The Feed

New Google cookie-replacing technique shows 95% conversion

Google has unveiled a new ad targeting technique that could replace third-party cookies; called Federated Learning of Cohorts (FLoC), it involves grouping users with similar interest groups.

Why it matters

Cookies, individual identifiers of a user’s online activity, are very difficult to replace but Google’s new FLoC technique appears to be a strong contender, given that “advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising”, the company wrote on its blog.

How it works

The ad giant has been testing a new interface (API) that uses machine learning to form the groups based on advertising to large clusters of people with similar interests. Google says individual information can then be hidden “in the crowd”, while browsing history remains on the user’s browser.

The important bit for publishers

“Chrome intends to make FLoC-based cohorts available for public testing through origin trials with its next release in March and we expect to begin testing FLoC-based cohorts with advertisers in Google Ads in Q2. If you’d like to get a head start, you can run your own simulations (as we did) based on the principles outlined in this FLoC whitepaper.”

Criticisms

As ever, plenty of problems dot the new landscape. First, there’s the big problem of Google’s market power, which has come under increased scrutiny over digital advertising, but which saw the UK’s CMA single out Google’s post-cookie plans for particular scrutiny.

On the privacy front, the technique also draws criticism with the Electronic Frontier Foundation comparing it to a “behavioural credit score”, with added worries that it could even sustain discrimination against vulnerable groups lumped together, as TechCrunch writes.

Brands spent and sold 50% more on Amazon in Q4

Advertiser spend and sales on Amazon saw rapid growth in the fourth quarter of 2020 as brands attracted consumers during the festive period and Amazon Prime Day, according to data from performance marketing agency Tinuiti.

Why it matters

Amazon is the go-to place for many online shoppers and marketers have responded by shifting their budgets, with clear evidence of success.

Across Canada, Germany, the UK and the United States, advertising spend on Sponsored Products rose by 53% in Q4 2020. Sales associated with these campaigns grew even quicker, rising by 56% year-on-year.

Takeaways

• WARC's survey of over 1,000 marketers finds that one-third (30%) expect to spend more on Amazon this year.
• However, marketers should avoid short-termism as this may undermine their wider e-commerce strategy.

Sourced from Tinuiti, WARC Data

UK government taps new advertising tool

The content of government messaging around COVID-19 has frequently come under criticism, not so much the means by which it is distributed. Its latest campaign, however, steps up on both counts. 

A new TV campaign takes viewers inside hospitals to show the effects of the disease on both patients and staff – rather more hard hitting than advice to wash your hands. 

At the same time, it utilises Sky Media’s recently launched One Campaign to take the message to as many UK households and audiences as possible as quickly as possible with a single buy.

Key quote

“The acceleration of evolved viewing highlights the need to find agility in our media activation in order to reach audiences at an emergency pace. Such agility and measurement with Sky’s One Campaign will see our work deliver vital outcomes and save lives” – Tom Cornell, Head of Investment at OmniGOV@MGOMD.

Keeping it real – consumers want customers’ product photos not professional shots

Consumers around the world agree that authenticity is what they want from brands when they consider buying – and for most that comes from seeing photos posted by other consumers on social media, not big-money professional shots.

The power of real

A new report from Bazaarvoice, A picture’s worth a thousand purchases, found that two-thirds of consumers say they want to see such photos – and that figure rises to almost three-quarters of 18- to 34-year-olds.

Sixty-five percent of 8,000-plus consumers surveyed across Australia, Europe and North America also said they make buying decisions based on the availability of customers’ posted photos.

The detail

• When it comes to influencing purchase decisions and buying actual products, Facebook is the most popular social media platform overall; Instagram tends to be preferred by Gen Z and Millennials.
• Visual UGC is most important for products that usually have a higher price tag, such as tech and electronics items. Across all categories, though, fresh content is everything.
• Younger consumers are most likely to want to see visual UGC, with almost three-quarters saying they prefer it when brands use social media platforms in this way.

Soundbite

“Visual content shared by previous customers can give shoppers confidence to click the ‘buy’ button and reduce basket abandonment. It’s the best way to demonstrate online how the product fits or works, and can help potential customers imagine how they would use the product in their own lives” – Joe Rohrlich, CRO, Bazaarvoice.

^{[Image from Bazaarvoice]}

Asia over-indexes for livestreamed video consumption

Live video content is more popular with Asian streamers but video-on-demand content is growing its share quickly, according to data from streaming analytics company Conviva.

Why it matters

The video landscape is changing rapidly and marketers need to know where their audience is. Consumers also have different viewing states across on-demand and live content so it is vital that marketers tailor their approach accordingly.

Takeaways

• Additional research shows that mobile streaming is the most popular device across much of Asia and marketers are now making mobile video their priority for 2021.
• Video advertising performs best in the long-term when employing well-defined characters, locations and storylines.

