Marketer's Toolkit 2023: A new pattern for global advertising investment?

The coming 12 months will potentially usher in a new pattern for global advertising investment as digital investment growth slows, media planning is re-assessed and pressures for industry reform continue to grow, according to the latest instalment of WARC’s Marketer’s Toolkit 2023.

Why it matters

Against a backdrop of economic crises, geopolitical complexity, spiralling inflation, supply chain disruption, and structural technology shifts, marketers are re-evaluating their approach. Ad spend is growing but at a slower pace. 

WARC’s latest forecast anticipates a $90bn reduction in global ad market growth for 2022 and 2023, meaning digital media owners are likely to fight harder for ad revenue growth – and, increasingly, will compete with one another for ad dollars. 

Meta’s first-ever year-on-year quarterly revenue decline – announced last July – may one day be seen as the moment the digital advertising industry tipped into a new, less expansive phase. 

Key trends 

The Future of Media report, part of WARC’s annual Marketer’s Toolkit, highlights key trends in three vital areas: advertising investment, media planning, and industry reform.

• Digital investment reaches the top of the ‘S’ curve

Nearly a third of WARC’s Marketer’s Toolkit respondents expect 2023 marketing budgets to be lower than 2022. WARC has downgraded its global advertising investment forecast to $880.9bn, removing $90bn of growth potential for 2022 and 2023. 

Retail media is increasingly favoured by advertisers, and is now the fourth-largest medium by ad spend, with global investment totalling $110.7bn in 2022 and forecast to reach $121.9bn in 2023.

Marketers are rebalancing their ad budgets, decreasing investment in offline channels and increasing spend in online video, social media and gaming. TikTok ranked top for increased investment in 2023 by 76% of marketers, according to WARC’s Toolkit survey.

• Fragmentation calls for more fluid media planning 

More than a third (34%) of survey respondents identified media and audience fragmentation as one of their biggest causes for concern when drawing up plans for 2023. The situation calls for advertisers to adopt a more fluid approach to media planning and branding, and one that emphasises the importance of communities over basic demographics in segmentation.

While over half (52%) of survey participants expect to increase investment with social media influencers and creators as a whole, two-thirds (65%) are planning to work with content creators to connect with communities “aligned with specific interests authentically tied to the brand”.

• Fixing the media ecosystem

More than half (54%) of US respondents to the Marketer’s Toolkit survey said that media planning recommendations in 2023 will include more diverse publishers, reflecting the importance of minority audiences in that market.

However, with only a third (34%) of advertisers planning to include more low-carbon alternatives in their media plans in 2023, it is clear more work must be done to persuade marketers of their role in combating climate change.

WARC says

“While the breakneck speed of growth in ad investment witnessed in 2021 could never have been maintained, media owners like Meta, alongside brands and agencies, are also challenged by other fundamental issues – from cleansing the ecosystem of misinformation, using ad dollars to promote greater diversity and inclusion, attracting and retaining the right talent, to saving the planet from catastrophic climate change” – Alex Brownsell, Head of Content, WARC Media.

The Future of Media is the third in a series of four reports that make up The Marketer’s Toolkit 2023. Based on exclusive data from WARC Media, findings from a global survey of 1,700+ marketers, and interviews with with senior marketing leaders, the report is a guide to help brands focus, survive and thrive in 2023 and beyond. A complimentary sample of this report is available here. WARC clients can read the full report.

Data clean rooms show promise but brands struggle with measurement

Data clean rooms appear to be one answer to the decline of third-party cookies – a means of matching user-level data with a platform’s audience without compromising privacy – but a new IAB report finds that while some advertisers are using clean rooms for targeting, very few use them for measurement. 

Why it matters

With expansive data privacy regulations on both sides of the Atlantic, data clean rooms (DCRs) that purportedly allow audience-matching your first-party data to that of a publisher or platform without compromising privacy (or at least not contravening privacy rules) are often invoked as solutions. However, the IAB report depicts the big gap between theory and practice.

