The Marketer’s Toolkit: what marketers need to know to succeed in 2023 

Ninety-five percent of marketers globally expect to be affected by economic recession, according to a survey for WARC’s Marketer’s Toolkit 2023, an annual report that identifies the most important market trends that marketers should focus on to help drive their business in the year ahead. 

Context 

End-of-pandemic optimism at the start of 2022 faded quickly as the war in Ukraine turned the world on its head. The invasion has had a transformative impact on energy prices, inflation and the cost of living around the world. The IMF is forecasting the weakest growth in twenty years, except for the global financial crisis and the worst phase of the COVID-19 pandemic. 

Five themes for 2023

The following key themes emerged from WARC’s survey of 1,700 marketers worldwide for The Marketer’s Toolkit: Global Trends Report:

1. Marketing in a cost of living crisis: While almost all marketers are concerned about the impact of the economic crisis, more respondents are planning to increase spend than last year, across both brand and performance. However, 36% are planning to cut marketing investment, despite evidence from prior downturns suggesting they should maintain spending levels.
2. Price vs. planet: a false dichotomy: 37% of represented companies expect to continue with their sustainability objectives despite the economic situation, while 35% foresee only “some small compromises.” Brands are also challenging the idea that eco-credentials necessarily result in price increases, with examples of local sourcing and use of the circular economy potentially lowering costs.
3. A reckoning for Big Tech: The majority of advertisers (62%) agree that a range of changing market dynamics are forcing strategic shifts from the tech giants, and respondents concerned about the dominance of the ‘duopoly’ have halved over the past two years. More respondents plan to decrease investment in Facebook than increase it for the first time in six years, which suggests that brands are resetting their relationships with Big Tech.
4. The clash of demand, delivery and disruption: Supply chain disruptions are expected to hit brands in 2023, but not evenly. Sixty percent of marketers anticipate non-trivial supply chain disruptions, but just 26% expect they will be significant or severe. This rises to one in three amongst European respondents. And 52% felt challenger brands would be the hardest hit, as they struggle for profitability. Marketers have an important role to play in managing and minimizing supply chain disruption
5. The era of ‘bubble up’ culture: Media and audience fragmentation was the second biggest concern in our survey, with 34% of respondents picking it. Among North American respondents, it was the highest ranked. Two-thirds of marketers expect to focus more on platforms that allow them to stitch together interest-based communities to create reach in a fragmented media world. Other channels with deeply embedded communities such as gaming and influencers/social media content are also set to attract more investment from advertisers next year.

A sample version of the global report featuring the first chapter, is available to read here.

The full series, available to WARC subscribers, will include the following reports:

• The Future of Digital Commerce (launching December 2022)

• The Future of Media Report (launching January 2023)

• The China Toolkit (launching January 2023)

The reports will be complemented by a series of podcasts. 

Agencies are more prepared to tell it like it is

Two-thirds (68%) of agencies are comfortable telling their clients – at least most of the time – what needs changing at their end, up from less than half (45%) two years ago, according to new research* from the World Federation of Advertisers (WFA).

Why it matters

Many things in the sometimes prickly relationship between client and agency can be smoothed over but it’s the client who pays the bills (or who usually pays the bills – Keurig Dr Pepper is requiring agencies pitching for its business to agree to extraordinary 360-day payment terms). Ultimately this is about money. 

Less than half of agencies think their compensation should be linked to the results of their performance evaluation – and that’s because there’s often a lack of alignment on KPIs.

Advertisers cite a lack of “measurable or objective” KPIs as their top concern; agencies, meanwhile, indicate the wrong things are often being measured. 

Takeaways

• Broken down by agency type, clients seem to be prioritizing media, full service and creative agencies for the most regular evaluation. In at least three out of four cases, media agencies receive compensation based on the results of evaluations, as KPIs tend to be more objective and measurable.
• Digital (35%) and production (44%) partners indicated they are most likely not to get any opportunity to receive structured feedback.
• Overall, almost one in three agencies surveyed said they still didn’t have any opportunity to evaluate their clients, with a further quarter having to do it in an unstructured way. 
• 13% of agencies agree that “no matter the feedback, client is king and won’t change” – that's a significant drop from 38% in 2020 – indicating rising agency satisfaction and improved client processes. 
  
