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

Super Bowl: network toasts record bookings, platforms chase second screen

Traditional advertising around the Super Bowl reaches new, expensive heights while digital platforms vie to be the second-screen destination of choice.

Why it matters

The Super Bowl’s advertising mix is changing, but the high price of a spot during the live broadcast appears to grow, amid reportedly high audience excitement. Meanwhile, digital platforms battle it out for a share of the real-time conversation by selling space cheap.

Of course, both forms are a type of gamble but successful brands can capture some of the best quality reach at very good value, if the creative work and the cross-media plans come off. The trick, much of the research shows, is being able to match the spectacle of the occasion, across platforms, and in a way that benefits the brand (rather than the celebrities who tend to star in the ads).

What’s going on: Fox counts the benefits of a record year

Fox Sports, this year’s rights holder, has booked record sums as it heads into this Sunday’s Super Bowl clash between the Philadelphia Eagles and the Kansas City Chiefs.

• The network says it has managed to sell some of its 30-second spots for over $7m, while most brands are paying closer to a relatively reasonable $6.5m.
• “It’s certainly far and away the most money that we’ve ever booked in a Super Bowl,” said Fox Sports EVP/Sales Mark Evans in comments to Sports Business Journal. “All of the usual suspects are there.”
• Timing: exclusivity deals, such as that of AB InBev on alcohol advertising during the broadcast, have ended, opening up more spending opportunities for competitors.

It has been a complicated year for the broadcaster, which began the season with the vast majority of inventory sold, only for major crypto advertisers to pull out – now-collapsed FTX, for instance, had booked a minute-long slot. Other brands, meanwhile, have held back amid economic and supply chain problems.

The battle for the real-time conversation

Platforms, on the other hand, vie for the real-time conversation, with TikTok pushing its relevance and topicality hard.

Digiday has the news that some digital platforms are offering big deals, based on pitch decks seen by the website:

• Twitter has offered brands up to $250,000 in free ad space.
• TikTok will offer ad credit to the tune of 3%-5% for brands that spend between $50,00-$300,000 on Super Bowl campaigns.

Twitter remains the main destination for conversation during the broadcast but with brands concerned about the current direction of the platform, its ability to turn that traffic into commercial gain is under threat. Namely from TikTok.

Sourced from Sports Business Journal, Digiday, Bloomberg, WARC

Pinterest’s video push boosts Gen Z engagement

Pinterest, the image sharing and social media service, is seeing accelerated interest from Gen Z even in a softening advertising market, according to company executives. 

Gen Z was once again the fastest-growing cohort for Pinterest in the most recent quarter, growing double digits year-on-year. 

By the numbers

• Pinterest grew global monthly active users in Q4 to 450 million, up both sequentially and year-over-year.
• Global mobile app users account for over 80% of impressions.
• Pinterest generated advertising revenue of $2.8 billion for the full year, growing 9% or 11% on a constant currency basis.
• In 2022, Pinterest advertisers adopting a multi-objective media strategy saw up to a 50% improvement in sales lift.

Video drives deeper engagement

“We're building an experience that resonates with this audience on Pinterest, specifically around video. In fact, nearly half of all new videos pinned in Q4 were from Gen Z users. And in Q4, Gen Z sessions grew much faster than sessions from our other demographics,” said CEO Bill Ready on its recent Q4 2022 earnings call. 

The company recently announced a deal with Condé Nast Entertainment to create high-quality video content aligned with Pinterest's key seasonal and cultural moments, such as fashion months, wedding season, summer and back-to-school.

“We remain focused on growing our supply of videos from multiple sources, including creators, brands and publishers,” Ready said. “Last quarter, we grew our supply of video content 30% quarter-over-quarter … We believe high-quality and inspiring content will further deepen engagement, especially for Gen Z.”

Increasing monetization per user 

Pinterest is also looking to boost monetization per user through its advertising initiatives, said the CEO. “Pinterest is unique because users come to our platform with intent, and we are one of the few places where people can go from seeking inspiration to fulfilling that intent through action.” He added that the platform had built a “full ad solution” that helps advertisers meet users in their journey across the funnel, from top to bottom.

“In fact, our revenue is roughly split across the funnel with one-third brand, one-third consideration and one-third conversion. We've seen advertisers who take a full funnel approach see more success than those who are only active on one campaign objective,” Ready said.

