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Advertiser spend on TV and social media is twice as high as daily consumption

For the first time, social now attracts more investment from advertisers than linear TV, a new WARC Global Advertising Trends report reveals, but both media attract a disproportionate share of advertising budgets when one considers the time the average consumer spends with these channels each day.

WARC Global Advertising Trends: The Investment Gap

• Social media is forecast to account for 39.1% of 2022 adspend but has a 21.4% share of daily media consumption; the equivalent figures for linear TV are 31.5% and 16.1%.
• Social media spend would need to reduce by $94.3bn in order to mirror global consumption levels next year, while the investment gap is $86.9bn for linear TV.
• The largest gaps between social consumption and adspend can be found in China (where advertiser spend is 3.3x consumption), the UK (2.2x) and the US (2.0x).
• Conversely, in Australia (0.9x), India (0.4x) and Russia (0.5x), social’s share of daily media consumption is higher than its share of advertising budgets – a potential indicator of opportunity for brands.
• While linear TV spend is inflated in relation to its consumption, online video is now close to parity after years of underinvestment.

Undervalued media

• Podcasts are found to be undervalued by $40bn, with the greatest opportunities for advertisers among audiences aged 16–24, middle earners, and those educated until the age of 16.
• Advertisers would need to spend $58.0bn on online press ads globally next year to achieve parity with consumption levels. Instead, forecast spend is just $12.8bn.

WARC’s Global Ad Trends: The Investment Gap is based on WARC analysis of advertising spend forecasts for 100 markets worldwide, combined with the results of a survey by GWI of more than 715,000 consumers. A sample report is available for all. WARC Data subscribers can read the report in full.

Facebook races to defuse demographic time bomb

Investors and advertisers remain confident in the fundamentals of Facebook’s present and future – even amid a mixed set of results with privacy changes and negative headlines weighing on growth – but with leaks revealing that younger users are dropping off, ageing the social network’s user base, Facebook now says it will retool to retain its gloss among younger users.

The revelations drew comment right from the top, as Facebook CEO Mark Zuckerberg  explained during Monday’s earnings call that it would be shifting “to make serving young adults the north star, rather than optimizing for the larger number of older people”, which would likely slow growth in the short term but create headroom for the long term.

Why it matters

The ageing issue has been a worry for Facebook for a long time, when the expansion of its audience into older generations risked alienating younger users, therefore future generations of top earners, and therefore growth. With a 13% decline in teenage users since 2019, and a forecast 45% drop between now and 2023, not to mention that young users are spending less time and engaging less, Facebook’s current problem is nigh-on existential.

The “ageing up issue is real” a Facebook researcher wrote in a memo earlier this year, the contents of which were first reported by tech site The Verge.

Takeaways

The internal research findings show the following:

• Engagement metrics in key markets are falling among the young, even as rivals push ahead. Facebook’s own research suggests that teens are spending between two to three times more time on rival TikTok than on Instagram.
• “Young adults perceive content as boring, misleading, and negative,” internal documents show.
• They also “have a wide range of negative associations with Facebook including privacy concerns, impact to their wellbeing, along with low awareness of relevant services.”

The solution

Facebook’s metaverse ambitions are something of a response to this. Having seen teens flocking to platforms like Fortnite and Roblox, Facebook’s ambitions in the virtual world span from the workplace to gaming to socialising. As the world has become more visual, the core Facebook platform has struggled to catch up, but is now working towards even more imagery.

But other, more prosaic issues, need solving. For many people under 30, Facebook has been with them for around half of their lives, allowing them to accumulate hundreds of ‘friends’ that no longer bring any value to remaining connected.

Sourced from the Financial Times, The Verge, Facebook

How the pandemic is changing media habits

The pandemic has inevitably been a major influence on both media consumption and device ownership around the world; a new report highlights how consumer habits are changing. 

The annual Global Media Intelligence Report, from leading digital research organisation Insider Intelligence, in collaboration with Publicis Media-Starcom and GWI, is effectively a reference guide to consumers’ media use in 43 countries.

Takeaways

• Ownership of PCs and/or tablets continues to fall in many countries. Smartphones are already the primary – and sometimes the only – digital device owned by many internet users around the world. Different regions generally prioritise different devices, but there are national exceptions. 
• Smart TVs are gaining ground as high-quality in-home entertainment becomes a must-have. In all but a handful of countries, smart TV ownership rose by several percentage points year-over-year.
• Adoption of other smart products has accelerated. More people now own smartwatches, smart wristbands and smart home products; in the UK, for example, one in four internet users owned at least one smart home product in H1 2021; in the US, that share was 20.5%.
• In many countries, digital video has overtaken broadcast TV. In almost half of the countries surveyed, more than 75% of internet users had watched subscription video-on-demand (SVOD) in the prior month. But TV continues to reach more consumers worldwide than any other content-based medium. 
• The digital audio market is evolving, but radio hasn’t gone away. Broadcast radio’s reach shrank in many markets this year, but time spent with radio hardly changed since 2020.