For an overview of WARC's insight on the topic, read What we know about post-cookie audience tracking.

Take-up with missed potential

The IAB’s State of Data 2023 report, based on a survey of 200 data decision-makers across brands, agencies, and publishers, finds that two-thirds of brands “leveraging privacy-preserving technology” used data clean rooms, a quite obscure way of putting it.

Just under half of the sample reported using clean rooms for data anonymisation and compliance.

Where users appear to lag most is in the area of measurement and attribution: under a third use data clean rooms for this purpose.

Issues

Search Engine Journal has a good explainer that uncovers some of the limitations:

• First, you need lots of first-party data.
• Different platforms – Google, Meta, Amazon – tend to have their own DCRs, which creates complexity for advertisers working across platforms.

Alternative solutions

This complexity is part of the reason that brands are still learning to use this technology to replace the deeply flawed but broadly used cookie. Certain platforms have thrown their weight behind other identification techniques such as the Trade Desks open-source Unified ID 2.0, which Amazon and Disney have talked about supporting.

Sourced from IAB, WARC, Search Engine Journal

OOH ads that include location messaging encourage search

Six in 10 people in the UK are encouraged to search when an out-of-home advertising campaign features a location callout, new research finds.

The Point of Search study, by Clear Channel UK, Global, JCDecaux and Posterscope, is based on an online survey examining why people search, as well as a search diary completed by 1,100 people. 

The most common reason for a mobile search out of home was to fulfill a location need, such as finding a nearby store address (39%), followed by fulfilling a product or information need (33%) and a response to something seen or read (21%). 

Why it matters

Search behaviour is a clear indicator of consumer needs, and creative messages can be linked to these needs. The study suggests that optimisation of specific creative elements such as large logos, short succinct copy and large product shots can have a significant impact on search behaviour. 

Additionally, DOOH can use dynamic and contextually relevant messages, such as location, weather and time to encourage people to search. 

And with share of search emerging as a predictor of market share, there are good reasons to take all available opportunities to maintain or increase it. 

Key findings 

• Mobile searches conducted out of home are 38% more likely to lead to a purchase compared with mobile searches conducted at home.

• People who spend more time out of home search 58% more on their smartphones than those who spend less time out of home.

• People who spend more time out of home search across more varied products and services.

• Mobile searches out of home take place more often in the company of other people than at-home searches, providing more opportunity for word of mouth.

Sourced from Posterscope

Organisations are talking a good game on sustainability

Organisations’ stated enthusiasm for sustainability is not being matched by significant progress, according to a report which finds a gap between perception and reality across three pillars of sustainability transformation – environmental, economic and societal. 

Why it matters

The Fujitsu Uvance report*, Closing The Sustainability Gap, identifies ‘Change Makers’, a small group of organisations which it says are leading the way on both sustainability imperatives and technology transformation. 

Not only do Change Makers find “sustainability transformation” using digital innovation easier to complete, they’re also more likely to exceed profit targets and to have brand reputations that perform above expectations.

Key stats

• 61% of organisations say they’re advanced on their sustainability journeys, but in reality less than one in 10 has completed major sustainability imperatives such as developing sustainable supply chains (9%), achieving net zero status (2%) or preparing for environmental emergencies (7%). 
• 77% of organisations say being sustainable is the right thing to do and is ultimately good for business, but 18% regard sustainability as a passing fad.
• 27% of organisations are not clear whose responsibility it is to drive sustainability, while 25% are still being challenged on sustainability investments if they don’t offer a clear return on investment. 
• The top sustainability goals are simply complying with regulations and developing sustainable supply chains and ecosystems (both 18%); that’s followed by health/wellbeing initiatives for employees (12%) and empowering staff and customers to respond to social issues (11%).

The role of tech 

“A lot of sustainability challenges are problems of inefficiency. So technologies can come in and really help us take optimisation to a whole different level” – Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School. 