• 53% of advertiser respondents say they now evaluate the collaboration between agencies.

Key quote

“Advertisers need to work harder to become the client of choice by actively nurturing agency relationships. Doing this means starting ‘at home’ and looking at their own performance before blaming their partners” – Laura Forcetti, Director of Global Marketing Sourcing Services at the WFA.

* The Client-Agency Performance Evaluations 2022 report is based on more than 90 respondents from 82 multinational organisations (49 clients and 33 agencies), with advertiser respondents responsible for more than $69bn in global ad spend. Learn more from a WFA webinar in January. 

Sourced from WFA, AdWeek

People spend more time consuming daily content than pre-Covid

From concerns about inflammatory or polarising content, to a continued shift in the platforms and channels consumers are using, a report* studying advertising and media shows how people's habits are changing in fundamental ways.

As consumer habits evolve in response to macro social and economic trends, and digital content consumption rises, brands have to evolve their ad strategies to meet their audiences where they consume content, finds tech and data firm DoubleVerify. 

There should be a focus on contextually relevant, attention-grabbing ad placements that also safeguard their brand reputations.

Takeaways 

• Cost-of-living concerns are driving ‘stay at home’ content consumption, particularly on CTV and social media, with 55% of people now spending more time consuming content daily than pre-pandemic.
• Attention fuels media efficacy, with two-thirds (66%) of respondents claiming an ad that captures their interest in the first five seconds will make them more likely to pay attention.
• Online shopping surges and is bolstered by a contextual approach – 54% buy more items online now than pre-pandemic; 67% pay attention to an ad if it is relevant to content they are viewing.
• Trust and shared values foster loyalty but consumers are quick to judge – 61% are even less likely to purchase/use a brand again if they see it advertised beside mis- or disinformation.
• Inflation is a key driver: 45% of global respondents note the reason they’re spending more time consuming digital content is because they are staying at home due to the rising cost of living.
• In APAC, this stands at 40%, with the increasing availability of quality content (49%), interest in the latest trends and topics (48%), and work from home tendencies (45%) also top reasons.

Key quote

“On top of the growth in online content consumption globally, a growing number of consumers in APAC are relying on digital content more than before when making purchases.

“Along with a growing emphasis on brand accountability for mis- and disinformation, advertisers also need to relook at their strategies to ensure their ads are reaching the right target audience without risking their brand reputation” – Jordan Khoo, Managing Director, DoubleVerify APAC.

*DoubleVerify’s ‘Four Fundamental Shifts in Advertising and Media’ was conducted among 16,608 adults aged 18+ across 18 countries, with interviews conducted online in June 2022 using email invitations and an online survey.

Adtech: UK publishers seek billions in damages from Google

Google faces a competition lawsuit from a consortium of UK publishers, alleging that the search giant has abused its dominant position in online advertising at their expense to the tune of almost £14 billion, at a time when Google needs support from the industry for the next phase of digital advertising.

Does this matter?

While the headline figure of £13.6 billion is an estimation based on market analysis, the number is large enough to garner the story a lot of attention and, given recent fines for abuses of its dominant position, there’s a good chance that the suit will be viewed sympathetically.

Google itself has called the effort “speculative and opportunistic”, and observers have noted that defining the market itself will be a complicated task – as in other tech-focussed competition suits.

But it hits Google at a complicated time. Not only is it facing scrutiny if not action in several jurisdictions, it is doing so at a time when its Privacy Sandbox, its solution to post-cookie targeting and measurement, is in development. It must satisfy not only regulators but also an increasingly angered publishing industry that it is doing the right thing, which will be challenging.

What you need to know

According to a press release from the legal firms involved, the suit’s contention is that Google’s “market abuse may have reduced advertising revenues by up to 40% for some companies,” according to an economic analysis prepared for the action.

