UK Government backs blockchain initiative for digital advertising

The UK Government, through its innovation agency, Innovate UK, has awarded a six-figure grant to TAG TrustNet to boost efforts to make the digital advertising market more accountable, responsible and efficient.

What is TAG TrustNet?

TAG TrustNet was launched in February 2021 after a twelve-month cross-industry pilot programme and industry consultation. It’s a first-of-its-kind initiative that uses blockchain technology, specifically Distributed Ledger Technology (DLT), to reconcile billions of advertising impressions in near real-time to improve transparency, accountability and efficiency.

Why it matters

TAG TrustNet is already one of the most advanced DLT innovation programmes across the UK economy. Innovate UK believes that it provides an exemplar for other sectors to learn from and follow and, ultimately, can drive export opportunities. 

Quote

“From increasing trust and transparency in digital advertising, to improving the buying and planning of programmatic media, to reducing operational costs, the benefits to the global industry are enormous” – Paul Bainsfair, director general, IPA.

Sourced from IPA

How marketers can unlock the creative potential of technology

The advertising world often sets up a false tension between creativity and performance, but The Invisible Enabler, a new study co-authored by WARC and Braze, demonstrates how art and science are natural partners in successful customer engagement – with technology as the catalyst that frees great ideas by removing complexity and barriers to effective execution.

Why it matters

Over the past decade, landmark research from the likes of Data2Decisions and Nielsen Catalina has shown that creativity is one of the primary drivers of advertising effectiveness. Considerable growth in martech spend and digital transformation plus shifts in third-party data regulations and consumer expectations post-pandemic have all impacted the demands on creativity. But, as that happens, brands are looking towards technology to help them better blend the art and science of effective marketing. That, in turn, is enabling these brands to create more personalised, memorable and resonant experiences for their customers – a huge competitive advantage and a surer route to long-term brand growth.

Takeaways

• Data inspires the creative

  Instead of constraining creativity, we’re beginning to see more examples where data has provided the seed of a truly distinctive creative idea.

• The memorable middle

  In a world where getting omnichannel right is paramount, brands can stoke their audiences’ passions, interests and curiosity to provide memorable purchase journeys that mix physical and digital experiences.

• Collapsing the funnel

  Many marketers are advancing their use of technology to bring brand building and performance marketing closer together so that they can build stronger DTC relationships with their customers.

• From gaming to the metaverse

  As marketers begin to experiment with AR and VR, brands can take many customer engagement and experience lessons from the world of gaming

The big idea

In the past, technology used to be at the service of and facilitate creative ideas. However, now, technology is increasingly becoming creativity’s hidden enabler and core to the creative idea itself. As third-party data regulations change and customers shift their expectations of brands and the experiences which they provide, those who operate most effectively at the magical intersection of technology, creativity and customer engagement, will have a significant competitive advantage.

The research draws on lessons from highly placed, award-winning case studies in the WARC Rankings – the ultimate benchmark in creativity, effectiveness and media excellence.

The next chapter of resale

Circularity is – or should be – a goal of most product businesses from clothes to cars in the near future, but already a handful of brands from retailer John Lewis to fashion brand Balenciaga are investing heavily into re-use schemes that will define the market, if successful.

Why it matters

Re-use, which is far less energy and resource intensive than recycling, is imperative if we are to alleviate the pressures of the climate crisis. But actually making it work profitably is extremely difficult, given it is effectively a massive e-commerce returns operation with an added layer of difficult trust building.

New business models are emerging, and white-label tech is starting to show a neat route to market for these schemes. The challenge will likely be a function of the brand experience and how it delivers with the perception created even with a second-hand product. Re-sale will add a whole new dimension to the discipline of marketing.

A commitment to sustainability

John Lewis, the retailer to the British middle classes whose employee-ownership model has long anchored its wider societal purpose, has announced a new sustainability strategy with investment plans and pledges.

But what’s really interesting about its plans is the final bullet point: a commitment to “Develop more rental, resale and return opportunities, with an ambition to offer more sustainable ownership options for our customers across key areas including fashion, home and technology.”

