The Feed

TikTok’s Olympics have been intimate and full of personality

TikTok’s hardcore of users in the Gen-Z bracket means that it has emerged as one of the most important broadcast channels for the athletes themselves, further shifting the sports media landscape in new digital directions.

Why it matters

Many of the Olympic events don’t tend to attract huge interest in normal years, but the 2020 Olympics – happening, tellingly, in 2021 – have shown that unpolished, personality-led content can boost the profile of individuals beyond their teams. For brands, this will have implications around who to sponsor.

Separately, the Washington Post reports, TikTok has outpaced other video sites’ growth in the US, despite starting from a lower pace. It has seen daily user growth of 1.8% to YouTube’s 3.6%

What’s happening

• Sports-related content is some of the best-followed on TikTok, according to Conviva data on WARC.
• When US gymnast Sunisa Lee won a gold medal, she racked up five million likes dancing to a background track on TikTok in celebration. But this followed behind the scenes clips of her makeup and nails. The person matters as much as the sport.
• Others have found it an outlet for fumbles and fails that humanize athletes. Instructional and educational videos, especially from sports not generally understood by the population at large, but no less spectacular, have also found a large audience.
• There are question marks around what the official broadcaster will do given its understanding that TikTok fills a very different purpose from traditional linear coverage, especially among younger viewers who are less likely to watch.

Sourced from the Washington Post, WARC

Desiring green products, consumers are wary of brands’ eco credentials

At least a third of consumers believe brands are not totally transparent with their practices when using terms like ‘eco-friendly’ or ‘green’, according to new research, a response that comes at a time of heightened concern around the environment for consumers.

The research

Based on a survey of 1,100 UK respondents from Bazaarvoice, a global shopper tech and insight firm, the research shows that a vast majority want to live and shop sustainably. 78% of these consumers, from a panel that does admittedly skew younger as a result of being online, feel it’s important to use products described as green. 

People are both searching for and encountering more information about ecological practices, with Instagram (48%) just behind search engines (50%) as key sources. But just 24% think brands are actually mindful of their ecological footprint.

The overwhelming consensus is that the brands we put our faith into and purchase from have a responsibility to protect both the people and the planet by offering sustainable initiatives (88%).

Key quote

“Uncertainty remains around how the actions of some retail corporations impact the planet, so the key for brands to garner trust and respect is to be open, transparent, and communicative about the ways they prioritise sustainability” – Ed Hill, SVP EMEA, Bazaarvoice.

Sourced from Bazaarvoice

Radio budgets growing after steep cuts last year

Radio advertising budgets are growing in July following steep cuts last year due to the coronavirus pandemic, according to the latest figures from WARC Data's Global Marketing Index (GMI).

Why it matters

The coronavirus pandemic caused a rapid cut in advertising budgets but the recovery continues to accelerate. All six media analysed have recorded their best performance in July since COVID-19 began - digital, mobile, TV and out of home have accelerated their growth while radio budgets are now growing and press is slowing its decline.

Takeaways

• Radio advertising budgets are growing in July following steep cuts last year due to the coronavirus pandemic.
• The steepest radio cuts last year were seen in May, during the initial wave of COVID-19.

Developed by WARC, the GMI is a monthly indicator of the state of the global marketing industry based on current conditions among practitioners. Practitioners who complete the survey receive the full analysis report.

Sourced from WARC Data

Brand rejection is less of an issue for B2B marketers than low brand awareness

Lack of brand awareness is a much bigger barrier to customer acquisition for B2B marketers than overcoming rejection, according to a report from The B2B Institute, and the Ehrenberg-Bass Institute.

The research 

The ‘Brand Rejection in B2B: Incidence, Reasons and Implications’ report looked at the buying preferences of 600+ buyers of business banking in the UK and 600+ buyers of business insurance in the US.