• The claim, which has been filed with the Competition Appeal Tribunal (CAT), seeks up to £13.6 billion in damages.
• 130,000 businesses are being represented in the class action claim, which seeks damages from January 2014 onwards.
• While retrospective fines have constituted a slap on the wrist for the company, the suit suggests that publishers are now owed damages for the market situation.

The logic

“Advertising is sold in a fraction of a second in a process which is designed to match the product being advertised with the profile of an individual visiting a website”, notes Claudio Pollack, former chief of UK communications regulator Ofcom, and the named representative of the companies, in a statement.

“Third party platforms operate on both sides of the marketplace matching supply with demand and — in an ideal world — ensuring the market operates efficiently and effectively. Unfortunately, it is now well established that this market has developed in a way that is primarily serving Google.”

In context

It forms part of a broader movement against Google’s market position, with a parallel suit to be filed in the EU, and follows investigations from the UK’s competition watchdog, and the EU’s competition authority, as well as a fine from the French authorities last June.

A major, and now complete investigation from the UK CMA argued that the market dysfunction in digital advertising was so severe that the nature of the regulatory powers needed to police it should change – a measure that the government has avoided bringing forward.

Meanwhile, in the EU, proactive regulation is part of the DMA/DSA package soon to come into force.

Final word

“While the value of the claim we are bringing is substantial, we believe this matter is about much more than money,” said Professor Damien Geradin, founding partner at Geradin Partners who are bringing the suit.

“For years Google has been denying companies in the UK and Europe and beyond, including the local press and the publishers of community focussed websites, the chance to earn a proper income by way of advertising.”  

Sourced from Geradin Partners, TechCrunch, Stratechery

US consumers suffer subscription overload

Consumers are disappointed with the oversaturated subscription economy and might be willing to pay a premium for services that remove friction from the user experience, according to a study of 2,500 US consumers conducted by mobile internet payment company Bango.

Why it matters

As consumers grow increasingly annoyed about remembering all their passwords, renewing and canceling multiple subscriptions, and accessing login pages across different devices, companies have the power to alleviate frustration by removing friction wherever possible.

Consumers navigate subscription jungle

• The typical user pays for five subscriptions and one in five users pays for at least eight subscriptions.
• 72% of users say there is an excessive amount of available subscriptions, and 45% say it’s difficult to monitor how they signed up for their subscription.
• 39% of respondents resort to online piracy for a more optimal experience and to bypass admin involvement.

Simplicity important 

• 65% of users say they can’t afford all their subscriptions during this time of inflation.
• Most viewers only watch one program from each streaming provider, and 42% report feeling “locked in” to their subscriptions.
• To enhance customer experience, practicing flexibility is key: 63% of those surveyed reported they are comfortable with paying more for subscriptions if they are located in an all-in-one content hub.

Final thought

“Subscription users don’t want less choice, they want less admin” – Anil Malhotra, co-founder, Bango.

Sourced from Bango

Amazon quits food delivery in India

Amazon is quitting online food delivery in India as part of a restructuring of its presence.

What’s happening

Amazon has announced it will close its Amazon Food delivery business at the end of December, less than three years after it entered the market at a time when the pandemic was gathering pace. 

Market leader Zomato, meanwhile, is benefiting from making its app available in a number of regional languages. It continues to spread across the country with users in more than 1,000 cities. 

Mint reported that Zomato is now delivering an additional 150,000 orders a month thanks to regional language versions, with Hindi and Tamil contributing 54% and 11% of these orders respectively.

Orders in Gujarati, Kannada, Bengali, Malayalam, Punjabi, Marathi, Tamil and Telugu are also growing.

Why it matters

Amazon has invested heavily in India in recent years but its financial clout is no guarantee of success – witness recent reports that it is losing up to $10bn a year on Alexa, its voice assistant technology.

The food delivery market is estimated to be worth $20bn within three years. But for all of Amazon's innovation and deep pockets, it is local players Zomato and Swiggy that are leading the way.

Even in its core e-commerce business, Amazon is reported to be lagging behind Flipkart, an India start-up now owned by US retailer Walmart. 

All of which highlights the need for a deep understanding of the Indian market if a brand is to have sustained success there.

