WARC Podcast we unpack key themes from WARC’s latest EMEA Spotlight, Drivers of brand growth.

• Lena Roland is joined by Catherine Driscoll, Commissioning Editor EMEA for WARC Strategy, to discuss three themes.
• Lena and Catherine discuss Paul Dyson’s drivers of advertising profitability, optimising the balance between brand and performance marketing, and the importance of distinctive brand assets.

Lsiten to the episode in full here

Timestamps

01:14 – Why choose to report on drivers of brand growth?

02:06 – Paul Dyson’s drivers of advertising profitability.

06:42 – Optimising the balance between brand and performance marketing.

09:32 – Take care of your brand assets.

Further reading

Drivers of brand growth: A deep dive into how advertising works today

Growth efficiency: a new metric to monitor brand health and generate future sales growth

Short-term sales efficiency is not an indicator of how efficiently a company can grow, but by measuring longer-term growth efficiency, scale-up brands can plan for profitable growth, according to a new report from WARC.

Growth Efficiency: Marketing’s Existential Metric, produced in partnership with brand tracking company Tracksuit, and WARC sibling company Perpetua, a provider of e-commerce advertising optimization and intelligence also highlights that building brand awareness drives greater effectiveness in performance marketing.

Key findings

• The Paradox of Unscalable Efficiency
  A common pattern among brands seeking to scale up is that at a certain point, growth plateaus, becomes more expensive, and previously strong performance marketing metrics, such as ROI or ROAS, decline.

• Growth Efficiency and Brand Strength
  High awareness brands generate more than twice the sales lifts of low awareness brands as they increase their spend. At a 10% spend increase, high awareness brands yield an average 13% sales increase, while low awareness brands yield just a 6% sales increase.

• Future demand and growth efficiency
  Very low awareness brands (1-5%) with small overall sales have very high growth efficiency. But as those brands grow past a certain scale, if they haven’t built awareness among Future Demand, their growth quickly diminishes. 

• Modelling growth efficiency as brands scale
  When brands scale up awareness at the same time as scaling up performance spend, sales can continue to happen very efficiently and brands can grow profitably into a much bigger and much more valuable business.
  Greater levels of brand awareness supports greater levels of growth efficiency. Both are critical to sustainable, profitable growth. And the latter is very much dependent on the former.

A complimentary sample report is available to read here. WARC subscribers can read the report in full. 

Where to start with marketing mix modelling

In a new report, WARC and Magic Numbers delve deep into the fundamentals of marketing mix modelling, an essential technique as advertising moves away from cookie-based measurement. 

Why MMM matters

While advertisers may now have a better understanding of what MMM is, and why it’s so useful, there remains a gulf of knowledge about how to bring MMM into the marketing organisation, and what to do once it’s set up. 

WARC members can read the report here. 

What the report covers

The guide is divided into five chapters, covering key topics including how to implement MMM successfully, how to interpret and use MMM results, and frequently asked questions. Finally, the report looks into effective uses of MMM through three brand case studies: 

• Wagamama
• Mars Petcare
• Cazoo

Key quote

“When done right and communicated well, MMM gives people the confidence they need to make the right moves and succeed with their marketing” – Dr Grace Kite, Economist and Founder, Magic Numbers. 

Indonesia delivers blow to social commerce

The Indonesian government is to ban social media companies from taking direct e-commerce payments on their platforms, as it seeks to protect millions of offline small and medium-sized businesses from being squeezed. 

Why a social commerce ban matters

It’s a particular blow for TikTok’s ambitions: its TikTok Shop is one of the app’s most popular features in Indonesia, and it hoped to replicate that success in other countries as it pursues a target of quadrupling e-commerce sales in 2023.

Where next?

Legislation has yet to pass but it seems likely that promotions will still be permitted. Marketers will almost certainly have to rethink their budget allocations and content strategies; a shift from performance to brand marketing could follow. 

Meanwhile, authorities around the world will be watching with interest to gauge the impact of the restrictions and to study TikTok’s response as they contemplate regulation of a new and fast-growing area of commerce.

Final thought

“This could be an excellent opportunity to carry out small test-and-learn campaigns with channels which have not been overly crowded by brands, making them cheaper channels to spend on” – David Lim, principal consultant at Avante Strategies, speaking to Campaign Asia.