*Findings in the report are based on a survey of 1,000 business and public sector leaders across a range of sectors from 15 countries (Australia, Canada, China, Finland, France, Germany, Japan, Korea, New Zealand, Philippines, Singapore, Spain, Thailand, the UK and the US).

[Image: Closing The Sustainability Gap]

Media in-housing pays off for P&G

For Procter & Gamble, bringing media planning in buying in-house for its crucial fabric care category has allowed the company to drive reach while saving more than $65m in advertising spending in the US market, according to the company’s executives. 

Why it matters

While the in-housing of marketing functions previously outsourced to agency partners has been attempted by many brands, the change can be difficult and many brands have been unable to successfully implement it. P&G, which is one of the world’s biggest advertisers, marks a success story. 

P&G saves money ...

The Fabric Care team in the US brought their media planning and buying in-house and developed proprietary algorithms to better place ads during TV programming, which is a crucial channel for driving reach. 

“That in and of itself has allowed $65m of savings in one year, while increasing frequency,” said Andre Schulten, Chief Financial Officer at Procter and Gamble, on its most recent Q2 2023 earnings call. 

… but the move is not without challenges

One major challenge for brands seeking more marketing functions in-house is the need to restructure their existing partnerships and processes, for example:

• Reshaping the marketing team culture to take over elements previously handled by agency partners. 
• Hiring enough in-house expertise to match what is being lost from agency partners, especially in priority areas such as media planning and data.
• The risk of losing momentum in the market during the transition, or the project failing altogether, requiring an expensive and time-consuming move back to collaborating with agency partners. 

“There are many categories in the US that are still building their own approach to drive these synergies and there's the whole world outside of the US, which is still building on the capabilities that we are developing. We see this as an area of continued investment, in terms of our own capabilities, with a great ability to drive productivity for years to come,” Schulten said.

Sourced from Seeking Alpha

Inflation takes its toll on UK ad market recovery

The UK ad market is set to reach £36bn this year, up from a projected £34.7bn in 2022, according to the latest quarterly data in the Advertising Association / WARC Expenditure Report. 

Overall growth of 3.8% in 2023 is less than half of what is now expected for 2022 (+8.8%) and equates to a 3.0% real-terms decline once inflation is accounted for. Forecasts for the coming year show reduced growth expectations for almost all sectors of advertising in line with pressures felt by all parts of the economy. 

Q3 2022 highlights 

• UK advertising spend rose by 4.3% to a total of £8.5bn between July and September 2022, the ninth consecutive quarter of growth and demonstrative of an ongoing, resilient recovery from the COVID-19 pandemic.
• Search rose 7.7% – equating to almost 40% of total adspend during the quarter.
• Out of Home (+13.2%) continued a strong recovery, while cinema, in particular, bounced back (+148.1%) from a COVID-hit 2021. 
• Social media, included within online display, grew in line with the average (+4.4%), as did broadcast video on-demand (+4.3%).
• Main traditional media all declined: TV -6.6%, national newsbrands -11.2%, regional newsbrands -10.4%, radio -7.5% and magazine brands -6.3%.

Q4 projections 

A retained recovery is projected for the ‘golden quarter’ (Q4 2022). Spend during this time was estimated to have grown by 4.0%, to a total of £9.5bn, as the winter period hosted the two biggest events for adspend: Christmas and the FIFA Men’s World Cup. This growth was still half a point behind previous forecasts but should nonetheless be considered as a good performance given economic challenges.

WARC says 

“A looming recession will put pressure on ad trade this year,” advises James McDonald, Director of Data, Intelligence & Forecasting, WARC. “The silver lining here is that our current modelling suggests that the slump will be short lived, with advertising investment set to lift by 5% over the first nine months of 2024.”

Subscribers can read the report in full here. Non-subscribers can download the executive summary here. 

Sourced from WARC, Advertising Association

Multi-cultural K-pop stars expand brands’ appeal

Increasingly, multi-cultural K-pop stars are expanding bands’ brand ambassadorship potential, according to a new report.