UK CTV and gaming adspend to double in three years

UK advertising spend on connected TV (CTV) and gaming is predicted to double in the next three years, hitting a combined £4.15bn by 2026.

That’s according to IAB Compass, a new report from the digital industry body created with research consultancy MTM, that looks at the evolution of four fast-growing digital channels: CTV, gaming, AR/VR and shoppable advertising. 

Why it matters

The figures reflect: 

• the impact of an ongoing shift to streaming among audiences and an increase in ad-supported viewing as people look to cut down on subscriptions;
• the adoption of gaming by advertisers across a broader range of sectors, from financial services to healthcare.

CTV takeaways 

• Ad spend is forecast to rise from £1.17bn in 2021 to £2.31bn in 2026, including BVOD and YouTube. 
• Adoption of CTV by large advertisers is now close to that of linear TV and digital video.
• With a low minimum spend compared to TV, CTV is attracting a broader set of advertisers. 
• The CTV market needs to address challenges with fragmentation, standardisation and measurement – particularly beyond BVOD and YouTube – in order to fully mature. 

Gaming/other takeaways 

• Current ad spend of £815m is predicted to rise to £1.84bn by 2026.
• Native, in-game ad formats will continue to boost the gaming market, providing advertisers with the ability to combine brand and performance goals. 
• While most ad spend is currently focused on mobile gaming, if developers and advertisers embrace PC/console gaming that would significantly accelerate growth in the sector. 
• Advertisers’ investment in AR is likely to reach £250-350m by 2026. 
• Social commerce sales are predicted to reach £6.8bn [gross merchandise value] over the next three years. 

Key quote

“Between them, these four digital channels are poised to accelerate growth in digital spend over the next few years as advertisers capitalise on the potential for full-funnel marketing, marrying creative storytelling with actionable targeting” – Hannah Bewley, Senior Research & Measurement Manager at IAB UK.

Sourced from IAB UK

India’s short video platforms look to live commerce

Domestic short video platforms that sprang up in the wake of India’s ban on TikTok are turning their sights to live commerce, part of a social commerce market that could be worth $70bn within a few years.

That’s according to executives quoted in Afaqs!, who believe that live commerce is a significant opportunity. 

Why it matters

Live commerce has been a huge success in China, less so elsewhere – it’s one reason Meta has reconsidered its approach and is removing the ‘Shop’ tab from Instagram to focus instead on Reels. But in India, the local players are undeterred. 

“E-commerce platforms like Myntra or Flipkart, or home-grown social platforms like ShareChat, Chingari, Josh, etc., are embracing live commerce because the traffic they attract comes with the intention of product discovery,” says Akshay Gurnani, CEO and co-founder of Schbang. 

Takeaways 

• Sunil Kumar Mohapatra, CRO of Josh’s parent company, says social media and video-sharing apps have already become important touchpoints for brands in terms of product discovery and influencer recommendation, so adding a checkout option makes sense to complete the shopping journey.
• Deepak Salvi, co-founder and COO of Chingari, says many of its users are in lower-tier cities, where influencers have a much stronger connection with audiences. 

• Add in the limited presence of major brands in smaller cities and he believes there’s a strong live commerce proposition that could contribute around 15% of revenue in the near future.

Key quote

“I suggest these platforms need to offer exclusive products and deals, focus on creating engaging, entertaining, and educational content that’s not easily available elsewhere” – Sanjeev Jasani, COO, Cheil India.

Sourced from Afawqs!

Brands plan for China recovery

Anticipating a wave of “revenge spending” as China moves away from its zero-Covid strategy, mall owners report a surge of new tenants, while online retail platforms are busy improving the user experience.

Why it matters

Many brands attracted to China’s huge market saw growth stall over the past three years, but as the economy reopens there’s a renewed sense of optimism. However, there is some uncertainty as to just how strong the recovery will be and whether increased consumer spending will be cautious rather than extravagant.