It says that it will launch “take back” or “buy back” services across all categories by 2025. Across its own-brand products – a key strategic pillar for the company’s future – all products will meet circular design principles in order to last longer and withstand use across multiple owners.

It follows just a few days after the brand’s announcement of its ‘dress for hire’ service, reported here by WARC sibling Retail Week, and which itself is based on the success of a furniture rental service, which functions effectively as a test-drive (and, of course, data capture) feature to help customers decide on a purchase.

Balenciaga and the cold, hard business of resale

Meanwhile, Balenciaga, a major fashion house, has been testing a re-sale programme that allows owners to sell items through its own platform, the Business of Fashion reports.  

Unlike many of its luxury counterparts, Balenciaga appears to be borrowing more from do-good outdoorsy brands like Patagonia and Finisterre by hosting the platform – as one might imagine John Lewis doing, too – in partnership with a white-label tech vendor on its own site, thereby retaining ownership over the experience.

This brings several critical advantages, notably controls over pricing and authentication, BOF notes, while cutting down on technological and logistical difficulties.

Many brands are watching and waiting to see how the market develops before moving ahead, even if most observers recognise a massive opportunity quite apart from the sustainability credentials. Brands will hope to win on both fronts.

Sourced from John Lewis, Retail Week, Business of Fashion, WARC, House Beautiful

Liquid Death and the drivers behind the NoLo trend

Liquid Death is a canned water company that has marketed its way to a $700m valuation at its latest funding round, exemplifying how a clever brand can meet a deeper trend toward no- and low-alcohol (NoLo) beverages.

Why it matters

Across the world, people are drinking less. Whether that’s because of a growing interest in wellness, because more people want to moderate their alcohol intake, or because it isn’t as cool as it once was, low- or no-alcohol brands are having a moment and some are doing it in very interesting ways. And then there’s a water brand marketing like a beer brand, which is even more interesting.

The bigger picture: a world of moderation

Around the world, the NoLo drinks market is booming; according to IWSR figures for 2021 it is worth a total of $10bn, across 10 major international markets – including the UK, US, and Australia.

• Some brands are reacting to new consumer demands. Treasury Wine Estates, owner of Wolf Blass wines, said this week that it would begin investing heavily into no- and low-alcohol wine following internal consumer research showing that as many as 45% of consumers seek lower or no-alcohol options, especially among under-35s, the Australian Financial Review reports.
• Others seek to smooth the transition. Heineken, for instance, which began to see some success in 2019, has enhanced its alcohol-free option by attempting to “mainstream” the category by getting it into pubs on draught to help the product blend into the occasion.

… and then there’s Liquid Death

Despite its hardcore name, the American brand – that now harbours European ambitions – sells water. That’s right: you can have it still or sparkling or you can have it slightly flavoured, but it’s still water even if it “murders your thirst”.

But its whole thing is quite tongue in cheek, involving humour and punk rock/craft beer aesthetics. It’s a combination that has now resulted in a very serious valuation of $700m at its latest funding round, according to Bloomberg.

It is set to make as much as $130m this year, up 188% from 2021 when it made $45m.

Effectively, the company’s insight was to take a water brand, make it look “fun and unhealthy like beer or an energy drink”, in the words of CEO and former agency creative director Mike Cessario, and sell it online where it began as a DTC brand, in stores, and – crucially – at concerts.

In a commoditised category, the company has shown how potent a brand can be, with $3m of merchandise sales last year, from skateboards to hoodies. According to the company, more than 50% of buyers from its DTC site also attach merchandise to the order.  

“When you can actually make revenue off the marketing directly, it kind of means there’s no limit to how much you can do,” Cessario told Modern Retail in January.

In 2020, TechCrunch put it uncharitably when it said the joke was on consumers (at this point, the brand had raised a total of $23m), but the story goes to the heart of what a brand is and does in the CPG  category. After all, what’s the point of branding if not to build regard, recognition, and, ultimately, charge more than your undifferentiated competitors. It’s a lesson worth noting.