Key findings 

• Brand rejection averages 11% for UK business banks and 7% for US business insurance firms, which is similar to the 9% found in similar B2C markets.
• Two in three lapsed B2B buyers of UK business banks, and four in five lapsed buyers of US business insurance companies, would consider buying from the brand they defected from again in the future.
• The vast majority of a B2B brand’s non-buyers (90%) do not hold any negative attitudes that could be a barrier to becoming a future customer.
• Lack of brand awareness is a 4-8x bigger problem than brand rejection, particularly for smaller B2B brands (smaller B2B brands are small primarily because most potential customers do not know the brand exists)
• The most common reason for brand rejection in both categories is company history, but no single issue accounts for more than 20% of brand rejection. Therefore, using reasons for rejection as a basis for designing your sales or communications strategy will be difficult and unrewarding. 

Key quote 

“B2B marketers should stop worrying about whether people dislike the company or if people are saying negative things to others. Instead they must focus on building memory structures so the brand is front of mind when they are in the market to make a purchase” – Professor Jenni Romaniuk, Research Professor and Associate Director (International) at the Ehrenberg-Bass Institute.

Sourced from LinkedIn

Japanese firms move ahead of ad targeting restrictions

In anticipation of legislative and technological changes that will make targeted advertising online more difficult, some of Japan’s largest advertisers are moving away from targeting before they are forced to.

Why it matters

Targeting capabilities were the rocket-fuel behind the growth of media giants Google and Facebook, but with the third-party cookie set to be phased out and with governments and publics around the world becoming more activist about data privacy.

Now, according to Nikkei Asia, some of Japan’s industrial titans, like Panasonic and Sapporo breweries, are attempting side-stepping legal and PR burdens before they happen.

What’s happening

• Japan’s digital advertising market is big at around $20 billion (2.2 trillion yen), and around half of that is targeted according to users’ browsing habits.
• In April 2022, a new data protection law is set to come into force, which resembles efforts elsewhere like the GDPR in the European Union, and will force firms to seek users’ consent before sharing their data with third parties.
• It’s not simply an ethical realisation. Some companies are finding that contextual advertising – based on the topics in the content that a user is looking at – can be as and sometimes more effective than ads based on user data.

Sourced from Nikkei Asia

Rising ad prices boost Facebook revenue to new high

The average price of advertising on Facebook-owned platforms has risen 47% and this has helped the company's advertising revenue to a new high of $28.6bn, according to the latest company reports.

Why it matters

Rising ad prices are expected to fuel Facebook advertising revenue growth in the second half of 2021, though challenges remain. The company said it expected advertising growth to decelerate in the third and fourth quarters of 2021, in part because of the recent launch of iOS 14.5 limiting the potential of ad targeting – just a quarter of Apple users with iOS 14 have allowed app tracking, a number that drops even lower in the United States.

Takeaways

• Advertising revenue, including from Facebook, Instagram and Messenger, rose 56.0% in the second quarter of 2021, the quickest increase in five years.
• The average price of advertising on Facebook-owned platforms has risen 47% and the number of ads delivered rose 6%.

Sourced from Facebook, WARC Data

Xiaohongshu takes on low conversion rates by blocking rivals

Social media and e-commerce platform Xiaohongshu will stop hosting links to items on other shopping platforms in an attempt to bolster its own marketplace.

The news, based on sources that spoke to Caixin, means the app would block written links – but not live-stream commerce links – to rival services, including Taobao from Alibaba, which also backs Xiaohongshu. The platform says the move is in service of a batter UX.

Why it matters

Known as “Little Red Book”, the platform brings in a large sums in advertising revenue but is failing to convert that into value to its own e-commerce service as consumers opt for trusted platforms.

