WARC Media Platform Insights: YouTube

YouTube continues to command a strong position in the online video advertising market and is actively looking for ways to forge deeper connections with viewers, creators and brands through multi-format video strategies.

Context 

YouTube is prioritising Shorts and CTV engagement, and is innovating with unskippable 30-second ads and “pause experiences” on TV to help marketers engage audiences across screens and achieve both performance and brand-building goals.

Takeaways 

• Ad investment with YouTube is set to rise 4.0% in 2023 to reach $30.4bn

That marks a turnaround from Q4 2022 when ad revenue declined 8.8% year-on-year, as marketers shifted investment to retail media and search. But growth is expected to resume in 2023, at more than double the rate of growth recorded in 2022. WARC Media forecasts YouTube’s revenue growth to accelerate 10.3% in 2024, to reach $33.5bn by the end of that year.

• Commerce brands are expected to spend $4.1bn on YouTube ads in 2023 

This is a 4.6% rise on 2022. Retail remains YouTube’s most important category for ad investment, but growth from other sectors has been harder to achieve. While some categories will see double digit spending increases in 2023, including technology and electronics (+13.9%) and toiletries and cosmetics (+12.1%), figures elsewhere are more modest.

• YouTube advertisers can reach half of all internet users globally. More than one billion hours of video are watched every day on YouTube

YouTube is the world’s most popular online platform, with an adult advertising reach estimated at 2.07 billion people, almost twice as much as TikTok and Instagram respectively. YouTube Shorts (60 seconds or less) will provide more opportunities for marketers to reach new audiences, but its 50 billion daily viewer total is some way behind the 140 billion daily views achieved by Instagram Reels; under-18s, meanwhile, spend on average 60% longer on TikTok than with YouTube content.

• YouTube has overtaken Netflix as the biggest TV streaming platform in the US

YouTube accounted for 22.9% of OTT viewing in March 2023. It is also the most popular channel for US Gen Zs to catch up with sports news, and last year it was the most popular platform for both music and podcast listening in the US.

APAC is a key growth region for YouTube – from live shopping and Shorts to gaming – while in Latin America, YouTube delivers brand impact more cost-effectively than any other video platform, according to research by Kantar.

Platform Insights is a new series of reports exclusive to WARC Media subscribers. These include an overview of platform investments, media consumption and performance insights. More information is available here.

WARC Talks: Driving impact with entertainment

In this episode of the WARC podcast, Rica Facundo, WARC Strategy’s Asia Editor, and her guests discuss how entertainment is changing the marketing and media landscape in Asia and beyond.

Rica is joined by Manjusha Subramanian, B2B Marketing Lead, TikTok APAC, Kunal Sinha, Group Chief Strategy Officer at M&C Saatchi Indonesia and Leah Jackson, Head of Digital Marketing, Goodman Fielder.

Entertaining content can be effective at driving impact across brand and performance, and this episode details long- and short-form video best practices. The podcast also covers regional differences and how marketers can optimise online video for a specific target region/audience.

Listen to the full episode here

Timestamps

02:01 – What is changing in the Asian entertainment landscape?

05:32 – Trends in Indonesia.

08:12 – The view from Australia.

11:16 – How are these changes manifesting in your strategic briefs?

17:17 – Achieving impact across brand and performance.

18:06 – How TikTok drives performance and brand equity.

20:50 – What content connects?

28:05 – Why can entertaining content be so effective across brand and performance?

31:40 – Online short-form video best practice.

36:27 – Long-form best practice.

39:21 – How to optimise online video for a target region/audience.

See the full list of WARC podcasts here

New emotional brand metrics for dark times

Measuring brand metrics that inspire human emotions could sit alongside standard business metrics in future, says a new report from the Wunderman Thompson agency. 

The age of re-enchantment suggests that emotional KPIs that measure “heart swells, goose bumps, jaw drops, spine tingles, and more” will become increasingly important as people look for brands to bring some joy into their lives. 

Context 

War, climate change, disease and economic uncertainty are all contributing to a global mental health crisis, with young people, in particular, more stressed and anxious than ever before. Wunderman Thompson’s research indicates that almost half of people (46%) say they “feel tired and burned out all the time”, and two-thirds (67%) agree that technology is making us “feel more detached from the real world”. 

But 89% also say awe-inspiring experiences make them feel good, and 83% actively seek out experiences that bring them joy and happiness; 77% say “I just want to feel something, to feel alive”.

