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.

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

Lego aims for market share gains

Lego, the world’s largest toy firm, appears confident that the factors driving its market share growth are sustainable despite a toughening economic environment.

Why it matters

While profits have not grown in line with revenues, the beauty of the company’s structure means that it can sustain investment in difficult times – not only in its marketing activity but in new product lines and expansions into new service layers and new, older age ranges (a source of all important price elasticity).

But, critically, most of its H1 revenue growth has come from demand rather than price increases (these have come in later in the year, and on products aimed at older builders), and despite the closure of 81 Russian outlets.

By the numbers

The privately-owned Danish toymaker announced a 17% increase in revenues for the first half of the year (to $3.5 billion) and believes the underpinnings of that growth will continue even as surging costs have caused profits to dip slightly.

Optimism amid gloom

Speaking to the Financial Times, CEO Niels Christiansen noted his company’s strong performance amid difficult macro issues.

“We’ve had three or four unbelievable years where we’ve basically doubled the company. I’m not deaf to some people talking about a more difficult economic environment,” he told the newspaper.

But we also believe that the things underpinning us taking more market share are sustainable.”

It is also worth pointing out that the company is investing heavily in new areas, especially in digital services.

The company has also expanded its footprint internationally, with 66 new store openings, mostly in China.

Sourced from the Financial Times, Wall Street Journal, WARC

Netflix’s gaming drive chimes with rising cloud gaming interest

Netflix’s revenue diversification strategy continues apace as it bolsters its cloud gaming capability with the launch of a games studio in Helsinki, as it races to tap into a holy grail for the sector.

Why it matters

After advertising, which Netflix plans to launch in the very near future as the cost of its inventory have now emerged, gaming is a significant new frontier for the video streaming company at a time when interest in cloud gaming has grown by around 500% year-on-year, globally. In August it hinted it would explore such a direction through new hires.

Still, with gaming giants like Sony and Microsoft (which owns Xbox) seeking to evolve, and with expansions from Google and Apple yet to set the world alight, it’s not clear that Netflix will win out.

However, its suite of IP, rivalled only by Disney, perhaps, could be a critical element of the plan. The question will surround whether it’s computing power or great games that ensure success in the sector.

What’s going on

Earlier this week, the company announced that it would open up an internal games studio in the Finnish capital of Helsinki, having hired a veteran of mobile and online gaming firm Zygna – maker of Farmville. Apparently, the city is a hotspot of gaming talent.

It follows a handful of acquisitions in recent years as the company has built up a roster of acquired talent. This effort is the first time it’s building from scratch and will form a vital part of a development process that usually takes years to produce a single game.

Just this month, the company brought out its first mobile game, Oxenfree, following its acquisition of gaming studio Night School Studio a year ago, and the release of a suite of games on the mobile version of the streaming service.

 A special edition of an existing game, the version was a separate app for Netflix subscribers that features neither apps nor in-game purchases.

The business of gaming

• Games in all their forms are a vast business of which mobile – the area that Netflix is targeting – is a key driver.
• Mobile games are relatively well attuned to advertising, given that it has offered a relatively straightforward revenue model for young upstarts.
• But it’s very very difficult to do. Earlier this year, Google’s Stadia had to pivot its strategy away from making its own new games to operating as a cloud platform for publishers.
• Elsewhere, major console makers like PlayStation owner Sony are pivoting into the massive growth in mobile gaming.

Sourced from Netflix, Think with Google, WARC, TechCrunch

Australian retail sales grow on food and leisure

Retail spending in Australia remained strong through the month of August despite interest rate headwinds, reflecting ongoing consumer confidence in the country.

Why it matters

It appears that Australians are not yet tightening belts in response to rising inflation of an expected 7.75% this year. But some economists expect next year to be tougher as rate rises bite, with potential knock-on effects to the retail sector’s advertising spend.

Food-related products and department stores have done very well, suggesting the ongoing draw of leisure spending. Clothing and footwear, meanwhile, are slightly down.

 What’s going on

Retail spending rose 0.6% in August versus July – its eighth straight month of growth – reaching a record $34.8 billion.

The increase was spurred by “the combined increase in food related industries, with cafes, restaurants and takeaway food services up,” Ben Dorber, head of retail statistics at ABS told Bloomberg.

While this was more than expected, it does reflect a slowing growth rate on July’s 1.3% month-on-month gains.

It comes as the Reserve Bank of Australia has raised base interest rates to cope with rising inflation – they now stand at 2.35% - though economists expect a certain amount of lag time between rate rises and normal people feeling the effects.

Sourced from Bloomberg, WARC, Trading Economics

CMOs struggle to get to grips with data ethics

CMOs are keen to address consumer and regulatory concerns around data-driven marketing, but the complexity of the data and digital ecosystem is making it hard for them to identify the right practical measures to take.

That’s according to new research* from the World Federation of Advertisers (WFA) which finds that the great majority of CMOs at multinational companies are prioritising an ethical approach to their use of data but half do not know what this means when it comes to the processes and practices they need to apply both internally and across their marketing supply chains.

Why it matters

WFA President and Mastercard Chief Marketing and Communications Officer Raja Rajamannar believes the digital ad market is “facing an inflection point with the scale of regulatory, consumer and market pressures” and says it’s down to CMOs to lead the way in ensuring brands can use data in a responsible, equitable and ethical manner. “If we don’t, we threaten the entire industry’s licence to operate longer term.” 

Key findings 

• 50% of CMOs are very concerned about the level of privacy compliance among their external partners and suppliers (e.g. publishers, ad tech, online platforms and data brokers).

• 83% of CMOs are very concerned about being associated with a service provider or supplier that is investigated for the unethical use of data.
• Only 16% of CMOs are very confident that their company’s use of AI and machine learning will not create harmful unintended consequences for their consumers such as bias, unfair discrimination or unfair exclusion.
• 85% of CMOs are considering using privacy-preserving alternatives to programmatic advertising in response to increased regulatory scrutiny.
• 33% of CMOs believe that their marketers are consciously avoiding using data in a way that exploits vulnerabilities (e.g. unfairly excludes certain audiences, fuels unhealthy consumption patterns or polarises opinions).
•  41% of CMOs say data ethics has become an integral part of their organisation’s culture.

Next steps 

The WFA believes that brands must go beyond existing rules and apply a moral lens to the complex web of data-related marketing practices in order to develop more responsible, inclusive and ethical data practices. Its new CMO Guide to Data Ethics in Practice is designed to help CMOs address these challenges and better understand their responsibilities around data and AI.

*The results are based on 12 responses provided by global CMOs who sit in the WFA’s CMO Forum, which represents brands spending over $120bn each year.

Sourced from WFA