Sourced form Verdict, Campaign Asia

Does resale really reduce carbon emissions?

Resale does little to reduce the carbon footprint of fast fashion brands, although it can have a meaningful impact for premium apparel and outdoor brands, a new study finds.

Why resale matters 

Parts of the fashion industry, in the spotlight for the levels of carbon emissions and waste generated, are attempting to address environmental problems by encouraging resale. 

But for fast fashion brands, “it’s misplaced effort”. That’s according to Andy Reuben, co-founder of the branded re-commerce solution Trove and an author of the new report, ‘Where Are Circular Models Effective Sustainability Strategies for Fashion Brands?’.

“What they’re basically doing is moving around items that hold none of their value, which is a marketing program,” he told CNBC. 

The carbon reductions for such brands are less than 1% but move up the scale for premium apparel and outdoor brands, with resale able to reduce emissions by around 15%.

Takeaways 

• All brands can decarbonize their products through supply chain interventions – updating designs to eliminate production waste, sourcing more recycled materials, installing lower energy machinery. 
• Resale is a more viable option for durable products that retain their value. Brands can also optimize parameters such as resale price, sell-through, and trade-in values. 
• Maintaining operational control in managed resale gives brands a direct means to capture Scope 3 emissions reductions. 

Key quote

“Brands have to demonstrate meaningful investment into shifting their model. When they’re kind of skirting around the edges, by doing either a branded peer-to-peer site or working closely with a marketplace, they’re not actually shifting their model. They’re continuing to do the things that got their carbon emissions” – Gayle Tait, CEO at Trove.

Methodology

For the report, Trove, a supplier of “branded recommerce solutions”, modeled the carbon footprint of 38 products across five apparel brand archetypes (premium, outdoor, mid-tier, athleisure and fast fashion) to understand the impacts of decarbonization and circular strategies.

Sourced from Trove, CNBC

EA Sports FC: can a product outweigh a brand?

With the launch of EA Sports FC 24 this week, the game formally known as FIFA breaks away from the football governing body that had helped build its name, but it remains to be seen if the rebrand will be any barrier to success, or if the game publisher has put sufficient media and creative support behind it.

Why FIFA/EA Sports FC matters

When news of the conscious decoupling broke back in 2022, WARC noted how difficult it is to explain to non-players of the game just how important it is to the gaming world. It is the sixth best-selling video game franchise of all time globally (only titanic entities like Mario, Pokémon, and Call of Duty have outsold it). Across Europe, it was the top selling game last year. 

But that was under the FIFA name, licensed for a hefty annual fee until this year: the two sides reportedly failed to reach an agreement on a fee demanded by FIFA in the region of $300m a year. EA Sports decided to go it alone, armed with the game, a significant roster of major leagues and major teams, and a large marketing budget. 

This week, the publisher puts its bet on being the original and best to the test. FIFA, meanwhile, bets on its name, the World Cup, and diversification in the gaming industry. 

What’s going on 

The release this week of EA Sports FC 24 marks a turning point. “I don't think there's anything that compares to this rebrand in particular,” says Landor & Fitch executive creative director Graham Sykes, who underscores the risks of undoing the watermark of authenticity. 

Of course, any player of FIFA/EA Sports FC will recognise the audio tagline, “EA Sports: it’s in the game,” that has played to audiences every single time they start up the title. That’s a lot of exposure, considering that the franchise had its debut in 1993. 

Much of the critical reaction has centred around how little change has taken place in the game itself, lamenting the opportunity to turn a new page. On the surface, however, the things that matter remain the same: its licensing portfolio of more than 19,000+ players, 700+ teams, 100+ stadiums and 30 leagues. They include Europe’s largest and most popular top flights: the English Premier League, Spain’s La Liga, Germany’s Bundesliga, Italy’s Serie A, as well as the North American MLS. 

The marketing effort and new visual identity comes from Uncommon Creative Studio, which took on the mantle of relaunching a game with a rich history of campaigns unafraid to engage with the wider culture associated with it. 

Based on triangles, the visual identity centres not only on the icon that the game has used for decades, to show which player is being controlled, but connects to a deeper footballing idea: the triangles in total football and the more modern tiki-taka or gegenpressing. Ahead of Friday, expect to see much more of this. 