Why it matters

K-pop is a big deal around the world, part of a soft power play that has brought the genre to audience far beyond East Asia. The phenomenon is such that it is now becoming a tactic that brands want a part of, as Chinese stars help brands speak to Chinese audiences.

What’s going on

Luxury sector publication Jing Daily takes a deep dive into the cross-cultural potential of these new stars.

• Luxury brand Louis Vuitton has announced a brand ambassadorship with the Chinese K-pop star Jackson Wang (who sings in English), who has grand ambitions for global fame, as the FT wrote recently.
• Many other Chinese or Chinese-American K-pop stars have signed-on with luxury brands focussed on selling to China.
• It speaks to a growing interest in expanding China’s presence in global pop culture.

A tried and tested tactic, now for brands

“K-pop groups will go to a foreign country, and there will be one member of your group that will know how to speak the language and will know how to reach those fans more directly,” explains CedarBough Saeji, assistant professor of Korean and East Asian Studies at Pusan National University in South Korea, to Jing Daily.

Sourced from Jing Daily, FT

WeWork edges into experiential

As consumers and office workers continue to adapt to the post-pandemic environment, IRL connections are finding new traction, and co-working network WeWork is exploring ways to take advantage by edging into the experiential space. 

What’s happening 

Digiday reports that WeWork has been working with Recess, a platform that describes itself as an ad network for experiential, to help connect brands with people using its co-working spaces. To date, some 40 brands have used Recess to work with WeWork on partnerships of varying length.

As well as offering up spaces for events and sponsored products (it has exclusive tea, coffee and delivery partners), WeWork has also partnered with digital media company Captivate to bring digital OOH ads to around 200 of its locations.

Why it matters

Apart from opening up new revenue streams, WeWork is tapping into a trend as people everywhere look to (re)connect with each other and with retailers and brands beyond virtual environments.

But Rebecca Graf, WeWork’s head of ancillary revenue for the US and Canada, stresses the need for “the authenticity of the experience” to align with its users. “That’s why we’re choosing very specific categories to be broader category partners,” she said. 

Sourced from Digiday

Sustainability perceptions carry a financial value 

Major brands have hundreds of millions of dollars’ worth of value contingent on how sustainable they are perceived to be, according to a new study* by Brand Finance and the International Advertising Association (IAA) – and that’s the case whether they are seen as sustainability champions or not.

Why it matters

Perceptions of sustainability matter more for some brands and sectors than others. Tesla, for example, is particularly financially reliant on sustainability perceptions: 26.9% of its brand value is associated with a reputation for sustainability. Similarly, sustainability perceptions play an important role in the luxury auto sector with an average sustainability driver score of 22.9% – well ahead of the next sector, soft drinks on 13.7%.

And amid concerns about greenwashing, Brand Finance and IAA find that 62% of consumers believe claims about sustainability made by brands. That said, 79% also indicated they had reduced their use of a brand if they’d discovered it was acting in an unsustainable way. 

Who’s got most at stake

This analysis reveals tech companies and luxury carmakers to have the highest sustainability perceptions values, with sustainability being judged across the three ESG pillars: 

• Amazon $19.9bn (sustainability perception score 4.40)
• Tesla $17.8bn (5.43)
• Apple $14.7 bn (4.50)
• Google $14.6bn (4.74)
• Microsoft $9.0bn (4.28)
• WeChat $8.4bn (6.27)
• Porsche $8.1bn (4.44)
• TikTok $80.bn (4.55)
• State Grid Corporation China $7.4bn (5.64)
• Mercedes-Benz $6.5bn (4.74)

But those values largely reflect the size of the companies; strip out revenues and the picture starts to change: Tesla is still there, but so too are the brands one might expect to see – IKEA and Patagonia for example – while certain brands score highly in their home market (eg.The Body Shop in the UK (sustainability perception score 6.83), Natura in Brazil (6.25), Yves Rocher in France (5.87)). 