Sourced from Bloomberg, WARC, Australian Financial Review, Modern Retail, The Drinks Business, VICE

There aren't any easy answers - marketing science is complex

True marketing science is a far more complex undertaking than one of the industry’s most widely-talked about books of recent years might suggest, says an associate professor of marketing at Oxford University.

Why it matters

How Brands Grow has been the go-to explainer for more than a decade but the analysis put forward by Professor Byron Sharp in that text and elsewhere is now being assailed on multiple fronts, from its lack of applicability to digital brands to its rejection of the role of new metrics such as attention.

The latest criticism comes from Felipe Thomaz of Oxford University’s Saïd Business School in an interview with Contagious, where he acknowledges “grains of truth in what [Sharp] is saying” but suggests that “he’s selected carefully around existing frameworks and left out important details”. (Sharp, unavailable for comment at the time of writing, would no doubt refute the provocative remark that he is “ignoring about 60 years of published work”.)

The critique

• How Brands Grow is built on Andrew Ehrenberg’s (peer-reviewed) work from the 1960s but, says Thomaz, that was based on certain assumptions – including unchanging brand market shares and undifferentiated brands – that undermine any claims to explain and offer guidance on growth. 
• “Growth is a function of perceived differentiation,” he states. “Distinctiveness doesn’t work”.
• The work highlights the advantages of being large, but “cannot address how to grow”. 
• It is not an academic text so definitions and word use are not precise, says Thomaz, who adds that the concepts of mental and physical availability do not exist in marketing science; nor is there a clear measurement of availability.

An alternative view 

“We think of brands in a branching model,” says Thomaz. Brand is split into two initial components of awareness and image, with each of those branching further in their turn.

Awareness includes recognition and recall: the former is important when in a supermarket aisle, for example, while the latter is crucial in an online environment.

Image branches into aspects of associations the brand has – types, favourability, strength and, importantly, differentiation – with these branching further into product related, emotion related, location related, experiences, symbols etc. 

It’s a more nuanced take than that of Sharp, who, says Thomaz, “dismisses the need for differentiation – where it lives inside of brand image – and bundles all of the other moving parts into a single item: mental availability”. 

The big idea 

Marketers are moving past the oversimplifications of Sharp and beyond just buying reach, says Thomaz. They are managing complex systems and understanding how they can get “abnormal and disproportionate returns” from carefully chosen combinations of channels and creative for any particular campaign. 

Sourced from Contagious

Anxious times: behavioural and commercial studies sketch impact of inflation

Studies from across the UK and US reveal grim perceptions of people’s future prospects as the pandemic’s long-term effects continue to weigh on young people, and high levels of inflation hamper optimism.

Why it matters

Inflation is biting across the world – this has precipitated shifts in attitudes, behaviour, and spending. Some of the statistics point to desperation not only among the poorest but signs that a majority are feeling the pinch.

Find all of WARC’s reports and analysis on the economic situation at our hub on WARC Strategy.

Youth in crisis

A study from the Prince’s Trust charity in the UK looks at the ‘Class of Covid’ and finds that not only has the pandemic caused profound harm to young people’s prospects, but that the economic and political turbulence that has followed now weighs on them every day. Based on 2,002 respondents aged 16-25:

• 49% feel anxious about the future on a daily basis
• 51% feel their aspirations for the future are lower as a result of global events since 2020
• 51% agree that economic trouble makes them worry for job security
• 58% worry the cost-of-living crisis will prevent them from reaching their goals
• 35% feel their life is spiralling out of control

But perhaps the most worrying statistic is that over a third (35%) say their salary no longer covers their rent or mortgage.

A deeper set of problems

This chimes with the broader impact of the cost-of-living crisis on society, according to research from the Centre for Social Justice think tank shared at the Conservative Party conference this week.