Sourced from WARC, BBC, IGN, Uncommon, Statista 

[Image: EA Sports]

Putting a figure on the value of ad-supported digital services

Free, ad-funded digital services – such as email, social media, online news and streaming services – are worth an average £14,600 per year to every UK household, a new study from IAB UK finds.

Why ad-supported digital services matter

The figure from the industry body represents ‘consumer surplus’, or the value that people place on ad-funded digital services being free. And in the current cost-of-living crisis, 70% of UK adults say it’s important to them that online services are free – indeed, over a quarter of people have used free online entertainment more in the last year as a result of budgets being squeezed, according to The Digital Dividend*.

Takeaways 

• Business investing in digital advertising in 2022 saw a combined total of £73bn in increased sales as a result, with £26bn of that among small and medium-sized companies.
• For every £1 spent on digital advertising, £4.80 was delivered back to the economy in GVA.
• The digital ad industry contributed a total of £129bn in gross value added to the UK economy in 2022, with £39bn directly generated by businesses within the digital advertising sector.

The IAB UK take

“Having a deeper understanding of [the contribution of the digital ad industry and how people value the services it funds] is particularly important at the moment, with 85% of the population worried about rising inflation and the Government considering how to further regulate the digital ad sector. This can only be done effectively if the very real benefits that digital advertising delivers for people and businesses across the country are recognised and protected” – Christie Dennehy-Neil, Head of Policy & Regulatory Affairs at IAB UK.

* The study, conducted by Public First, draws on a mixture of new economic modelling, data analysis and consumer opinion research.

Sourced from IAB UK

The talent question at the heart of retail media innovation

Talent fuels innovation, and innovation drives demand for talent, but many marketers are unable to find and retain the talent needed to support sustained growth in the hotbed of innovation that is retail media, a new report from WARC Digital Commerce argues. 

 Recruiting Digital Talent: Strategies for Retail Media and Beyond takes a deep dive into talent and innovation, and presents a framework that organizations can deploy in order to acquire and retain talent. It’s the second in a three-part series on Organizational Readiness from WARC DC, in partnership with the Digital Shelf Institute.

Why talent matters so much in retail media 

In short, these skills are very new. An individual with two years’ experience may be more of an ‘expert’ than one with five years. Digital transformation of any type needs to include an effort to assess the people and processes responsible for recruiting the talent the organization requires to grow.

What you need to know

The framework proposed in the report revolves around five key takeaways: 

• The talent process needs to modernize
• It must integrate stakeholders from across the organization
• It needs to include a strategic understanding of which areas are best in-sourced and which are best outsourced 
• Recruitment and retention go hand in hand
• Recruiting teams need to be empowered and upskilled

More from the series

How retail media is disrupting marketing structures was published in July 2023. 

[Image: Marketers’ Toolkit 2023]

APAC attitudes to parenting undergoing profound shift

Just over half of APAC parents say they have questioned their decision to have children and one in three non-parents say they never will have kids, according to a global study. 

‘The Truth About Modern Families’ – a report* from McCann Worldgroup Truth Central – explores key themes related to family structure and examines the complicated identities of parents, the role of technology in family life, new dynamics in family hierarchies and the role of brands.

Why APAC parents matter

Amid cultural shifts in how, when, who and if people want to have children, the very definition of parenting is undergoing profound shifts that the brand community must be aware of and responsive to in order to connect with this coveted cohort.

Takeaways 

• 54% of APAC parents say they’ve questioned their decision to have children, while 65% believe that everyone has a responsibility to have kids.
• More than two-thirds (68%) of APAC non-parents have questioned whether to have children, with one in three having decided not to.
• Participants in Japan (50%), Hong Kong (44%), Singapore (42%) and Thailand (42%) ranked higher than the global average (38%) in saying they don’t plan to have children.
• But the fame/fortune paradox is that 60% of APAC parents want their children to be famous: three out of the five top-ranking countries globally are from Asia – India (81%), China (78%) and Thailand (71%).
• Being famous is seen as a way to move up the socioeconomic ladder, in contrast with the West, where only 25% of US parents hope their children will find fame, down from 41% in 2015.
• APAC is one of the nerve centres of the tech revolution and technology is seen as a net positive in parenting – 74% of Asian parents say technology helps them to get more out of family life.
• This is higher than the global average of 64%, with Indonesia ranking the highest globally at 87%, followed by China at 85%, Thailand at 83% and India at 81%.
• A high number of parents also say that it is easier to keep their children entertained compared to in the past: India, Thailand and Indonesia at 84%, Philippines at 81%, and China at 74%.