Key quote

“Failing to communicate clearly about ESG topics puts value at risk. Consumers are relatively trusting of sustainability claims, and clearly value brand’s commitment to sustainability, so under-communicating or ‘green-hushing’ is a missed opportunity. On the other hand, communication must be authentic and supported by action, because over-claiming or ‘greenwashing’ exposes the business to hundreds of millions of dollars of reputational damage” – Robert Haigh, Strategy & Sustainability Director, Brand Finance.

*The Sustainability Perceptions Index takes the values established in Brand Finance's annual Global Brand Equity Monitor and derives a Sustainability Perceptions Value based on the sustainability part of a brand drivers’ analysis and on how sustainable consumers perceive a brand to be versus the sector median. 

Soured from Brand Finance and IAA

Google faces ad-related antitrust lawsuit

Alphabet, the parent company of online search giant Google, is the subject of a new antitrust lawsuit filed by the Department of Justice (DOJ) and eight states that alleges the firm “corrupted legitimate competition in the ad tech industry.”

The context

• Google’s ad revenue stood at $209bn in 2021, positioning it as the biggest advertising company worldwide.
• The firm has drawn scrutiny due to its operation as a buyer, seller and advertising exchange which, combined with its vast scale, is often said to give it a uniquely dominant position.
• Alphabet has pushed back against this view, highlighting the market share held by Meta, the owner of Facebook and Instagram, which generated ad revenues of $115bn in 2021.
• The DOJ and various states also sued Google in 2020, based around allegations that it deployed anti-competitive tactics to try and monopolise the markets for online search and search ads. That lawsuit is still in progress.

What the latest filing says

• The latest DOJ filing alleges that Google has taken actions which have compromised the ad tech space as the company aimed to become “‘the be-all, and end-all’ location for all ad serving.”
  
• "Competition in the ad tech space is broken, for reasons that were neither accidental nor inevitable," the filing continued.
• Google, it further alleges, “has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising."
• The states joining the Department of Justice in the filing are: California; Colorado; Connecticut; New Jersey; New York; Rhode Island; Tennessee; and Virginia.

Under the microscope

• One aspect of Google’s strategy coming under the microscope is the results of certain acquisitions, like the $3.1bn purchase of ad-serving firm DoubleClick in 2007.
• Similarly, the purchase of ad optimisation platform Admeld in 2011 was argued to demonstrate a “familiar tactic: acquire, then extinguish, any competitive threat.”
• If the antitrust lawsuit is successful, it may result in Google being required to sell off parts of its ad business.

Google’s response

• A Google spokesperson told Axios that the DOJ’s latest lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector.”
• Moreover, the spokesperson suggested, the lawsuit could have negative effects for players across the online advertising space.
• “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow," it was argued.

Sourced from Axios, CNBC

WARC Awards for Effectiveness North America: winners announced

Campaigns for Quickbooks, Champion, BMO, Coinbase and McDonald’s have won Grand Prix in the inaugural WARC Awards for Effectiveness, North America Edition. 

The Awards, in association with LIONS, recognize the most inspiring and effective work delivering marketing success. Two judging panels, one led by Pam Forbus, SVP, Chief Marketing Officer of Pernod Ricard USA, the other by Cheryl Guerin, EVP, Global Brand Strategy & Innovation of Mastercard, gave out a total of 22 awards across five categories. The US won 16 awards, Canada five and Mexico one.

The winners

Brand Purpose

• Gold: Underpressure · Michelob Ultra · GUT, Mexico City
• Gold: Feeding Imagination · Goldfish Crackers · Zulu Alpha Kilo, Toronto
• Bronze: Tough Turban · Pfaff Harley-Davidson · Zulu Alpha Kilo, Toronto 

Business-to-Business

• Grand Prix: Adios Cuadernito · QuickBooks · Alma DDB, Miami
• Gold: A Song For Every CMO · Spotify · FCB New York

The Grand Prix was awarded to Alma DDB Miami for their work for accounting software brand QuickBooks. To reach the 14% of small businesses in America owned by Hispanic entrepreneurs, the brand brought to life insight-driven, culturally relatable creative resulting in first-time prospects accounting for 89% of traffic.