Why it matters 

There’s an opportunity for brands to step into this doomfest and lighten the load for consumers by giving them the sort of experiences they crave. More than six in 10 survey respondents (3,000 from the US, UK and China) felt brands should make more effort to wow them with spectacular advertising or marketing (67%).

What brands can do 

• Stand up for fun. Not only does fun offer a welcome respite in tough times, it’s a potential triple win for brands – delivering pleasure not only in the moment but also in its anticipation and recollection.
• Prioritise connection. With 85% complaining that we have less time for one another these days, brands can help facilitate meaningful connection via rituals and spaces (both physical and virtual) that bring people together.
• Enthrall the senses. Sixty-three percent wanted brands to provide multisensory experiences – and that applies in digital and virtual worlds as well as IRL.
• Escape the rational. Three-quarters (74%) enjoy an element of mystery and surprise in the things they do. Brands can build in moments of serendipity and the unexpected.
• Strive for better. Just 25% are positive about the way things are going in the world. By applying themselves to solving societal and environmental challenges, brands can foster some much-needed optimism.

Sourced from Wunderman Thompson

Unexpected ads gain attention but make sure it’s the right sort

Salient advertising features, such as using abrupt onset or motion, increase unexpectedness and attract more attention to online advertisements, according to a paper in the Journal of Advertising Research (JAR).

Why it matters

It seems axiomatic that an unexpected advertisement would be more effective in attracting consumers’ attention than an expected one – when consumers ignore online advertisements it’s often because they know what to expect and can easily filter them out. 

But it’s the nature of the unexpected ad that’s important. Pop-ups (abrupt onset) that get in the way of the information people are seeking are hugely annoying; floating ads (abrupt onset and motion) garner attention with less negativity.

Also important is the mindset of the viewer, whether they’re focused on a task or just browsing.

Takeaways 

• Online advertisements embedded with unexpected features – motion and abrupt onset, for instance – attract consumers’ attention in a bottom-up perspective (as opposed to top-down control of attention which is associated with the viewer’s awareness of the stimulus and its features).
• Unexpected advertisements more likely will capture consumers’ attention during goal-oriented tasks than free-browsing ones.
• Consumers are more likely to disengage from central processing during goal-oriented tasks and, therefore, are more attracted by unexpected advertisements than they might be during free-browsing tasks.
• Unexpected advertisements are associated with a more favourable attitude and less perceived intrusiveness than unexpected advertisements that obstruct the web content.

About the study

• How consumers process unexpected online advertisements: The effects of motion and abrupt onset on consumers’ attention and attitude was written by Emna Cherif (University of Clermont Auvergne) and Theirry Baccino (University Paris 8).
• The authors analysed the effects of three levels of advertising unexpectedness: high versus moderate versus low during both goal-oriented and free-browsing tasks. The context was a series of web pages that mimicked the front page of online newspapers.

Sourced from JAR 

Performance marketing effectiveness needs to get better

Marketing effectiveness is below pre-pandemic levels for the second year running, according to the Data & Marketing Association, with performance marketing effectiveness falling sharply, even as brand marketing effectiveness has improved.

Why it matters

The current economic climate has meant that marketing budgets are under more pressure than ever, with a greater burden on CMOs to prove the impact of their spend. This is leading to an ever-increasing demand to articulate short-term business outcomes at the expense of focusing on what drives long-term sustainable business growth.

Takeaways

The CMO Measurement Toolkit from the DMA highlights five key points for marketers: 

• Focus on measuring what matters to your business: Linking marketing spend to business outcomes (eg ROI, profit growth, and long-term customer loyalty) helps to sell the organisational value of marketing when budgets are under pressure.
• Assess which metrics are linked to business outcomes: Ad volume, efficiency and engagement, along with Net Promoter Score and Retention Rate growth, were found to be strong business effectiveness drivers.
• Contextualise marketing performance against benchmarks: Make like-for-like comparisons with relevant industry benchmarks when setting campaign KPIs.
• Stimulate future demand through brand building: Generating customer response to marketing comms is harder when household budgets are under severe pressure. Brand activity can itself drive sales directly and have a halo effect on performance / response marketing in the short term.
• Rediscover the lost art of creativity to drive campaign response: Performance marketing effects have declined by 62% over the past two years in the face of subdued consumer demand. Creativity is being severely underutilised in the performance marketing space. This is a big opportunity for advertisers aiming to arrest the decline in response effectiveness.