Sourced from Mint, TechCrunch

The office: are we ever going back?

Major agencies and brands alike can return to their offices around the world, but the workers that occupy them and the world they inhabit has changed – how to square this circle?

Why it matters

The office is back(ish), but in a new and more complicated incarnation. Mondays and Fridays see drastically reduced attendance, if any, while the ideal of central offices built for collaboration are complicated at a time when a less-frequently used office space would suggest a cost-saving opportunity.

Balancing the company finances, worker productivity and happiness, and the limitations of the space itself will require a rethink of the structures of the office but also of the week and day.

Early movers: R/GA is “never going back”

IPG-owned agency R/GA announced last week that it would shut its large New York and San Francisco offices in light of profound shifts in working patterns where, according to the company, 80% of product teams bring together people from more than one location. In effect, the agency will downsize its New York presence, reopening elsewhere in 2023, while other locations will consider a local hub model.

In a thoughtful LinkedIn post about the news, global creative chief Tiffany Rolfe made an interesting point that for as long as the pandemic meant that people needed to work from home, the question among leadership and employees alike has always been “when are we going back?”

Instead, the better question is “what are we moving towards?” Is it possible to marry the increased flexibility (and often the huge cost savings for individual commuters and working parents) with the focus, buzz, and accidental collaboration of a city-centre office?

Structuring the office

The post-pandemic office is in a tricky spot. The idea of a collaborative space is a noble one, but the nature of work is different: global companies now work across global teams daily. The working week doesn’t divide easily into days of collaboration and days of focus. Often, the experience of the modern office is one of sitting with people but meeting digitally.

Offices require a balance: places to focus – more crucial than ever after two years of relatively self-controlled working environments – and places to meet a colleague, a group of colleagues, or work together in a huddle. Senior staff or staff dealing with sensitive documents or conversations need to guarantee privacy – this is an emerging challenge.

Designers are grappling with this blend of open spaces for large teams to sit together, along with more private individual quiet spaces – for want of the word cubicles – as well as booths for huddles of two to four. This is an ongoing challenge.

Hybrid work is going wrong: it’s about the structure of the week

But the challenge is bigger than geography. Research from Gartner suggests that a new settlement is needed, one that mixes “intentional collaboration and empathy-based management”.  

This is a long way of saying that office time isn’t just for employee surveillance, and instead requires a structured week, one that mixes autonomy with accountability and considers the nature of the specific project or projects at hand: are they at a phase of individual, focussed implementation, or are they collaborative in nature or at an ideation phase. It argues for:

1. Flexible work experience: “offering a reasonable choice as to where people will work, as well as on which days and during which hours, allows each employee to find the work-life balance that suits them best.”
2. Intentional collaboration: “the most effective enterprises plan collaboration deliberately — intentionally devising a mix of synchronous and asynchronous collaboration that works best for the task at hand and the people executing it.”
3. Empathy-based management: “the best outcomes occurred at organizations where leaders are empathetic to employees’ needs. The worst outcomes were at organizations where managers mandate that workers be on-site so they can watch them.”

Structuring the day: embrace asynchronicity

Microsoft has identified a new pattern to the working day – the “triple peak day” – which observes that some interaction with certain working tools is taking place in the late evening, but the Atlantic’s Derek Thompson also posits that there’s a deeper expansion of work.

The working day is getting longer, caused by the blurred boundaries between work and office as well as a 250% increase in meetings versus pre-pandemic, according to another piece of research from Microsoft.

His conclusion is that a deeper shift in thinking has to happen: one in which we stop seeing work as a synchronous activity in which all parts of the organisation are active at the same time to one in which collaborative work can happen asynchronously.

That, and meetings need policing: long meetings in which information is broadcast ought to be emails, whereas meetings in which all participants are expected to give input and make decisions should remain as meetings.

Sourced from Worklife, Gartner, AdWeek, Gartner, Microsoft, The Atlantic

A controversial World Cup as a brand backdrop

Going into the 2022 Qatar World Cup, there were many unknowns – about the alcohol, the heat, human rights abuses and institutional intolerance – and these have made it a complicated picture for brands. 