Key quote

“Brands have a unique opportunity to be there for parents as they grapple with everything from the tactical to the existential, but first they must understand them” – Laura Simpson, Chief Intelligence Officer and President of Truth Central, McCann Worldgroup. 

*McCann's global study aggregated responses from 55,000 people (parents and non-parents) across 28 markets, including 10 in APAC: China, India, Japan, the Philippines, Hong Kong, Singapore, Thailand, Australia, Indonesia and South Korea.

Why sustainability is No 1 and No 2 for Who Gives A Crap

Who Gives A Crap, an Australian company making recycled and bamboo toilet paper, has launched a new line that sells plastic-free body and haircare products, in a bid to meet consumers’ need for quality and value while connecting with them emotionally. 

Why sustainability matters 

Being a sustainable brand is no longer enough for consumers; they are also looking for brands that will meet their needs on quality and value. Those brands that can prove their eco credentials and engage consumers with creative storytelling, a cheeky tone of voice and humour can build customer loyalty, even when the price point is higher. 

Takeaways

• The brand’s eco-friendly toilet paper raises awareness of one million trees cut down every day to be flushed down the toilet.
• Delightful designs, a humorous tone and its social/environmental impact encourage consumers to make the switch to the brand.
• Embed sustainability in executive-level roles so environmental values are integrated into top-level strategic and decision-making.

China is on the move again

The confluence of the ongoing Asian Games in Hangzhou with the upcoming Mid-Autumn Festival and the Golden Week holiday period is leading to a surge in tourism in China.

Why it matters

The next few weeks are expected to give a welcome boost to shopping and tourism in an economy best with problems. The numbers of people on the move are truly staggering: even in 2020, with pandemic restrictions in place, more than 630 million people travelled during Golden Week, generating 466 billion yuan in tourism revenue. 

Tourism has been slow since restrictions were lifted six months ago but all the signs are that demand is growing strongly for the first long holiday period since then. 

What’s happening 

• Hotel rooms in Hangzhou and co-host cities for the Asian Games are almost sold out, China Daily reports.
• 199 million railway tickets have been sold in the past week. 
• Data from travel service provider Trip.com shows that, compared to last year’s Golden Week, domestic travel is up 4x and outbound travel up 20x.
• Trip.com also notes that outbound travellers are more willing to pay for in-depth experiences and high-quality services.

Sourced from China Daily, Trip.com, Reuters, CNBC

Emotional ‘positivity’ is vital to audio advertising effectiveness

Audio ads that make listeners feel more positive can “dramatically” impact consumer behaviour and deliver longer-lasting brand effects, a new study has found. 

Radiocentre, the trade body for UK commercial radio, partnered with System1 to further the latter’s research into hemispheric specialisation – and the subsequent impact on advertising effectiveness.

Specifically, researchers took the findings in Lemon (2019) and Look Out (2021), written by Orlando Wood, System1’s chief innovation officer, and adapted them for an audio media context. 

Hark, what a sound

Rather than focus on TV and video qualities, System1 focused instead on the creative devices that may be used in an audio ad. 

Qualities appealing to the right hemisphere (associated with ‘broad-beam’ attention) include characters with vitality, ‘dramatic intimacy’, distinctive accents and music with discernible melody. Conversely, devices appealing to the left hemisphere (associated with ‘narrow-beam’ attention’) include commanded action, comparisons and claims, technical language and highly rhythmic music. 

System1 analysed Radiocentre’s bank of more than 1,000 radio ad case studies, using its Star Rating, Spike Rating and Fluency Rating methodology to identify trends in effective radio campaigns.

Feel-good effect

Presenting the results of the study (called Listen Up!) at Radiocentre’s Tuning In event in London, the researcher revealed findings including:

• Audio ads that make listeners feel more positive dramatically change consumer behaviour (+8.2% more consumer action) and deliver longer-lasting brand effects.
• Radio campaigns that create more positive and less negative emotion saw large increases in word-of-mouth and uplifts in social sharing.
• Optimised audio adverts are effective at attracting attention and forming strong memories, increasing short-term effects.
• Audio ads with more right-brain features are more likely to cause longer-lasting brand effects.