Sourced from Conviva, WARC Data

It’s a buyer’s market for Amazon as it builds its next billion-dollar business

E-commerce is soaring in the US and, as Amazon’s need for rapid and reliable logistics grows, it is increasingly looking to build its own capacity to deliver.

And, as travel has taken a nose-dive following the pandemic, Amazon has found ready sellers of 11 passenger aircraft at bargain prices. Converted to cargo planes, these will be delivering the goods this year and next. Logistics should be wary of the growth of Amazon Air.

The context

• Amazon now delivers two-thirds of its own packages in the US and has a fleet of 20,000 vans, as existing couriers like FedEx, UPS and USPS have failed to keep up with its demand over the last three years.
• Observers see the planes’ purchase along with new delivery hubs in the US and Europe as part of Amazon’s ambition to build capacity and take on established logistics giants.
• It did the same with Amazon Web Services, built to carry Amazon’s own site traffic until it was big enough to take on external clients. That’s now thought to be worth $400 billion as a standalone business.

Soundbite

“At some point, just as they’ve done with other parts of the organization, they [Amazon] build out capability internally, see their own business as their first customer, and then they look to sell that capability to others. And this, I would suggest, is another perfect example, with the planes being an extrapolation of exactly that” – Thomas O’Connor, senior director and analyst for Gartner’s supply chain strategies team.

Online a bright spot as UK ad market to recover growth in 2021

The Advertising Association/WARC Expenditure Report anticipates 15.2% growth in the UK advertising market in 2021, better than key markets including US and China, due to strong online activity.

What it means

E-commerce has proved fundamental to maintaining platforms’ powerful position in the UK advertising sector, as consumption and commerce headed online. In the year ahead, greater certainty over trade and vaccinations ramping up indicate that the market could bounce back to pre-COVID growth levels.

A strong year ahead

In 2021, the UK ad market is set to accelerate past last year’s decline and back into growth to push past 2019’s high (£25.37 billion) and reach a total of £26.69 billion.

2020: rough but better than expected

The preliminary estimate for growth in 2020 now stands at -7.9% with adspend of £23.17bn, a marked improvement of +6.6 percentage points on the previous outlook, thanks mostly to a boost in online adspend, spurred by increased e-commerce penetration.

Internet spending stands out

• Internet spending grew by 10.1% to reach $4.2 billion during the quarter
• Search spend, key to capturing increased demand for e-commerce, grew 14.5%, closely followed by online display (pure play) at 13.9% growth

Digital dominates low budget campaigns but TV leads for high budgets

The biggest determinant of media allocation is budget. TV dominates in high-budget campaigns and digital is most important in low-budget campaigns, according to the latest data from WARC’s Media Allocation Benchmark.

Why it matters

Majority of campaign media spend goes towards digital and/or TV. Gaining the right balance of TV, which delivers reach, and digital, which supplements reach and facilitates personalised targeting, is a critical component of media allocation.

Takeaways

• Low-budget campaigns allocate 61% of the media budget to digital.
• High-budget campaigns allocate the same proportion to TV (60% when budgets are between $10-20m and 61% when budgets are over $20m+).
• Mid-budget campaigns have a more even balance of the two channels.

Sourced from WARC's Media Allocation Benchmark report

Luxury brands can tap nostalgia in China

Many of the world’s luxury brands still seem unsure how to market in China, but getting the messaging right is more vital than ever as China is set to be the world’s biggest luxury market by 2025.

The context

Ahead of the crucial Chinese New Year holiday period next month, a number of luxury brands are finding nostalgia messaging can create powerful connections ­– when it’s done right.

• Partnering with childhood animated characters, in particular, is popular with brands – Loewe has used characters from a fantasy movie, and Gucci products have featured a Japanese manga character, for example.
• When companies connect with customers emotionally, the pay-off can be huge. But nostalgia marketing needs to be highly sophisticated or it can backfire, especially if consumers see it as shallow – simply cutting and pasting a character onto products – or if brands fail to understand the complicated mores of Chinese culture.
• Overuse is another potential pitfall – no brand wants to be seen as looking backwards too much.

Soundbite

“The Chinese market is extremely complex and local teams can help understand cultural references, and make sure that they’re playing at the right level, without making any missteps that can be harmful to the brand” –  Remi Blanchard, consultant with China market research firm Daxue Consulting.

^{[Image from Gucci.cn]}

Why China’s ‘Silver Economy’ is an online gold mine for brands

Even before the pandemic struck, China’s senior shoppers were gradually closing the digital gap on younger consumers, but last year they made up the fastest-growing demographic of online shoppers and many are sticking with online shopping post-pandemic.

The context

China’s over-65s are expected to number almost 247 million by 2030, and investment bank UBS has described greying China as a “goldmine”, one to which e-commerce platforms are adapting.