Key quote

“In a muted economic environment, there is only so much response that you can sweat out of consumers with your direct response advertising … [but] brand campaigns are getting more effective – those who are investing in them are getting better at doing them” – Ian Gibbs, insight and planning director at the DMA.

Increasing prices reshape the Chinese luxury market

The target audience for luxury brands in China is being reassessed as middle-class salaries fail to keep pace with rising prices.

What’s happening

The price of luxury goods has almost doubled since the pre-Covid period, as rising production costs have been passed on to consumers, and inflation takes its toll. That’s pricing out many aspiring buyers whose incomes aren’t rising at the same rate. “Luxury brands are now pivoting back to the elite in a bid to maintain exclusivity, and thus preserve the allure that once made them iconic,” Sixth Tone notes.

Background

The ‘daigou’ phenomenon – where people bought goods overseas cheaper and resold them in China – forced luxury brands to reassess the price differentials between western markets and China. Lower prices in China helped boost the local market and draw in a new demographic of buyers (one 2018 survey reported millennials were prepared to set aside 20% of discretionary income to buy luxury goods). Many of these buyers still had to save hard to make entry-level purchases, which were often limited to a celebration of a particular occasion.

Takeaways 

• Rising prices have led to many luxury consumers eschewing “bling” in favour of “quiet luxury”, either because of a new appreciation of timeless craftsmanship or simply from a wish to appear less showy during difficult economic times.
• Second-hand luxury outlets are doing well, with some products like bags even selling for more than new ones if they’re unavailable in store.
• There are reports that luxury brands, wanting to focus on high-end customers, are seeking to discourage ordinary walk-in buyers.
• High-net-worth customers account for 0.003% of the population but buy over 80% of all luxury goods.

Key quote

“All luxury brands have realized that core high-end customers are the key to survival and development. The brand on the top of the pyramid will have the best future” – Zhou Ting, co-chairman of research firm Yaok Group. 

Sourced from Sixth Tone

Aussie farmers demonstrate link between trust and brand use

Farmers who trust a particular agribusiness brand are 127% more likely to have used that brand in the past 12 months, a new study finds.

That’s according to a special Roy Morgan Agribusiness Survey* of farmers looking at trust and distrust in Australia’s agricultural sector. 

Why it matters

The findings show a direct correlation between trust and brand use: those who trust brands are much more likely to use them, and to use them regularly. And the reverse is true for those who distrust brands.

Takeaways

• The top reasons farmers give for trusting a brand are ‘strong customer relationship’ (26%), followed by ‘good customer service’ (12%) and a ‘good track record’ (8%) – which highlights the importance of relationship-building to gain repeat business.
• Farmers who distrust agribusiness brands are 53% less likely to consider using those brands in the future.
• In 2022, Elders was the most trusted agribusiness brand by Australian farmers; NAB was the most trusted bank for agribusiness.

Key quote

“When customers trust a brand, they continue buying its products or services, they recommend it to others and remain loyal to the brand. So trust is the underpinning foundation of brand reputation” – Michele Levine, CEO at Roy Morgan.

*Roy Morgan interviewed 1,230 Australian farmers

Sourced from Roy Morgan

Tips for the data besieged

An advertising industry overwhelmed by data considered how to navigate the tsunami of information at an IPA event in London. 

Signals in the Noise considered how much audience measurement can be trusted, accountable and transparent, hearing from the likes of economists, broadcasters, regulators and data officers. 

Why it matters

“Data, data everywhere, not a drop to drink,” observed one speaker, a line that would have baffled Samuel Taylor Coleridge. For the modern marketer attempting to put messages and money into a kaleidoscope of platforms and channels, working out whether these myriad sources do what they say they do can make it difficult to see the wood for the trees.

‘The big spreadsheet in the sky’ is a myth

Tim Harford, who writes the Undercover Economist column for the FT, noted the tendency to believe that all this data comes from “the big spreadsheet in the sky” – but not all data is created equal. Which is why returning to the first principles on data is vital, even for seasoned practitioners.

What you need to know

Harford outlined the following three ideas:

• Data production is a choice. What we choose to count and how we choose to count it matters enormously. While we often think about torturing statistics to get them to say what we want them to, the bigger mistakes come from the source of the data (or the lack of source).
• Data needs to be taken seriously to be trustworthy. Just saying it’s trustworthy won’t cut it; providers should seek to make it comparable and as transparent in methodology as possible.
• With the above in place, a little rigour goes a long way. Only once you’ve done the basics can the devastating insights of data wizardry can happen. But, ultimately, if bad stuff goes in, bad stuff comes out.