Sourced from System1, Radiocentre

[Image: System1, Radiocentre]

Brands can ‘supercharge’ search ads with behavioural science

Updated research from Google finds that “supercharging” search results, owned content, and presence at points of sale with insights derived from behavioural science can improve ROI and growth.

The research findings can help brands respond to consumers’ increasingly nuanced and specific search queries.

Why online search matters

Three years ago Google introduced the concept of the “messy middle”, which explained how online consumers, faced with abundant information and unlimited choice, navigate using a range of cognitive shortcuts. Now the second part of its Decoding Decisions series, in partnership with The Behavioural Architects, takes that research further and outlines what brands can do.

Tracking trends in Google Search, for example, shows that consumer demand is a moving target. Google suggests that marketers need to not only keep an eye on evolving trends but also invest in tools that will enable them to respond in real time, whenever unpredictable pockets of demand appear.

Takeaways 

• By supercharging Search Ads with compelling aspects of behavioural science, shoppers across every category switched not just from a preferred brand to their second-choice brand, but to an invented brand created purely for the experiment.
• For established brands, supercharging ad copy with behavioural science can protect brand investment and maintain their position as a top choice for consumers.
• For challenger brands, supercharging ad copy can help level the playing field and enable them to win a greater share of clicks
• The same factors that inspire shopper confidence also drive consideration: marketers who invest in anticipating and answering the information needs of consumers may be rewarded with increased purchase consideration.
• People’s preference for specific products and services is stronger than it is for retailers. Completely invented retailers with supercharged propositions were able to attract large numbers of shoppers away from their first-choice and second-choice retailers. 

Sourced from Google

Aldi grows on the consumer shift to private label

Private-label products are at record highs, says Giles Hurley, CEO of Aldi UK and Ireland, in a sign that economic trouble remains a reality for many people despite a cooling in inflation. 

Why private labels matter

To an extent, private label products are the enemy of brands (other than the brand of that supermarket) and during lean economic times or when everything is getting more expensive, private labels tend to encroach on traditional brands’ customer bases. 

The Aldi equation

• Now the UK’s fourth largest supermarket, over half of everything bought at the German-originated discounter has been from its private labels, the supermarket told the BBC, with “own label products growing at twice the rate of branded goods,” said Hurley.
• Two thirds of UK households are now buying from Aldi, according to Hurley, with many of those purchases made up of Aldi’s typical mix of own-brand products. Eyeing a greater opportunity, Aldi said on Monday that it was planning to open a further 500 UK stores in the coming years.
• This week, the company posted strong results even if it noted that many shoppers continued to be “under real pressure”. However, there is now pressure on the discounters as traditional supermarkets also accelerate their price cuts; for the first time in months, Aldi and Lidl lost some ground to traditional rivals, according to Kantar data reported by the FT.

 Key quote

“Why would [shoppers] go back?” - Giles Hurley, CEO of Aldi UK and Ireland. 

Sourced from the BBC, FT, WARC

A greenwashing crackdown is coming 

As a Vienna commercial court finds Austrian Airlines misled passengers over claims about sustainable flights, the EU has taken another step towards a complete ban on greenwashing.

What’s happened 

The airline said that flights to an art show in Venice would be fueled with 100% sustainable fuel. But only 5% derived from renewable resources, according to a copy of the court decision the airline was required to post on its website and social media account where the original ad appeared. It was also made to pay the costs of the consumer-protection association that brought the case against it, Bloomberg reports. 

Why it matters

The sanction on Lufthansa-owned Austrian Airlines amounts to little more than a slap on the wrist but a new EU law will outlaw such practices altogether (although not until 2026), Euractiv reports. 

• Airlines will no longer be able to use carbon offsets to suggest flying is climate-neutral.
• Generic environmental claims will require proof of recognised performance.
• The use of terms such as “eco” or “natural” will need to be backed by evidence.
• Manufacturers' labelling will need to display expected product lifetimes. 

Key quote

“We are clearing the chaos of environmental claims, which will now have to be substantiated, and claims based on emissions offsetting will be banned” – Biljana Borzan MEP.

Sourced from Bloomberg, Euractiv