• The proportion of internet users over 60 years old has soared in the past four years from 4% to more than 10%. And e-commerce giant JD.com found that, in 2020, online users aged 56 and above spent 2.3 times as much as an average online shopper in 2017.
• Already worth 3.7 trillion yuan ($570 billion) in 2018, China’s “silver economy” is expected to reach 5.7 trillion yuan ($880 billion) by the end of 2021, according to iMedia Research group.
• Alibaba has spotted the growing e-commerce opportunity and launched its ‘Taobao for Elders’, which features simplified functions; JD.com has launched a number of initiatives to encourage seniors’ online confidence, including app training for digital payments, booking appointments and medical consultations.

Top takeaway

As UBS notes, where China leads, others will follow, and brands that develop products and services catering to China’s massive elderly population will be able to use this experience to find growth elsewhere since ageing populations are a global phenomenon.

CMOs adopt ‘low risk, low return’ strategies for 2021

Almost three-quarters (73%) of chief marketing officers in North America, the UK, France and Germany intend to play it safe by relying on existing customers to fuel growth in 2021, according to a new survey from research firm Gartner.

Its inaugural CMO Strategic Priorities Survey 2021, which is based on responses from 381 CMOs in September and October 2020, suggests they will take a low risk approach this year following a tumultuous 2020 even though many would like to rescale their marketing strategies.

Key findings

• When asked “what is your company’s primary strategy to fuel growth in 2021?”, 39% of CMOs said they plan to increase sales of existing products to existing customers, while 34% intend to introduce new products to existing customers.
• Just 18% said they would enter a new market using existing products, while 7% said they would enter a new market by introducing new products. Zero sales growth was anticipated by 1% of CMOs.

Recommendations for 2021

• Gartner advised CMOs to be more selective in what strategies they choose to reinvent, rescale, reduce or retire, and to focus their efforts on what is most essential in the short-term.
• They should document their decision-making process to reassure fellow managers that marketing’s priorities are focused on the highest possible returns.
• CMOs are also encouraged to draw up formal scenario and contingency plans which can be adjusted as the year progresses.

Key quotes

“Focusing on existing customers has a number of benefits for CMOs, namely being low cost and low risk. But low risk is matched by relatively low return” – Jay Wilson, VP analyst in the Gartner Marketing practice.

“CMOs must try to avoid reinventing the wheel in 2021 and remember: For every strategy you rescale, you must choose another to reduce or retire. For every strategy you try to reinvent, another must return to pre-pandemic levels and approach” – Augie Ray, VP analyst in the Gartner Marketing practice.

Luxury brands tap the influence of Korean TV dramas

Korean TV dramas, popularly known as K-dramas, are becoming an increasingly important channel for luxury brands to connect with consumers, not just in South Korea but across the wider Asia-Pacific region.

Hit shows that feature luxury goods are benefitting brands ranging from French accessories label Roger Vivier to Belgian handbag brand Delvaux and Boon the Shop, the South Korean clothing retailer.

Top tips

• Netflix, which has signed up to releasing more than 40 K-dramas to its users by 2022, is a key choice for marketing budgets, but brands need to be careful to bet on the right show and ensure their strategies for K-drama deliver good return on investment.
• Apart from investment in traditional celebrity endorsement and brand ambassadors, sponsorship of popular shows, which few luxury brands have opted for in the past, is expected to become a major area of growth, with US jeweller Tiffany & Co. leading the way.

Key quote

“If you want to go nationwide and reach out to [viewers in their 30s and 40s] who actually spend a lot of money, dramas play a more powerful role than social media” – Stephanie Kim, Korea country manager at Roger Vivier.

_{[Image: Teemah, Creative Commons]}

News Media Bargaining Code fight escalates with Facebook, Google ultimatums

Social media giant Facebook has added its voice in opposition to the proposed News Media bargaining Code (NMBC), saying it would have to prioritise other markets and stop hosting news in Australia; Google, meanwhile, has said it would need to pull out of the Australian search market.

Why it matters

Termed blackmail by one senator, the escalation of now both companies’ opposition to a law that would vastly strengthen the position of news media companies against platforms, is a significant new step.

The talk from the platforms comes during a week that Google agreed to pay French publishers for news, and struck a global deal with Reuters. While Facebook agreed a deal in December with a handful of UK newspapers.

Bottom line

A compelling read comes from the New York Times, which suggests that the companies' concern is less about payment, and more about having to pay publishers on terms other than their own.

Critics such as Sir Tim Berners-Lee argue  that as it stands the law could set a dangerous precedent over payments for linking, links being the basis of an open internet.

It’s an important argument, given that Google and Facebook (with its coming News product) don’t simply link and provide traffic to news publishers; they slightly repackage or reframe the news in order to add a richer experience. It’s this experience that they advertise against.