Cultural Impact

• Grand Prix: Reverse Mode: Reversing Injustice & Rediscovering An Icon · Champion · Energy BBDO, Chicago
• Grand Prix for Good: Shamecards · Change The Ref · Mullenlowe U.S., Boston
• Silver: Cut Out The Bullshit · Change The Ref · Mullenlowe U.S., Boston
• Bronze: Save It See It · Michelob Ultra · GUT, Miami
• Bronze: Extra's Pandemic Comeback · Extra · Energy BBDO, Chicago

 Energy BBDO Chicago picked up the Grand Prix for sportswear brand Champion, by turning to TikTok to reverse sales declines, propel the brand into Gen Z culture and rectify the injustice experienced by Black creators of not being recognized for their contributions.

 The Grand Prix for Good was awarded to MullenLowe Boston for their work for US nonprofit Change the Ref, for which they created the first postcard collection designed to be sent to Congress to demand gun law reform. With no paid media, the effort drove 2.3bn earned impressions worth $21m in ad spending, and increased gun control advocacy among those aged 55 and over.

Customer Experience

• Grand Prix: Gear Up · BMO · FCB, Montreal
• Silver: Veteruns 100K · Call Of Duty · GUT, Los Angeles

FCB Montreal is the winner of the Grand Prix for its carefully targeted multimedia campaign for BMO, the financial services organization and an active sponsor of CF Montreal. The result of the campaign saw 11,000 pieces of soccer equipment delivered to more than 2,500 children in need.

Instant Impact

• Grand Prix: Coinbase Super Bowl Ad · Coinbase · Wavemaker, New York
• Gold: Invisible Hate · NAACP Atlanta · 22Squared, Atlanta
• Gold: Better With Pepsi · Pepsi · PepsiCo · Alma DDB, Miami
• Bronze: The Wendy's Phone · Wendy's · McCann, Toronto
• Bronze: Pabst Is The Place · Pabst Blue Ribbon · DNA Seattle, Seattle

Picking up the Grand Prix, Wavemaker New York won for its Super Bowl ad for Coinbase, the cryptocurrency exchange platform. It introduced the brand to the masses using a QR code, with the execution achieving over 20m instant landing page hits.

Sustained Growth

• Grand Prix: Famous Orders · McDonald's · Wieden+Kennedy, New York
• Grand Prix for Good: Long Term · Canadian Down Syndrome Society (CDSS) · FCB, Toronto
• Gold: Skip The Rinse · Finish · Havas, New York
• Silver: Moving From Nuclear Laxatives To Holistic Health · Miralax · Energy BBDO, Chicago
• Bronze: Get Your TV Together · DirecTV · TBWA\Chiat\Day, Los Angeles

Wieden+Kennedy New York won the Grand Prix for fast-food brand McDonald’s. To reverse the decline among young and multicultural audiences in the US, the campaign created the Famous Orders platform and made a series of iconic partnerships resulting in US$280m in incremental sales and 1.2m more 18-24-year-olds served per month. 

A Grand Prix for Good has been awarded to FCB Toronto for their work for the Canadian Down Syndrome Society (CDSS). The campaign empowered an entire community through a creative platform that allowed them to, literally, speak for themselves, resulting in a boost of 429% in donations.

More information on the new WARC Awards for Effectiveness, North America Edition, part of a suite of WARC Awards, is available here.

New India influencer guidelines and what they mean

New guidelines from India’s Department of Consumer Affairs on product endorsements bring greater clarity over what influencers can and can’t do on social media, but opinion is divided as to whether spending by brands will be affected as a result. 

What’s happening

Last week’s ‘Endorsements Know-hows!’ guide sets out how celebrities and influencers on social media platforms should disclose all “material” interests when endorsing any products, services, or scheme. These could include gifts, hotel accommodation, equity, discounts, and awards. A failure to do so could lead to a lengthy ban on endorsements and a fine of up to Rs.10 lakh.