It reports that some of the lowest income households end up paying a “poverty premium” – think pre-payment gas and electric meters that cost far more than direct debit systems – and that these people are often far more likely than the rest of society to look to gambling so they can make extra money and are slightly more likely to drink alcohol in order to cope.

Across the pond

Meanwhile, in the US, consumer research firm dunnhumby finds that Americans believe food inflation to be almost 10 points higher than it is in reality. Yet, this reflects a deeper issue: that people are living very precariously, even desperately.

• 64% of US consumers in the study would have difficulty covering an unexpected expense of $400 or more (up 4 percentage points since May).
• Elsewhere, hunger is increasing: 18% report not getting enough to eat, while 31% report skipping or reducing meals.

From a commercial lens, dunnhumby’s research shows a slight increase in dollar store use (up two points since May to 19.9%).

Trading down is now mainstream; 83% of respondents say they are looking for cheaper alternatives in at least one category. Top three trade-down categories are packaged food (53%), common household products (52%) and frozen food (42%).

Sourced from Prince’s Trust, dunnhumby, Centre for Social Justice (via Twitter)

Speculation grows on Foxtel's Binge joining ad streaming party

With interest in subscription streaming services adding ad-funded tiers, Foxtel Media chief Mark Frain has played down the possibility of putting ads on its as-yet ad free entertainment streaming service, Binge, but did not rule out the possibility – should it go ahead, it would be an Australian continuation of a growing global trend.

Why it matters

First party data: signed-in, paying audiences already mean much higher quality data of the sort advertisers will need to leverage if they are to move past the cookie. In this time of need, some streaming services have spotted an opportunity to do as premium publishers like the Financial Times or the New York Times do and blend subscription and advertising revenue streams.

Reports surrounding Netflix’s much anticipated (and probably very lucrative) ad tier debut suggest that a strong minority of people, at least, would watch ads in return for a cheaper subscription. Like Foxtel’s Binge, Netflix once touted its ad-free service as a benefit. Are we heading for a new golden era of cinematic ad creative? We’ll soon see.

What’s going on

This is according to an interview that Frain has given to the Australian publication Mi3, in which the pivotal quote was Foxtel was “confident of bringing new sources of inventory” to market.

It follows excited chatter and rumours that December would see a test of the service with a small pool of users.

In the interview, he noted that even with current brand-friendly offerings such as its subscription sports services, the company’s video revenues are growing way ahead of the market, but that there was yet plenty of growth to come as digital video ad revenues catch up to digital video audiences.

Sourced from Mi3, WARC, LA Times. [Image: Binge]

TikTok ad revenues grow 5x

Filings reveal that the short-form video sharing app TikTok grew its European ad revenues 5x over the course of 2021, even as growing costs weigh on the company.

Why it matters

Privately-owned TikTok: social media’s new kid on the block, beloved of Gen-Z, and very difficult to imitate, filings reported by the Financial Times show a company investing heavily in growth around the globe but finding its most serious revenue opportunities in Europe (inc. UK).

While costly in the short term, this serious investment (losses have increased by more than a third) is yielding big user numbers of the sort that draws in advertisers; as a result, they are now a significant player in the space.

By the numbers

According to filings to Companies House, the UK register of firms, the app – which is owned by the much larger, Beijing-headquartered ByteDance – has reported the following numbers for its European operation:

• Revenues: +$990m (up from 172m in 2020)
• Pre-tax losses: $896m
• Selling and marketing expenses: $666m (up 90%)

Advertising remains the biggest revenue source for the app, at $802mn of turnover – a fivefold increase on the year before.

The reliance on ads is an interesting aspect, especially at a time when many other non-endemic companies are turning to selling ads on top of commerce businesses.

The figures, especially the selling costs, indicate how expensive servicing a growing ad client base is, and provides some indication of why the company continues to push ahead with commerce in the US and potentially in Europe, through outsourcing.

It is a business that ByteDance’s Chinese app Douyin has excelled in, part of a broader growth in livestreamed commerce that has worked extremely well in it’s home market but that has struggled to internationalise. Earlier this year, TikTok’s commerce experiments in the UK showed limp results, reports suggest.