What’s happening 

• A study from Bain & Company and Kantar points to pent-up demand for packaged food and personal-care products, with Gen Z, in particular, driving revenge spending in cosmetics. 
• “At least” 13 global chain-store operators are in the process of opening their first mainland Chinese shops in Shanghai, according to the South China Morning Post.
• Tenants include Japanese food and drink maker Suntory, French candlemaker Trudon and Swiss furniture maker USM.
• Meanwhile, Alibaba is focused on optimising the user experience across its online platforms, Jing Daily reports, with more short videos, AR trial fittings and metaverse activations. 

Key quote

“In 2023, a strong recovery of shopping activities will be seen from the second quarter. More lease agreements will be signed as new-energy vehicles, personal care brands, garment makers and outdoor sportswear companies look to open new stores” – Sherril Sheng, research director at real estate firm JLL China.

Sourced from South China Morning Post, Jing Daily

Rivian looks to growing e-bike category for profitability

Rivian, an electric vehicle maker, is working on an e-bike amid profitability woes in the electric car space, according to reports.

Why it matters

Electric vehicles come in more shapes than just cars and vans, which had been Rivian’s focus until now. A move toward e-bikes could help shore up some of the profitability and production problems that have dogged the company over the course of last year, leading to significant layoffs and even denting the balance sheets of its major investors (Amazon owns 20%).

Bloomberg, which first reported the news based on sources present at a company meeting, notes that it’s unclear whether the work is focused on a battery-assisted bicycle or on an e-motorbike.

Other car brands have made the move based on their manufacturing capabilities, and the huge growth of the e-bike market, which is set to outsell all electric cars in the US and all cars of any kind in Europe. However, there are signs that the cost-of-living crisis is hitting demand in certain markets.

While a more accessible product might drive volume, actually making enough bikes might remain a significant issue for Rivian.

E-mobility in focus: a B2B opportunity

Though the e-bike market has been booming, a shift to two wheels hasn’t yet improved the fortunes of other car marques that have broadened their product line.

Well-known brands like Mercedes, Jeep, and Porsche have all introduced an e-bike offer but have typically priced their products at the absolute top end of the market (way above the typical $1500 price point). Whether these do more for these brands than demonstrate a commitment to electrification and sustainability, remains to be seen.

Yet other car brands, such as Toyota, have targeted the electric cargo bike space, with the potential of speaking to a large and more stable business audience, as deliveries move to e-mobility.

Back in October, Rivian CEO RJ Scaringe pointed out this potential market in a conference appearance: “The e-bike space is something we’re super excited about. We haven’t announced anything or said anything there. But I do think it is going to play an increasingly important role for transportation, both in the movement of goods for commercial purposes, but also for the movement of people.”

Meanwhile, some of the more visible players in the space, such as Netherlands-based VanMoof, have targeted buyers weighing up the benefits of a car or an e-bike for personal transportation as part of a strategy based on shifting its competitive set.

It’s not yet clear whether this is possible for car brands. VanMoof, whose distinctive design and Apple-like simplicity have made it very popular among urbanites, still came close to financial ruin toward the end of 2022, only to secure new sources of funding.

Sourced from Bloomberg, WARC, WSJ, Electrek, Cycling Industry, Mercedes, Porsche, Cycling Weekly.

Olympic sponsors face Ukraine challenge

Following an IOC decision to allow Russians and Belarusians to participate in next year’s Paris Olympics as “neutral athletes”, Ukraine is putting pressure on the Games’ sponsors.

What’s happening 

Ukraine’s President Zelensky had previously called for these athletes to be barred from the Games and restated that view at the weekend, saying “Representatives of the terrorist state have no place at the Olympics and international tournaments.”

Now the diplomatic offensive is continuing, with the Kyiv Independent reporting that Ukraine has sent letters to several major sponsors of the Games aimed at ensuring their “reputation and support are not used for war propaganda”.

What it means

While it’s not clear which sponsors have been contacted, it’s a timely reminder for brands of the potential risks of being associated with ‘sportswashing’. 

FIFA, for example, has just come in for criticism from the hosts of this year’s Women’s World Cup for striking a sponsorship deal with Saudi Arabia. Other tournament sponsors, including Adidas, Coca-Cola and Visa, may be less than thrilled to have their brand mentioned alongside a country with a questionable human rights record.

How much more might such concerns apply to any perceived support, even if indirect, for a country embarked on an unprovoked and murderous war?