Broadcasters stay strong

Now firmly into the tournament’s second week, both brands and the channels that broadcast the competition are starting to see the effects of the most controversial World Cup since… the last one.

The Hollywood Reporter notes that coverage of the tournament on Fox Sports and Telemundo (English and Spanish language respectively) suggests that the negative backdrop to the tournament hasn't dampened interest in the US. Viewership of the opening game (a routine 2-0 win for Ecuador over hosts Qatar) was up on 2018:

• Fox Sports up 78%, peaking at 3.5 million.
• Telemundo up 164% with a peak of 1.7 million.

The USA’s opener – a 1-1 against mighty Wales – had 8.3 million viewers, while UK broadcaster ITV racked up 13 million viewers for Wales' first outing in a World Cup since 1958.

Generally, US broadcasters have avoided covering the human rights angle of the story. In the UK, however, joint broadcasters BBC and ITV have covered difficult topics in their news coverage.

Given it is the country’s national sport – and two of its nations are competing – the knotty politics of the tournament don’t appear to have dampened viewers’ enthusiasm.

The brand view

Despite the controversy, brands around the world have considered the World Cup too big to avoid.

Some, such as beer brand BrewDog, attempted an anti-sponsorship campaign, only to be accused of hypocrisy when observers noted that the company was still planning to show World Cup games in its bars.

For giants Nike and Adidas, which together provide the kits and/or boots for most of the teams, a presence is part and parcel of their significant involvement in football.

Aside from the on-field presence, the Athletic explores the similarity of both brands’ digitally inflected campaigns:

• Adidas features its greatest asset in an “impossible rondo”, a kickabout between present-day Lionel Messi and four younger versions of himself, one for each World Cup he has played in.
• Nike, meanwhile, deploys its own greatest living footballer, Cristiano Ronaldo, to play other contenders for the title of GOAT (Greats Of All Time) in “the Footballverse”.

Neither campaign makes mention of the location of the World Cup, relying instead on timing and reference. But what’s really interesting is what they say about the proximity of football and gaming, not necessarily as a channel, but as a well of culture and many people’s experience of the modern game.

 Sourced from THR, The Athletic, Big Hospitality, Bloomberg, WARC

Global brands’ carbon offset problem

Many major brands have identified offsetting as a quick route to low emissions or even carbon neutrality, but a new study shows that such swift and relatively cheap solutions don’t really work, and don’t replace the profound changes businesses must make to achieve true carbon neutrality.

What are carbon offsets or credits?

When there’s a problem to be addressed, it’s more than likely that a business or even an industry will emerge to correct it. A mixture of accounting creativity and clever marketing, the carbon-offset industry is now worth north of $2bn.

Carbon offsets are effectively packages of support that allow a business to fund environmentally friendly projects to the tune of their own carbon outputs, thereby theoretically negating carbon from their balance sheets and allowing the business to claim a significant reduction or even neutrality.

Do they work?

A new analysis from Bloomberg Green, which also does some good naming and shaming of those buying bogus credits, finds that most purchases of carbon credits have favoured low-quality variants – the cheapest – and are often tied to renewable energy projects.

While that may sound good, the trouble is that an offset (which for the green projects are meant to allay the higher costs they face versus non-renewable or non-green projects) has next to no benefit when renewable energy is already far cheaper than coal or gas.

Bloomberg reveals that around 40% of the transactions analysed for 2021 went to these cheap and largely useless carbon offsets. In order for them to have any value, they have to cost money because they must be verifiable and have to be measured on effectiveness, not their cost efficiency. Funding effective (usually expensive, cutting-edge) carbon-reducing projects is hard.

It is on this basis that Salesforce recently created a centralised marketplace for carbon credits with a layer of centralised measurement to give peace of mind. Other services are also emerging to help businesses move their carbon-offsetting practices to the much tougher task of reducing the business’s own emissions across their supply chain.  

This all looks very familiar

Those with experience of securitisation through collateralised debt obligations in finance, or the murky digital ad supply chain in marketing may notice that something similar is going on.