WARC Data Premium clients can access the latest media consumption trends across 52 markets in a new interactive dashboard. If you do not currently have access, register your interest to find out more. 

Fast delivery key to capture rising 18-35 spending this holiday season

Consumers in the 18-35 age group are likely to spend more this holiday season, as delivery speed, product selection, and video creative have the greatest impact on purchase decisions, a new survey by recommendation platform Outbrain reveals. 

Why it matters

As the world strives to put behind the uncertain times while being wary of a crisis not completely gone, consumer confidence is a sure hint at a semblance of normalcy. As consumers loosen their purse strings, marketers’ spirits are only going to be further buoyed.

Key findings

Outbrain’s Consumer Insights for the 2021 Holiday Shopping Season survey covered over 8,000 consumers worldwide, across the United States, United Kingdom, Australia, Germany, France, Italy, Spain, and Israel. Some of the key findings include:

• 52% of the consumers consider speed of delivery to influence their purchase decisions while 38% value free/discounted shipping.
• 54% value brand accessibility/availability, followed by sustainability (47%), and brands that support local businesses (43%).
• A majority of respondents (61%) believe watching a video about a product is important to their decision-making process; 45% consider swipeable ads online to be most engaging.
• 71% of consumers globally purchased a product outside of their home market last year. Outbrain believes this trend will continue into the holiday season.
• 57% of global consumers only begin planning Black Friday purchases a few days or up to two weeks ahead.

Sourced from Outbrain

Supply chain issues affect adspend

Social media platforms are feeling the effects of the global supply chain crisis which is making many advertisers rethink their Q4 spending plans.

What’s happening?  

• Supply chain disruptions, which include a lack of components, reduced working at overseas manufacturing locations because of COVID-19 and rising energy prices, and shipping delays at crowded ports, mean companies can’t be sure of their stock levels ahead of the busy Christmas period.
• A new Adobe analysis found that out-of-stock product messages have risen by 172% compared to the pre-pandemic period, with apparel, sporting goods, baby products and electronics hardest hit.

Why it matters

Businesses won’t want to advertise products that might not be available, so promotional spending is likely to be muted, the Financial Times reported; at least one social media group anticipates taking a hit as a result. Advertising groups, meanwhile, are monitoring the situation and will hope that brand advertising holds up. 

Key quotes 

“We expect that some [advertising partners across a wide variety of industries and geographies] may opt to slow their marketing spend given the diminished need to drive incremental demand at a time when their supply chains are not able to operate at peak capacity” – Jeremi Gorman, chief business officer at Snap, in a Q3 earnings call. 

“Supply chain issues and labor shortages... have left many consumer businesses with less inventory. This has reduced their appetite to generate demand from consumers, which has impacted advertising spend” – Sheryl Sandberg, COO at Facebook in a Q3 earnings call. 

Sourced from Financial Times, Seeking Alpha, Adobe 

The strategic pursuit of profit with purpose is the driving force for effective marketing in Asia

Following an in-depth analysis of this year’s results, WARC has today published Insights from the WARC Awards for Asian Strategy, a report outlining lessons learned and successful marketing trends from this year’s awards.

Key insights 

• Brand advocacy takes centre-stage

Across this year’s shortlist, WARC saw a marked increase in advocacy- and sustainability-driven work. This focus on social and cultural issues – by winners such as Lifebuoy and Dove – reflects consumers’ new expectations of brands based on actions and long-term commitment to worthy causes.

• Partnerships strengthen brands in tough times 

Many of this year’s winners showed how strategic partnerships can help amplify reach and lead to growth. Brands like Pizza Hut, Unilever and Gillette, joined forces with parties that were seemingly unrelated to their brands, helping them reach new audiences and uncover new areas of growth.

• Emotional strategies are built on actions

This year saw a jump in the use of emotion as a creative strategy. But tugging at the heartstrings is not enough: truly empathetic communications go beyond messaging to support and engage consumers, as proven by winners like Cadbury Celebrations and Ginebra San Miguel.

• TV leads sophisticated media strategies 

While TV strengthened its lead, in part due to lockdowns forcing people to stay at home, the most successful campaigns were those that showed a layered approach to media planning. Ariel, for example, combined its main TV commercial with extensive social activity.

Download a sample of the insights report here. More information on the WARC Awards for Asian Strategy 2021 is available here. 