Bottom line

Harford stresses, both in his columns and in his views at the event, that data needs to be taken seriously in organisations – to be thought about in advance and gathered consistently and transparently, not for winning an argument with a really nice simple stat. 

After all, as Chris Ladd, head of media at Nationwide Building Society, noted later: every CFO expects verification because every single financial release that they have put together has been audited, seriously.

Reported from IPA: Signals in the Noise by SPT

New York Magazine’s headwind-resistant retention strategy

New York Magazine, the venerable publication owned by Vox Media, adapted its newsletter strategy in 2019, resulting in a doubling of its audience base and a 10% improvement in subscription retention just in the last year, according to reports.

Why it matters

Sustainable digital publications are something of an oxymoron without subscriptions, which are critical to NY Mag’s business, and one of the attractive elements to Vox Media when it acquired the property in 2019.

As a result of the recent economic tumult, and the sensitivity of digital advertising to fluctuations in advertiser confidence, subscriptions tend to weather storms more effectively, provided they give readers what they want. Keeping paying subscribers engaged is the aim of the game.

What’s more, the format is a brilliant testing ground for new ideas that can start as one-offs but can then become valuable products in and of themselves, a kind of minimum viable product.

What’s going on

“Part of the value of a subscription business for a company like Vox Media is that it is counter-cyclical, in that it can buffer a bad advertising period,” editor-in-chief David Haskell told Adweek, in a story about the magazine’s strategy.

One of the ways it has done this is through its suite of newsletters, which has now reached one million email subscribers to 30 separate products, both standard newsletter offers paid for by programmatic ads, and subscriber-specific “pop-ups” around big cultural moments, like the current and final season of hit HBO show Succession.

•  Through a combination of internal traffic and social media play, the magazine’s three newsletter editors and its writer design newsletters around topics that appear to make readers want more.
• Specificity is crucial to the company’s newsletters, but even a small audience is a strong move for the company when its newsletters achieve a 39% open rate among non-paying readers and 64% for subscribers, the magazine told Adweek.

Sourced from Adweek

Brand in action: How SanKash made travel more affordable

Travel start-up SanKash started in 2019, just as Covid put a freeze on the entire travel industry, but the company buckled down, improved its product, and leveraged the Buy Now Pay Later (BNPL) model to meet unprecedented customer demand.

Why it matters 

Brands can occasionally make the mistake of not evolving fast enough to meet customer demand when they already have a successful product. SanKash recognised that it could take Buy Now Pay Later – already proven in the travel sector – and apply it to another big-ticket item: marriage. This type of innovation has put the brand in prime position to take advantage of new opportunities. 

Takeaways 

• SanKash clients are experience-seeking and middle-aged, not Gen Z; they are financially stable and understand credit bureau scores.
• Half of Indians who use BNPL see it as a cash flow management tool because they are not paying anything extra for a loan.
• The biggest challenge is the regulatory framework, with old laws that need to change, causing uncertainty in the ecosystem.

Shein looks to India and Mexico in diversification push

Fast-fashion phenom Shein is trying to get ahead of potential pressures, by finding a user base that can continue to fuel its ambitious growth plans amid concerns about rising geopolitical tensions.

Across the world, Shein’s profile is changing, according to reports, with the company considering a Mexican production operation in order to protect its US and wider Americas business, while the company appears to be targeting India as its next source of growth in Asia.

Why it matters

Shein plans to IPO in H2 of this year, according to the Financial Times, but the China-founded, Singapore-headquartered firm appears to be struggling to retain its momentum in existing markets. Until now, it has been using a famous formula that WARC covered back in 2021: find what people want and then make it and sell it to them quickly.

Its Gen Z audience has tended to be more open to new brands but less loyal (and affluent) than older cohorts – as a result, the company needs a new pool of customers. It has serious ambitions: by 2025 it aims for revenues of $58.5bn up from $22.7bn in 2022, so it needs growth.