According to Bloomberg’s analysis, 47% of transactions studied didn’t have enough information to link them back to a buyer. It is, effectively, an opaque market when buyers and sellers need it to be.

The trouble is that this confirms many people’s – often correct – perception that they can’t trust what most brands tell them about their carbon footprint. Greenpeace goes so far as to call it greenwashing, and the extensive use of low-quality credits is likely to become more scrutinised and more embarrassing.

What to do

Ad Net Zero is a good resource to understand where carbon credits should fit into a reduction plan. Effectively, they should only be used if they are totally unavoidable and should only seek to offset 10% of a business’s baseline emissions. The rest of those reductions should come from within the supply chain.

Sourced from Bloomberg, WARC

Canyon Bicycles aims for urban drivers, spotting cultural shift

Canyon, the German bicycle manufacturer that supplies some of its higher-end models for the WorldTour, is seeking to double sales of its urban bikes by the middle of this decade amid changes to mobility.

Why it matters

How people get around is big business, with brands such as Canyon and upstart Van Moof rethinking what they consider their competition and going after car buyers, mostly in urban locations.

From a marketing perspective, the automotive industry is a big spender on high-reach premium video and audio advertising, as well as the search advertising that befits high-involvement, deeply researched categories.

As people look to their own carbon footprint as part of a wider set of sustainability changes, bikes may well start to eat into a chunk of that spending.

What’s happening

In an interview with the Financial Times, Nicolas de Ros Wallace, CEO of Canyon, explains that one of the company’s key priorities now lies in urban cycling, an area where the brand sees “huge growth”. It aims to make this segment account for 20% of the firm's total sales.

The plan is to service this growth with chunkier models built for durability and cargo rather than speed or downhill performance.

With cities investing heavily in bike infrastructure, the CEO feels that urbanist trends fit in with sustainable transport. He also notes how even an extremely high-end bike is cheaper to run than a car – “you don’t pay insurance and you can park it anywhere”.

New techniques

E-bike growth is well documented, but the techniques to sell them appear to borrow increasingly from automotive. Canyon, for instance, nabs the term SUV for its €4,199 Pathlite SUV bicycle.

The new golf?

The SUV model differs from the kind of pared down racing machines favoured by middle-aged men in lycra (MAMILs) who have made the sport of cycling their new favourite, moneyed pastime. But the presence of a well-to-do audience of enthusiasts suggests there may yet be an opportunity to add more vehicles to these cyclists’ fleets.

Sourced from the Financial Times, Cycling.CC, WARC.

[Image: Canyon]

Why marketers should consider ‘encounter thinking’

Media plans have long been based on a channel-by-channel approach but a better way of considering media strategy is to think in terms of encounters, a new Wavemaker report suggests.

In Growth Trends 2023, the agency argues that the traditional media-buying process, based on channels, creates silos that hinder the production of truly 360° media campaigns. Instead it offers an alternative that is based on the nature of the media encounter: static, for example, would embrace everything across OOH, print, display, social and TV.

Why it matters

As media becomes ever more fragmented, the old distinctions of ‘channel’ become increasingly irrelevant. Consumers don’t think in terms of channel and neither should marketers. Thinking by media encounter will help deliver a more holistic media experience for the consumer – one that is focused on receptivity.

Takeaways 

• Think about the encounters you want audiences to have with the brand and be prepared to use channels in unconventional ways.
• Build creative assets by media encounter rather than by channel.
• Taking a media encounter approach can enable more efficient media plans. 

Sourced from Wavemaker

[Image: Wavemaker]

Ongoing lockdowns deliver rare profit for Meituan

Meituan, the China-based shopping platform service, reported a 28% revenue increase in its latest earnings, as demand for delivery services defy a dampened economy and deliver the company’s first profit in seven quarters.

Why it matters

Delivery is generally an expensive service to provide, with costs scaling alongside delivery volumes. As a result, the companies that provide delivery services have a different route to profitability, with significant tactical marketing implications. 

Circumstance often plays a role in a company's fortunes too – and that's no less true of Meituan. 