P&G, Nestlé bet on brand equity amid rising prices

Major global firms – among them FMCG titans like Procter & Gamble, Unilever and Nestlé – are betting that consumers will put up with rising prices and stick with named brands, in what will be a significant test of their marketing power.

The story, per the Wall Street Journal,  is that, rightly or wrongly, firms are not yet seeing impact of higher prices on consumer preferences, and are therefore telling investors that they expect sales and profitability to continue growing.

The context

• Key to this is Procter & Gamble’s announcement last week that it would raise prices – an important moment in which the firm will show if its brands can maintain market share.
• Inflation is on the rise across many of the world’s advanced economies, with supply-side constraints causing prices to spike for consumers and costs to rise for companies.
• FMCGs are likely in a strong position, however, as even with economies re-opening, people continue to spend more time at home than they did pre-pandemic.
• Nestlé observed people are drinking more of the firm’s coffee at home and they’re drinking better coffee, i.e. they’re spending more.

The trouble with pricing

Pricing should be of profound interest to marketers, given its position among the four key pillars (the 4 Ps) of the marketing discipline as proposed by Kotler and McCarthy. Effectively, brands will have trouble getting people to pay more than their perceived value – marketing activity and understanding is critical here.

Inflation may be rising now, but many people haven’t yet felt it in their pockets. As price pressure grows, many people will trade down to private label or cheaper brands.

It does all come down to whether big brands with established names – often considered a safe bet – will have more success in protecting their margins than smaller brands or brands whose competitive pricing sets them apart.

Price rises can be tricky business, and often rely on elements outside the company’s control, not least the behaviour of competitors. Others, meanwhile, may opt for a quieter defence of margins through the suite of product adaptations that some have called ‘shadow inflation’, and selling a little less product for the same price.

Sourced from WSJ, FT, WARC

Hybrid viewing is the European norm

CTV adoption among European households has increased by 30% from 2020, meaning four in five households can now be reached by CTV, a new study reveals.

Why it matters

With more than three quarters of European audiences watching CTV, this channel is now an essential element of TV planning for advertisers, the more so since CTV yields greater results than social media or traditional TV when it comes to engagement.

The UK angle

The report (CTV is for Everyone: 2021) from sell-side advertising platform Magnite reveals that: 

• Two thirds (65%) of British CTV viewers pay more attention to an ad on CTV than when an ad is seen on social media (22%). 
• British CTV viewers are 54% more likely to share personal information to receive relevant advertising, while 57% think it is important that brands align with their values and opinions.
• British parents are easier to reach with CTV, especially households with teens: 45% of households with teens watch mostly streamed content. 
• CTV reaches diverse audiences including purchase decision-makers (68%), gamers (89%, of which 28% watch CTV only), light TV viewers (65%) and those born outside of the UK (69%). 

Sourced from Magnite

Younger marketers need seniors’ help to sharpen skills: report

Senior marketers need to do more to help junior-mid-level marketers hone their skills, according to research by the Association for Data-driven Marketing and Advertising (ADMA).

Why it matters

Skills that are shared more in relation to knowledge are planning, goal setting and strategy, while the skills that are less shared but with the same knowledge score are critical thinking, curiosity, opportunity, insight, learnings, communications strategy and campaign plan and tests.

Key insights

• The research, reported by Mumbrella,  found senior marketers lack the most in data planning, marketing technology and data management.
• Mid-junior level marketers are more adept than the senior-executive level at strategy and execution.
• The research, which included 136 marketing practitioners in Australia, also surveyed knowledge in discovery and planning.

Quote

“This gap is not the case for businesses that are e-commerce natives but more for those businesses that are coming from traditional disciplines who have had to quickly pivot and adapt to a new consumer expectation in a shifting, evolving and predominantly online environment” – ADMA Marketing Skills Assessment research report.

Sourced from Mumbrella 

Deloitte: CMOs spot growth potential in purpose

Purpose helps the top brands grow if they believe it should run through the entire company, and guide decision-making across the whole organisation, according to Deloitte’s marketing trends for 2022.

The findings

A key part of Deloitte’s Global Marketing Trends Report focusses on the behaviour of high-growth brands (growing at more than 10% each year).

These brands are found to be much more likely to have committed to an integrated purpose. However, in Deloitte’s definition, this requires those brands to “put a premium on accountability and establish key performance metrics anchored around their purpose.”

• High growth brands tend to enact their purpose more holistically than their lower-growth peers.
• For these brands, purpose doesn’t just feed into product and service delivery.
• High-growth brands are 66% more likely to use their purpose to help guide employee decision making than low-growth brands and are 41% more likely to use it to drive the CSR investment agenda.

Methodology

The recommendations are based on a combination of:

• a poll of 1099 C-suite executives from global companies operating across the US, UK, France, Japan and the Netherlands
• A global consumer survey of 11,500 participants across 19 countries across the Americas, EMEA and Asia.
• In-depth interviews with 18 C-suite executives.