Why it matters

The new guidelines could push marketers back towards straightforward performance marketing. When users can see a post clearly flagged as an ad, that removes part of the rationale for using influencers in the first place; users may be more likely to avoid such content, with knock-on effects on metrics like reach and engagement. 

Takeaways 

Experts consulted by Medianews4u.com and Afaqs! had various takes on what impact the guidelines will have:

• While there may be a short-term impact, influencer marketing won’t be affected in the longer term, as practitioners find new ways to showcase brands and make that content as enjoyable as their regular content (Rohit Agarwal, Founder & Director, Alpha Zegus).
• The guidelines bring transparency and a framework to the channel while consumers will be better able to make their own judgements (Deepak Sakhuja, Co-founder, Ripple Links).
• Celebrities are likely to be less affected than ‘ordinary’ influencers by a post being flagged as “star appeal overpowers content” (Shweta Purandare, Advertising Compliance Expert).
• Those influencers with large followings are more likely to adhere to the guidelines simply because of their visibility; smaller influencers could still fly under the radar (Vivek Yadav, Co-founder, Cosmofeed).
• Brands will welcome clear guidelines that they can follow and so safeguard their interests (Ankita Gaba, former Co-founder of Social Samosa).

Sourced from Medianews4u.com

Marketing theory in a crisis: Lessons from Eve Sleep

Eve Sleep, the DTC mattress brand, went into administration in October last year as a result of what former CEO Cheryl Calverley described as an “economic tsunami” that obliterated the company’s market; appearing on the latest WARC podcast Calverley, a former marketer, reflected on marketing theory in the face of a crisis.

Why it matters

There is a strain of marketing thought that holds dearly to the idea that brands should continue to spend on marketing in order to come out the other side; Calverley’s experience suggests that we need a bit more nuance about the crisis in question. 

In context

Eve Sleep had been a success story of the direct-to-consumer boom and became a publicly listed company in 2017. But, like many other companies,  it was hit hard by the economic tumult that followed Russia’s invasion of Ukraine and the ensuing energy price crisis, which led to the hollowing out of its market – effectively, it faced a problem that marketing couldn’t solve.

Short term crises, long-term investments

 “At the end of January [2022], I was staring at a business that was ahead of all of its targets – and we had really punchy targets – and we were hiring, and we were flying,” Calverley explained, in an appearance on the latest WARC Talks Podcast on putting theory into practice, which is free to listen to.

Then everything changed: “our market dropped 40% in two months … something like 20-30% at the end of January to 20 or 30% down by the end of March.”

It was around that time that Eve Sleep entered into a long-term partnership investment with Channel 4 for a year’s sponsorship of Late Nights on 4 programming with a view to brand building, with a probable payback on that investment in around one to two years. Given the strong position the company was in, and thinking about the next phase of growth, it was a textbook move.

But by March, “the market had disappeared from under our feet. And I desperately needed that money back and the business was not going to be around to enjoy the fruits of that sponsorship.

“Quite frankly, theory goes out the window when your market has completely disappeared.”

“It’s really simple. If we spend money on stuff, which is going to do anything other than drive tomorrow’s sale, literally tomorrow – so: Google, press, physical, literally, physical availability – it will not pay back in time for me to pay the wages.”

The nature of the crisis

Calverley, whose CV includes senior roles at Unilever, the AA, and leading marketing for Eve prior to taking the top job, noted the difference of today’s economic tumult to recessions of the past.  “Give me a minor recession and 3% inflation, I’ll keep investing,”  she said. But “This is not a recession, it’s a global crisis.”  

As such, for many brands it’s not going to be a case of continuing to spend as a universally applicable idea. It may make sense for some more stable categories, but others are facing much deeper problems than future growth. 

Marketer to CEO and a total view of investment

It is not the norm for marketers to become CEOs of companies, but there are significant advantages to understanding the fundamentals of marketing, even if you are as CEO “much more conscious of the cash”.