Background

• The idea behind Xiaohongshu is to bring together social networking capability with a cross-border e-commerce offer that could give global brands a direct route to the Chinese market.
• Since its latest funding round, the company has struggled to live up to its reported $6 billion valuation.
• Xiaohongshu is very popular with Gen-Z women, and attracts more than 100 million monthly active users.
• The move is particularly interesting in light of the country’s tech regulator’s intention to clamp down on apps that block competitor links. There is a possibility that instead of opening up the market, it could instead entrench market power among incumbents.

Sourced from Caixin, WARC. Image: Xiaohongshu

After another big quarter for Facebook, is there a limit to its growth?

Facebook’s Q2 2021 earnings sees the social giant continuing to grow on top of bumper numbers, but as it laps last year’s periods of extremely strong growth, continuing to post these numbers will be extremely tough.

What happened?

Facebook’s Q2 results were the usual bonanza of big increases:

• Quarterly revenue up 56% year-on-year to $29.1 billion.
• Net income grew 101% YOY to 10.3 billion.
• Monthly active users up 7% YOY to 2.9 billion.
• Daily active users of Facebook Group products (including Instagram and Whatsapp) was 2.76 billion on average, having grown 12% YOY.
• Price per ad grew 47% YOY.

Areas of interest

While some might be rightly sceptical of Facebook’s claims to strong video viewership, Mark Zuckerberg noted that “video now accounts for almost half of all-time spent on Facebook”.

Over on Instagram, however, Reels, an Instagram feature similar to the flowing short video content typically associated with TikTok, is now “largest contributor to engagement growth on Instagram”.

Barriers to growth

For the moment, the trouble that many had expected as a result of Apple’s IDFA changes that saw just 11% of iOS users allowing ad tracking, doesn’t appear to have dented the company’s prospects. However, the company does expect “greater impact” to ad revenue in the near future.

Other barriers are more numerical. The company expects total revenue growth YOY to “decelerate significantly on a sequential basis as we lap periods of increasingly strong growth”. As a result, Facebook has indicated that a two-year view might be a more accurate reflection as it excludes the impact from the COVID recovery, of which the firm was a major beneficiary.

Focus on the metaverse

A sign that Zuckerberg is now doubling down on the company’s new interest in the metaverse: it was mentioned on the earnings call roughly twice as much as Instagram.

The important part is not about the virtual world, however, it’s about the ads. In essence, they have a future in the metaverse: “as we embark on this next chapter, ads are going to continue being an important part of the strategy across the social media parts of what we do and it will probably be a meaningful part of the metaverse too.”

But there is also a significant opportunity to expand its commerce interests into the metaverse too.

“I think digital goods and creators are just going to be huge, in terms of people expressing themselves through their avatars, through digital clothing, through digital goods, the apps that they have, that they bring with them from place to place. A lot of the metaverse experience is going to be around being able to teleport from one experience to another,” Mark Zuckerberg said.

Sourced from Facebook, Seeking Alpha

AA/WARC: UK adspend to grow 18.2% in 2021

The UK is set to post the strongest advertising expenditure growth of any major European market at 18.2% in 2021 to reach a total of £27.7 billion, according to the latest Advertising Association/WARC Expenditure Report. 

Based on advertising revenue data from across the entire media landscape, the report is a significant upward revision from the 15.2% growth forecast issued in April. Coming off the back of an unprecedented downturn as a result of the pandemic, this rise in spending will be the highest on record, recovering the entirety of 2020’s £1.8 billion decline. 

Why it matters

“Seventy pence in every pound spent on UK advertising is invested in digital formats, a rate which accelerated greatly last year and is now surpassed only by China”, explains James McDonald, Head of Data Content at WARC.

“It is these formats that will lead absolute growth over the coming terms and none more so than paid search, which is seen to be benefitting from burgeoning e-commerce trade.” 