What’s going on

Mexico nearshoring: Reuters reports that Shein is exploring plans to build a manufacturing facility in Mexico, to add to its announced Latin American manufacturing presence in Brazil. There are two ostensible reasons for this:

• The first is that proximity to the end consumer improves on Shein’s lightning fast offer and strengthens one of its core benefits.
• The alternative view is that, like many other companies with strong supply chain links to China, it is diversifying its production base in order to protect itself should the US, in particular, pursue a policy of commercial decoupling from China that could damage the business.

Indian partnerships: Despite having been banned in India since June 2020, the result of a border dispute with Shein’s native market of China, the company is now targeting the 1.4 billion-strong country through different means:

•  Mukesh Ambani’s Reliance Retail has signed a partnership with Shein to operate in the country, in a deal that includes sourcing, warehousing, and logistics as well as online properties, LiveMint reports.
•  Of course, the story isn’t without its political context, and numerous countries are concerned that the fast fashion company’s emergence has implications both for the environment and for other businesses.

Sourced from Reuters, LiveMint, FT, WARC

AdEx Benchmark 2022 study reveals strong digital advertising growth

Digital advertising spend in Europe increased by 9.8% in 2022 to achieve a market value of €86bn, according to the latest data from industry association IAB Europe. 

Why it matters

Despite the economic and political headwinds across Europe (Belarus and Russia have been removed from IAB Europe’s geographical coverage while Estonia, Latvia and Lithuania have been added), €7.7bn was added to the digital advertising market total in 2022. 

“Digital advertising in Europe has experienced robust growth despite the volatile macro environment,” says Daniel Knapp, chief economist at IAB Europe. “It reinforces the importance of digital for brands during a period of downturn due to its measurability and performance.”

Key stats

• Audio saw the largest growth across all formats in 2022 with a 22.1% increase to €0.7bn. 
• Video also experienced significant growth with an increase of 13.6% to value the format investment at €18.3bn. 
• Display grew by 9.5% to €40.1bn, with search experiencing a 10.7% increase to €37.4bn. 

Sourced from IAB Europe

Neobanks and the revolution in India’s financial sector

The digital revolution in India’s financial services industry has led to the creation of neobanks which operate online only and, unlike traditional banks, use technology and data to remove pain points and offer personalised consumer experiences.

Why it matters

Financial brands can gain a competitive advantage in the future when traditional banks and neobanks partner with each other to improve financial inclusion and access. This includes using data to offer relevant products to consumers and personalisation.

Takeaways

• Neobanks and traditional banks are together required to bridge the existing inclusion and experience gap in the banking sector.
• Digital financial transactions empower women with better visibility of finances, greater privacy and hassle-free transactions.
• Financial brands can achieve sustainable/equitable growth and loyalty/awareness by improving financial literacy.

TikTok rethinks its e-commerce strategy

TikTok is rethinking the global rollout of its shopping features, in recognition that new strategies are needed to take its popular service in East Asia around the world. 

TikTok Shop allows influencers and advertisers to display shoppable products in clips or livestreams, either in-app or offsite. According to the Financial Times, the division is changing the location of its development teams to get them close to target markets. 

Why it matters

Following a bumpy few years for the short-form video site’s e-commerce division, TikTok is effectively moving the developers working on its marketplace offer closer to the markets in which it is already live – across much of Southeast Asia, the US, and the UK.

The broader lesson, however, is a useful one about how a global strategy often needs local execution and understanding, especially when attempting to normalise a new shopping behaviour.

Livestream shopping?

Popular – and lucrative – with Douyin’s consumers and creators alike, social shopping has been slower to take off around the rest of the world, suggesting that copying a previously successful strategy doesn’t naturally pay off. Or at least not in the same conversion-focused way.

Brands may want to think about the brand building and education potential of livestreams rather than simply as an Asian-style conversion channel. Most brands in the UK just link to product pages, similar to Instagram’s shopping products.

TikTok Shop’s context

• TikTok Shop went live in the UK in 2021, but it has struggled to catch on – some reports even suggested it was scrapping an European and American rollout altogether, which was later corrected by the company to more of a slowdown as it worked out how to adapt the offer to Western markets. Several new market expansions have been delayed multiple times.

• The service was also further mired after reports of a “toxic” work culture. The commerce division’s London chief resigned as a result. But numerous development roles are now being relocated to London from other offices like Spain and Brazil.

• While not related to this story, this all takes place amid a backdrop of political heat from across the United States, where congressional scrutiny and a ban in the state of Montana – which is yet to take effect – keep the service in the headlines.

Sourced from Financial Times, WARC