Sourced from Deloitte

Snapchat ad revenue tops $1bn but weighed down by Apple's privacy push

Snapchat has announced strong advertising growth in the third quarter of 2021 but has called out "significant headwinds" that include Apple's iOS privacy changes that have limited ad tracking and "upended many of the industry norms and advertiser behaviors", according to the latest company report.

Why it matters

Apple's data privacy push has had a widespread impact on digital advertising and Snapchat expects a challenging final three months of the year. iOS platform changes, supply chain disruption and labour shortages mean the company is forecasting Q4 2021 ad revenue growth of between 28% and 32% to between $1,165m and $1,205m. This would be one of its lowest rates of growth in the normally lucrative fourth quarter.

Takeaways

• Snapchat topped $1bn in quarterly ad revenue for the first time in Q3 2021, with a 57.3% rise taking the total to $1,067m.
• However, the company called out "significant headwinds" from Apple's iOS privacy changes that have "upended many of the industry norms and advertiser behaviors".

WARC Data Premium clients can access the latest data on Snapchat's performance here. If you do not currently have access, register your interest to find out more.

Sourced from Snapchat, WARC Data

The positive impact of showcasing black stories in advertising

Advertising that features black characters and positive, joyful black culture creates a very large uplift in effectiveness, according to new ad testing conducted by System1 to mark Black History Month in the UK. 

Why it matters

When people see their life or culture represented on screen, it resonates more powerfully and emotionally. The research (part of the Feeling Seen report series) also demonstrates that, to a point, advertising that strongly appeals to a minority group will usually appeal to the general population, proving there’s no downside to making inclusive work.

Some considerations

System1 looked at six examples of black representation in advertising and concluded that all ads saw a large uplift in effectiveness (as measured by its Star Ratings and Spike Ratings) when tested with a black British sample. But it also observed that there may be a point at which diverse advertising stops uniting audiences and offered some suggestions as to why that could be:

• While advertisers have long used black music, this has often been music released two or more decades before, rich in association and recall. Ads with, for example, a modern RNB or grime soundtrack may not resonate as effectively with the general audience. 
• The testing indicated that black audiences regularly notice more right-brained elements – especially hummable tunes and familiar locations – and are more likely to pick emotional rather than functional key associations. So advertisers should emphasise elements, such as characters and stories unfolding, which aren’t so culturally determined and which may then have the same impact on general audiences.

• Creating work with generally broad appeal is more effective than creating work that targets smaller populations. (Different audiences don’t necessarily need different advertising – they just need to feel seen within varied elements of the advertising.) So advertisers are better making minor creative shifts rather than entirely new work, to avoid losing reach or resonance.
  

Sourced from System1 [Image: Levi Roots]

Reaching Southeast Asia’s new digital audience

Digital penetration during the pandemic has increased by 15% or more across Southeast Asian markets, thus adding a whole new audience to an already fragmented landscape.

Why it matters

While the detail varies in each market, ad budgets are increasingly allocated to digital channels such as search, social and video, and, says Nielsen, influencers are a fast-growing touchpoint. 

Key stats

• Philippines: internet usage stands at 87% (Q2 2021) up from 70% (Q2 2019), smart TV usage at 17%, up from 7%, video on demand viewing at 27%, up from 6%. 
• Thailand: internet penetration increased 15% during the pandemic, with increased uptake among the rural population and older consumers. 
• Instagram claims two thirds of the total number of influencers within the region; within that figure, Indonesia has the highest number of influencers with over 7 million personality profiles. 

Key quote

“Where influencers are really fitting in is how they are able to deliver and reach the specific audiences they are engaged with. Brand recall for influencer content is 4x up versus traditional digital content” – Nicholas Bruce, Head of Consulting and Research for Asia at Nielsen.

Sourced from Nielsen

TV and social advertising inflated compared to consumption

Advertising spend on TV and social media is highly inflated in relation to daily consumption worldwide, according to WARC Data's latest Global Ad Trends report. The analysis compares WARC Data's new quarterly advertising spend figures with GWI's survey of more than 700,000 consumers.

Why it matters

The purpose of the report is to assist clients in identifying the discrepancies between daily media consumption and advertiser spend, in order to better recognise opportunities for optimisation.

It also finds global social media advertising spend is now larger than linear TV investment while podcasts are being potentially undervalued by as much as $40bn.

Takeaways

• Spend on TV and social media is highly inflated in relation to daily consumption.
• Conversely, audio formats and online press appear to be heavily undervalued by advertisers.

A sample of the report is available here and WARC Data subscribers can read it in full here.

Sourced from WARC Data, GWI