Takeaways

• Search cements its importance to doing business online with expected gains of 19.7% year-on-year, particularly significant given the re-opening of physical retail locations. It suggests that e-commerce’s share of retail should continue. Similarly, online display – inclusive of social media and online video – is set to see 17.2% growth this year. 
• The worst affected media in the pandemic are set to see the biggest gains, notably cinema (+315.6%) and out of home (+29.3%) of which digital will grow 43.7%.
• Q1, however, reflects the weight of the pandemic on spending, as spend rose just 0.8% to £6.5bn during the first three months of the year - just behind the 1.8% rise estimated in April. However, online formats – most notably search, online display and BVOD – were seen to grow by double-digits during the quarter.

Key quote: 

“The upward growth revision in spend growth this year – to reach a record of 18.2% – would mark an exceptional recovery, after the record declines in 2020. UK adspend growth also looks set to race ahead of European markets, reflecting the success of the vaccine rollout and fast-rising corporate and consumer confidence” – Stephen Woodford, Chief Executive, Advertising Association.

Decline of China’s personal shoppers impacts foreign businesses

Personal shoppers, known as daigou, were crucial routes for foreign brands to tap China’s huge senior market. Shoppers would source and purchase either hard-to-find or expensive products from abroad and bring them back. The pandemic has hit this business and others that relied on it.

Why it matters

For many foreign brands in luxury, but also in infant formula or cosmetics, Bloomberg reports, this army of shoppers was a direct line to $40 billion worth of revenue in 2019. Many daigou would travel outside of China, meaning that certain brands could enjoy the Chinese market without having to make a formal entry. Many firms will now be forced to enter the country properly.

Problems

• With the halt in overseas travel, shoppers have been unable to collect products. Without the daigou as a mark of authenticity, many are looking elsewhere.
• As the business remains tough, not only because of the pandemic but because of government efforts to clamp down on tax avoidance at customs, many former customers are finding legitimate e-commerce solutions.
• Infant formula is a particularly telling product. New Zealand’s A2 Milk saw revenues fall around 30% in H2 2020, partly as a result of lost daigou sales.

Solutions

• E-commerce importers, with platforms like Tmall International and JD International have picked up a lot of this business and expect high annual growth (around 30%) in the coming years.
• Other brands are now deploying a one-to-one consultant structure in an attempt to provide a similar service to the kind of VIP consumers that would have employed a daigou.

Sourced from Bloomberg

Alphabet advertising revenue reaches new high of $50bn

The parent company of YouTube and Google smashed its previous record, earning $50.4bn from advertising in the second quarter of 2021, according to the latest company reports.

Why it matters

Google Search had a notable decline in advertising revenue last year but it has recovered strongly, rising 68.1% to reach $35.8bn in Q2 2021. YouTube is growing rapidly and has doubled its advertising revenue in the past two years, showing the continued importance of online video for audiences and advertisers.

Takeaways

• Following an 8.1% decline in Q2 2020 during the initial impact of the coronavirus pandemic, Alphabet advertising revenue has risen by more than two-thirds (68.9%) to top $50bn for the first time ever.
• YouTube saw the largest increase, rising by more than 80% (83.7%) to $7.0bn.

Sourced from Alphabet, WARC Data

The forgotten ingredient of innovation

A capacity for divergent or lateral thinking, non-conformity, extreme motivation are the typical psychological traits of people who come up with new ideas – but innovation, understood as getting them over the line in complex bureaucracies, requires something extra.

The business world and press tend to lionise individuals as innovators that single-handedly push the world forward, but the reality is far more social.

Those who push ideas forward are good at changing people’s behaviour by building informal relationships.

The key idea

While this idea won’t be surprising to marketers, its foundations – as outlined in a new piece in Psychology Today – are interesting.

Notably, the creation of psychological safety: allowing spaces in which the other members of an organisation don’t fear embarrassment when trying new ideas.

An equation

One co-author, Dr. Eric Haseltine, describes it as:

“Innovation = (Talent + Relationships) / Formality”.

In essence: maximum trust and minimum process will let good ideas rise. Those informal ties will pay dividends when you need to navigate the idea through the organisation.

Sourced from Psychology Today