In context

On a global scale, TikTok’s influence is vast. On one side, its growing importance in the search game has arguably contributed to Google accelerating its evolution of the search experience toward visuals and exploration. For more on paid search, check out WARC’s big picture report on paid search for a macro view of the scene.

More broadly, TikTok is also pulling a move reminiscent of an earlier social media giant with an incredibly similar service to the French photo-sharing app BeReal as it seeks to cover new avenues of user growth.

Sourced from the Financial Times, WARC, Business of Apps

Amazon launches livestream shopping in India

The retail giant is rolling out Amazon Live in India, a livestreaming service in which creators will host QVC-style shoppable shows, part of the company’s long-running effort to make inroads in the country.

Why it matters

Livestreamed commerce is huge business in China, where it accounts for 15% of all e-commerce sales and, for a time, the next big thing everywhere else, with research indicating that people were broadly receptive. But it has proved harder to replicate in other markets, with both Meta and TikTok winding down live efforts – can it work here?

What’s going on

Reported by TechCrunch, the platform enjoys the presence of around 150 creators across consumer electronics, interiors, fashion, and beauty. Videos had averaged between 30 and 600 views at any one time.

The question is whether it can make participation worthwhile not only for pro creators but for the actors and sportspeople it has attracted to the service at launch.

There are bigger opportunities that it can explore. Back in March, Amazon sponsored the Country Music Awards in the US, rendering practically the whole show shoppable. It’s quite probable that similar approaches could appear for some of India’s major TV events.

In context

It comes at a time when Amazon is working hard to build goodwill in India, as it has faced the perception of unfair practices among smaller sellers who mistrust its use of their product data in the face of Amazon’s private label business, according to recent reports.

Sourced from TechCrunch, Rest of World, WARC

Report: CTV growth sees it achieve serious reach as spend grows

With some of the biggest advertising stories this year involving major streamers introducing advertising, a new report puts numbers behind that optimism.

Why it matters

Connected TV is going mainstream – and this report indicates a much larger reach than we last reported.

Pixalate’s Ad Supply Chain Trends Report finds 94% US household’s reachable by open programmatic CTV ads this year, up eight percentage points on 2021 and increasing integration of open buying across apps collectively feel like a turning point for the capabilities of high-reach, big screen TV advertising.

It is based on an internal analysis of more than 300m CTV devices and reports on the period Jan 2019-June 2022. Ad spend datasets are based mainly on buy-side open auction traffic.

Details

• Global open programmatic CTV ad spend is up 31% year-on-year (according to estimates).
• More CTV apps (+20% YOY) now support open programmatic ads, though most of the growth took place between 2020-21.
• While US CTV adspend was ahead of the global total at 32%, Europe has been catching up fast, with a 816% increase in programmatic CTV ad spend YOY. Latam was also a major growth market with 318% YOY.
• APAC reveals a more mature picture, with 2020’s growth in CTV spend so high that spend appears to be falling.

Go deeper

It’s well known that CTV in big but fragmented markets like those of Europe are very complicated, so while adoption across the world is very high, some places move faster than others.

Roku in the US, for instance, emerges as the undisputed market leader with 44% of programmatic spend, having capitalised on its first-mover advantage and expanding into advanced new retail opportunities and new ad techniques.

Moreover, big names from Netflix to Disney+ to Amazon are getting increasingly involved, especially with sports growing in importance to these services bringing in viewers. Coverage is likely to continue growing.

Read WARC’s Guide to Connected TV here

Sourced from Pixalate, WARC. Image: Pixalate

What it means when search becomes more visual

At Google’s search event this week revealed several ways in which its core search product would be adapting to the growing trend that young internet users are searching more visually-led platforms; the changes speak to a deeper philosophical shift that could have a big change on the way the massive business of search advertising operates.

Why it matters

In 2021, Google made $149 billion in advertising revenues on its core business of which search plays a huge part – not only to Google’s business, but by search accounting for 34% of the world’s ad spend in 2020. Big changes to a business this big are worth paying attention to.