Background

When Russia first invaded Ukraine, companies across multiple sectors moved to limit ties with Russian companies. Some chose to shut their operations in that country or to pause shipments, while others were forced to act by a new sanctions regime. 

Almost a year on, however, a recent study claimed that many Western companies are still carrying on business as usual in Russia. The picture is complicated, however, as luxury brand Paul Smith has found, with its products continuing to be sold in Russia via a franchise partner; last week it said it was ceasing supplies to the distributor and had requested stores trading in its name be closed.

Sourced from Kyiv Independent, Financial Times, Politico, Guardian

Amazon Q4 results: ad business a bright spot

Amazon, the e-commerce and cloud-computing firm, posted solid revenue growth, with the company’s advertising business a key performer, even as once fast-growing aspects of the business have slowed. 

Why it matters

Amazon’s results arrive amid a disappointing round of earnings calls among its big tech rivals, largely down to a slowdown in advertising spending as brands consider their investments in a volatile environment. Amazon’s Q4 sales grew 9% year on year, ahead of analysts’ estimates, but it has struggled – like its peers – to sustain the growth of online sales and digital services during the pandemic, topping off its slowest year of growth since it listed on the stock market.

“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” said CEO Andy Jassy on a call with investors. 

What’s interesting about Amazon’s Q4 results is that the softness in the advertising market was reflected less in the ad segment and more in the performance of AWS, the company’s cloud computing division, which has seen a drop in computing from advertising companies, perhaps signaling a deeper concern in the industry.

Advertising in focus

Advertising revenues grew 19% (23% adjusted for currency fluctuations) to $11.56bn – ahead of the $11.38bn expected by analysts. The segment grew ahead of the overall company, but slower than its Q3 YOY growth of 30%. 

• Some observers noted that its Prime Day shopping holiday fell in the quarter, a factor that may have flattened its performance. On a call with investors, Amazon executives rarely mentioned advertising services as analysts probed other areas of performance, apparently satisfied.
• It’s worth noting that in Q3, Walmart – a direct rival in retail media – also saw 30% YOY growth in its ad business. Its Q4 results, to be announced later this month, will be very closely watched.
• A key announcement in the quarter that could bolster ad spending on the platform was the AWS Clean Rooms, part of an emerging group of advertising technologies that help advertisers blend their data with that of a platform in a manner that protects the users’ privacy. 
• Amazon’s strategy is always to make its customers members and then sell more services off the back of that relationship, whether to consumers or to business customers. It sees this as a key area of growth among advertisers who are also cloud users.

The flywheel

Subscription services – key among them, its Prime membership – grew 13% year on year to $9.19bn, fuelled by major investments in TV content, such as its Lord of the Rings TV series and Thursday Night Football, which both drew “record sign-ups” for membership, said CFO Brian Oslavsky. 

“We see a direct link between that type of engagement and higher purchases of everyday products on our Amazon website.”

Cloud computing and the ad slowdown

Talking about the company’s investment approach, CEO Andy Jassy pointed to the importance of AWS to what the company is today: “Think about how different a company Amazon would be today if we hadn't invested in AWS.”

It helps to contextualise the 20% year-on-year growth that the division saw in the quarter, which was down on Q3’s 27.5% growth, and down from the 40% YOY growth posted in Q4 ‘21.

“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” Oslavsky explained. 

Certain industries like financial services and crypto diminished their usage, but so did many companies tied to advertising: “as there's lower advertising spend, there's less analytics and compute on advertising spend as well.”

The company, however, is confident that this reduction – which is a critical selling point of cloud computing – will help to bear fruit in the long term, and helps strengthen “a set of relationships in business that outlast all of us”, as Jassy put it. 

Sourced from Amazon, WARC

Google's AI future is imminent

Ad revenues took a hit across the board at Alphabet last year and the tech firm is laying off thousands of staff, but it is also promising significant advancements in AI in coming months. 

Headline ad figures

• Advertising revenue at Alphabet was down 3.6% in 2022, knocking $2.2bn off the previous year’s total. 
• Google Search was down 1.6% to $42.6bn 
• YouTube advertising was down 7.7% to $8.0bn
• Google Network was down 8.9% to $8.5bn

The AI future of ads

The challenging macroeconomic environment filtered through in Q4, especially when there was “ a broadening of pullbacks in advertiser spend”, chief business officer Philipp Schindler, told an earnings call. But he is optimistic about the future, seeing opportunities in applying Google AI to the ad business. 