Being a marketer gives a CEO a greater awareness of the risk profile of marketing, Calverley notes. But, there are problems in the space between top-level company leadership and the view of investments that they must make in marketing.

“We haven’t adapted marketing teams and marketing skills, and marketing structures, in line with the changing dynamics of media landscapes, creative landscapes, platforms,” she pointed out: it is effectively attempting to fit a square peg in a round hole.

“I think if you take a step back and created a marketing team from scratch today … you’d have an investment lead,” she argues: a person or team to consider marketing investments in their totality – across channels, short- and long-term bets – and to think about how to balance these against business objectives.

“We don’t have that. We tend to have that split over the organisation, which is, I think, quite an old-fashioned way of dealing with it.”

Sourced from WARC Talks, The Guardian, Retail Times

The rapid evolution of retail media

The fastest-growing part of retail media is off-site advertising, according to a Kroger executive who explains that brands are using the retailer’s audiences to reach consumers outside of Kroger.com.  

Why it matters

This marks a significant shift in both the value of retailer data and in the partnerships between brands and retailers. Initially, brands tapped into retailers’ first-party data to be able to better understand and target advertising on retailers’ own platforms, but they can now apply that across other online environments, including social media, CTV and programmatic display.

It’s a relatively recent development: The Current notes that “in the past year, more retail networks opened their offerings to programmatic platforms, allowing brands to compare data across retail media networks and control frequency at a consumer level, adjust for overlapping audiences, and ensure they are reaching the right consumers and not spending too much on the same audiences”.

Who’s doing it?

The Coca-Cola Company can access data from search inquiries, banner ads and cart orders from its partnerships with over 25 retail media networks including Kroger. It can then layer on top purchase histories at brick-and-mortar stores and then further layer that data across retail media networks. 

“It has really helped us become more efficient with the way we were buying, but that would have never happened if the retail media networks weren’t willing to venture into data-licensing agreements,” Katie Neil, connected commerce lead, North America, for The Coca-Cola Company, told The Current.    

Key quote

“People are shopping differently today. Incremental brand growth is happening on the digital shelf and retail purchase data is about much more than just retargeting … purchase-based data from retailers results in fewer wasted ad impressions”  – Jill Smith, vice president of sales at Kroger Precision Marketing.

Sourced from The Current

Why brands should steer clear of ‘grey content’

Persuasion metrics such as purchase intent and search intent are adversely affected by ‘grey content’, according to a study from Magna, the media intelligence business owned by IPG Mediabrands.

What is grey content? 

This is content that may or may not be aligned with individual brand values, Magna explains in The Art of Alignment, a study of 5,845 regular YouTube users across the UK, US and Australia watching content and answering a post-exposure survey to measure impact on brand KPIs.

Why it matters

The study found that, rightly or wrongly, advertising brands are held accountable for the content their ads appear next to (specifically video ads in this study). But while consumers tend to make an association between content and adjacent brands (eg “ads that play during videos are usually supporting the video”), they don’t necessarily do that to the same extent across all categories.

Findings 

• Grey content blurs message association: Magna found a nine percentage-point gap between ads in standard content and ads in grey content.
• With grey content, purchase intent dropped six points, while search intent dropped five points. 
• Ads from toy and financial services brands were at increased risk from being seen as misaligned compared to beverage or QSR brands. 
• Gen Z adults and millennials were more likely than older age groups to react to the perceived misalignment of ads.
• Consumers were more critical of B2B brands when it came to the appropriateness or otherwise of ad placements.

Key quote

“Ad environments that fall into grey areas require careful judgment calls be made by brands and their agencies,” says Joshua Lowcock, global chief media officer at IPG Mediabrands media agency UM. “There isn’t always a one-size fits-all solution as misaligned content for one brand could be a smart, under-leveraged opportunity for another.”

Sourced from Magna

[Image: The Art of Alignment]