What’s happened

Its Search On event revealed a suite of new ways in which to search and in which to shop on Google – both will be of huge interest to the marketing discipline. While we won’t rehash them all here, they uncover two trends:

• Searching by vibe: visual search and voice note search are incoming.
• Search isn’t about finding one right answer but a method of discovery.

Where it’s going

This second point is articulated neatly in a good piece on tech site The Verge, in which it observes that search has evolved into a “system for exploration, for discovery, for trying to learn things about which there are no obvious answers.”

While users are usually ahead of platforms in this regard – as evidenced by Google’s own admission that around 40% of young users go to TikTok or Instagram (when looking for a place for lunch) – it’s a significant shift.

This has fed a new feature, Exploration, which will be coming to iOS devices soon via Google’s dedicated app currently dedicated to travel and tourism topics, offering suggestions that help users explore. While nothing is set yet, this is likely to affect the ways in which search ad buyers reach their targets.

Looking to China, where the trend toward the visual is more developed, VC-turned-media company a16z explores some of the adaptations that businesses have made in order to become searchable on Douyin (TikTok in China).

Sourced from Google, WARC, The Verge, New York Times, a16z

Bain research adds evidence to B2B brand argument

New research published in the Harvard Business Review points to the importance of your brand being first to mind even in complex, long-lead B2B purchases as 90% of the time buyers will simply choose a brand they know prior to beginning the search process.

As a result, the article argues, brands tend to place way too much emphasis on channels aimed at converting demand rather than building it, adding to a growing body of evidence about the importance of brand-building (or creating future demand among potential buyers) to the B2B space.

Why it matters

Some brands continue to rely too heavily on short-term digital advertising that is often product-led and rationally aimed at in-market buyers.

This limits their growth potential. While some surveys suggest the importance of brand is growing among business-focussed brands, and academic researchers have established ways to model the kind of memory creation the Bain researchers identify, it is not yet mainstream thinking.

What’s going on

Based on a survey of 1,208 workers at US companies tasked with buying software, cloud hosting, hardware, telecommunications, logistics, marketing, or industrial equipment, and an additional 10 in-depth interviews to flesh out the themes.

• 90% of buyers ultimately choose a vendor they had in mind before they began researching the purchase.
• Word of mouth is very important, with recommendations from colleagues a vital aspect of the purchase decision. This implies that memory creation beyond the individual buyer.
• Previous experience with a vendor is critical, and helps brands to be bought even as buyers move jobs.
• Digital experiences and demonstration experiences are both often underdone. Discoverability and online presence means that digital experience must live beyond the company website.

Understand buying tiers

B2B buying is usually done by committee, with personal motivations often making decisions more about not getting the task wrong rather than buying the very best.

Bain identifies three tiers:

• Ultimate approvers
• Core committee (researchers – typically the most important tier)
• Internal influencers (often the users).

Sourced from the Harvard Business Review

‘Zero Covid’ dampens Chinese commerce

Ongoing efforts to keep coronavirus infections at an absolute minimum in China through lockdowns are having a widespread impact on commerce in the country.

Why it matters

Viewed through the prism of the markets, as Bloomberg does here, the return of pent-up demand seen in other economies – and, indeed, in China back in the Spring of 2020 - hasn’t materialised two years on.

With restrictions tightening ahead of Golden Week, the dampening looks to be creeping into a wider slowing of the economy. However, China’s economy remains vast, and with its middle class continuing to grow there remains great potential both for local and international brands.

What’s going on

• Effectively, people are now cutting back spending not only because of the coronavirus as wider macro issues like youth unemployment bite.
• Retail sales in July, for instance, were down versus the same period last year.
• Elsewhere, it appears investors and analysts have taken a grim view of central government encouragement of thriftiness, part of a long-running anti-graft effort under President Xi Jingping.
• Between lockdowns and shifts in emphasis, luxury brands that had once done very well in China have struggled.

Sourced from Bloomberg