• Already, smart bidding uses AI to predict future ad conversions and their value, he noted, “helping businesses stay agile and responsive to rapid shifts in demand”.
• Specifically, an understanding of intent in language, combined with advances in bidding prediction, “are why businesses can see an average of 35% more conversions when they upgrade exact-match keywords to broad match in campaigns that use a target CPA”. 
• “Google AI also underlies our creative products like tech suggestions in Google ads and creative optimization and responsive search ads,” Schindler added.

The AI future of shopping 

Google continues to explore how it can become a more central part of shopping journeys and a valuable place for merchants to connect with users. 

• An improved consumer experience will include more visual, immersive, browsable search; at the same time more merchants will be able to take advantage of free listings and ad experiences.
• AI-powered campaigns like PMax are helping retailers better hit goals and connect with customers: “advertisers on average see a 12% uplift from SSE to PMax,” Schindler reported.

Key quote

“Very soon, people will be able to interact directly with our newest, most powerful language models as a companion to Search in experimental and innovative ways. Stay tuned” – Sundar Pichai, CEO, Alphabet. 

Sourced from Alphabet, Motley Fool

Who owns sustainability within a business?

Businesses and brands frequently make all the right noises about sustainability, but if you want to know how committed they really are, ask whose responsibility it is – and if it’s not the CEO it’s perhaps justifiable to feel sceptical about their claims. 

Leaders and laggards

Global research* from experience innovation consultancy Designit finds a gap between businesses spearheading positive change and those stalling for time. A ‘leaders’ group is far more likely to have made the CEO responsible for sustainable practices, while a ‘lagDesignitgards’ group tends to leave these matters to a CSR role.

• Leaders constantly review their strategies, with 78% always including it on their quarterly boardroom agendas.
• Laggards consider sustainability at this level infrequently – 11% do so only once a year.

Why it matters

Sustainability is about more than just marketing: leaders in sustainability practices experience more benefits for their efforts, according to Designit – and they reference profitability as a driver for sustainability almost twice as much as the least advanced businesses (70% and 38%, respectively).

Barriers to progress 

• Half (49%) of all businesses state that having too much data to make sense of, or not having the right data, is the biggest single barrier to sustainability.
• More than half (54%) of all businesses have difficulty integrating sustainability innovation into products – and on average they spend only 4% of their revenue on sustainability.
• The majority of companies (63%) state that rising costs are the biggest external barrier to sustainability, but unclear government guidelines are also a challenging roadblock (47%), alongside geopolitical instability (43%), and technological constraints (42%).

Key quote

“What really sets the most advanced businesses apart is an innovative approach to sustainability. They are intent on consistently and holistically applying strategic design innovation until it forms part of the organisation’s DNA and extends into its wider value chain” – Miguel Sabel Pereira, Designit’s European Head of Sustainability.

*Findings are based on responses from 1,000 sustainability professionals with an influence on or responsibility/accountability for sustainability, ESG or corporate responsibility within large organisations.

Sourced from Designit

The benefits of ‘micro-upskilling’

A UK-wide pilot into ‘micro-upskilling’ has found that this approach offers additional learner benefits compared to traditional training methods.

What is micro-upskilling

As advocated by the DMA, an industry organisation, micro-upskilling sees learners commit as little as one hour a week to flexible, bite-sized e-learning and professional development. The aim is to reduce skills gaps and talent shortages through continuous staff development. 

Why it matters

The marketing industry faces challenges around talent and skills. Last month’s LEAD conference, organised by AA, IPA and ISBA, reiterated the problems, which are across the board, from attracting people in the first place through recruitment, development and retention. 

The DMA found that, for many people, it’s difficult to find the time among competing priorities to upskill. Its pilot highlights the potential benefits of taking a different approach to training and development, although it also emphasises that it must be spearheaded from the very top to reach its full potential.

Micro-upskilling drives employee engagement 

The pilot project found that: 

• 52% of learners felt more engaged with upskilling.
• 46% acquired new skills through micro-upskilling that they previously wouldn’t have been able to develop.
• 39% of learners said they found micro-upskilling better than their previous learning experiences.
• 67% believe micro-upskilling has made their organisation more engaged with their skills development.
• 63% would feel more confident and positive about their career if micro-upskilling was permanent at their organisation – and 33% would be more likely to stay with them.

Key quote 

“The fact that the majority of participating talent mentioned that if micro-upskilling became permanent it would boost their career confidence as well as their organisational loyalty, suggests it has a huge role to play as an alternative learning method in our industry, supporting traditional approaches such as training days” – Rachel Aldighieri, MD of the DMA.

Sourced from DMA

India’s digital spend to overtake TV in 2023

This is the year that digital media spending finally overtakes TV in India, according to a new report from Denstu, which says a “generational leap into the new digital economy is revolutionising the Indian advertising industry”. 

Key stats

The agency’s Digital Advertising Report 2023, in association with e4m, reveals that: 

• Total advertising spend in 2022 stood at $11.09bn, with that figure set to rise 14.6% this year to reach $12.72bn and to continue growing at a similar level (15.5%) into 2024. 
• TV’s current 40% share will decline to 37% in 2023 and to 34% in 2024.
• Digital media’s current 35% will increase to 40% in 2023 and to 45% in 2024.
• Print media’s share will decline from 21% to 19% in 2023 and to 17% in 2024.
• Radio remains steady on 2%, as does OOH; cinema is flat on 0.3%.

Context 

Government policy is playing an important role in developing the country’s digital infrastructure, which in turn is leading to digital transformation across businesses. At the same time, growing data penetration has created a mass market in areas like OTT and e-commerce. 

All that is helping to make India’s advertising industry – and digital advertising in particular – one of the fastest-growing in the world. Remember that, pre-pandemic, digital media spending took just a 20% share of the total so the speed of change has been dramatic. 

Why it matters

Brands and agencies are having to adapt to a rapidly changing environment: for example, retail media is now increasingly significant, video has exploded with the growing penetration of smartphones and cheap data plans, and mobile commerce now allows for new targeting possibilities.

Few winners

“While the outlook for ad growth on digital looks rosy, the unevenness of revenue spread is only likely to grow, with a handful of large players likely to continue to corner a lions’ share of revenue,” notes exchange4media co-founder Nawal Ahuja.

Meta sees weak ad demand but conversions are up

Meta’s latest results announcement point to the areas in which Facebook needs to strengthen and seek growth in its advertising business – now surrounded by investor-pleasing mentions of AI.

The ad demand environment according to Meta

• Q4 was, as expected, a period of weak ad demand, which Meta puts down to an uncertain and volatile macroeconomic environment.
• That uncertainty particularly hit the spending of its vitally important small and medium-sized business user base.
• Ad impressions grew 23% in Q4 year on year.
  
• Advertisers also saw 20%-plus more conversions than in the year before. 
• Combined with the decline in cost per acquisition, this resulted in higher returns on ad spend. 

The ad future 

Meta sees opportunities for continued gains in the near and medium-term. CFO Susan Li explained on an earnings call that AI investments are “powering a lot of this work as we continue to improve ads ranking and enable increased automation for advertisers to make it easier for them to run campaigns and use our systems to optimize their performance”.

A significant aspect of the company’s ad strategy now is to “bring conversions on site”, Li said, adding that work and investment on these kinds of ad formats is ongoing. 

AI to the rescue

“AI, it’s the foundation of our discovery engine and our ads business,” CEO Mark Zuckerberg explained on the same call (in passing it’s telling that the word metaverse arose just seven times versus AI’s 29 mentions during the call). “We also think that it’s going to enable many new products and additional transformations in our apps,” he added – a reflection of the end of tracking across apps and a focus on new measurement techniques.

Also ongoing is work on generative AI, where Zuckerberg acknowledged challenges in achieving scale and efficiency.

What it all means 

What is clear from Meta’s Q4 results is that, following an extended period of being at the mercy of external headwinds, the company has managed to regain control of the narrative, after last quarter’s difficult results.

Its work on AI looks to growth rather than toward Apple’s rule changes; its work on Reels no longer looks like it’s desperately chasing TikTok’s runaway growth; advertiser demand may be diminished, but it has measurement systems in the pipeline to get some of it back; the metaverse remains expensive but is currently – and thankfully for Meta – overshadowed by the other stories.