By the numbers

• Revenues grew 28% year-over-year to reach 62.62 billion yuan ($8.7 billion), beating estimates, its Q3 results revealed.
• Net profits grew to 1.2 billion yuan ($170.6 million) versus a loss of 9.9 billion yuan, also beating estimates.

Growing existing users and new merchants

With around 70% of the market share in food delivery, Meituan has successfully managed to turn that dominance into additional growth.

Despite steady user growth of 2.9% year on year, the number of active merchants has grown 11.3% – an indication that sellers needed somewhere to continue doing business.

But users were also buying more. Average annual orders were up from 34.4 in the same quarter of 2021 to 39.5, a year-on-year increase of 14%. It’s here that ongoing lockdowns have really helped the business.

Focus on costs

Around the world, app-based brands (for want of the increasingly meaningless term ‘tech’) are shifting away from a focus on growth to the protection of margins. While this is an imperative from the markets, it means that publicly listed tech brands are operating on a similar plane to everybody else.

Meituan is no exception. It slashed spending across its divisions this quarter, including a 5.9% decrease in selling and marketing expenses – mostly down to advertising cuts. However, brands must remember that future demand is not a cost but an investment.

Sourced from Meituan, WARC

Foot Locker backs e-commerce and loyalty for omnichannel growth

Foot Locker, the sportswear and footwear retailer, sees a major opportunity to level up its omnichannel strategy in 2023 with a strong loyalty programme at its core. 

Why it matters 

According to executives at the company, Foot Locker is shifting its approach from being product-led to consumer-led in an effort to create a consumer-driven demand engine that grows its market share, customer base, and share of wallet. 

Focusing on omnichannel ecosystems

In a Q3 earnings call, president and CEO Mary Dillon said the company will be focusing on its omnichannel presence and capabilities, the loyalty programme, digital marketing strategies and the technology platform enabling those efforts. 

The role of e-commerce in its omnichannel ecosystem is one major area of focus, added Dillon: “Without having a specific target in mind yet, I believe at 16%, our e-commerce penetration is below where it should and can be, which means there's an opportunity to capture more online-only sales; and, more importantly, build our omnichannel customer base.” 

By the numbers 

• Foot Locker's current omnichannel customers in the U.S. spend nearly four times the amount of its single-channel shoppers.
• Yet they represent only 6% of Foot Locker’s customer base, which leads to a vast opportunity to improve engagement with customers across channels and attract more of their spending dollars.
• 80% of Foot Locker’s best customers already buy three or more brands.

Leaning into loyalty

The CEO sees tremendous opportunity to further refine and evolve the FLX loyalty programme as part of its omnichannel offering.

“While we're already capturing a considerable amount of our sales through members of FLX, I see more opportunity to improve the value proposition of the program, drive more engagement with our members through personalization and ultimately attract more members and capture more share of wallet of our existing customers,” Dillon said. 

“In technology, we're in the process of reviewing our foundational needs as well as making sure we're building the right tools and capabilities to support those efforts in omnichannel and marketing. Having a stronger backbone and technology enablers will be a key priority for us going forward,” she added. 

Watch out for Generative AI in 2023

Generative AI is a phrase we’re going to be hearing a lot more, not just because of its role in ‘deep fakes’, but because of its potential for cost savings and hyper-personalisation in advertising.

It’s one of the tech trends highlighted in Wavemaker’s recently launched Growth Trends 2023 report.

What is Generative AI?

Generative AI uses artificial intelligence and machine learning to create new digital content (this can be text, video, audio, imagery) with little human intervention beyond a starting input. The output can be believably real or consciously stylised. 

Why it matters

With the tech giants all involved in the sector, Generative AI is about to hit the mainstream. Already it is facilitating new modes of creative thinking and enabling the development of digital assets without long lead times or high production costs.

Ultimately, the report suggests, every digital touchpoint could be automatically customised using Generative AI in response to consumer needs and signals. 

Takeaways 

• Using Open AI tools it can take just seconds and cost as little as three cents to generate an image – offering significant time and cost savings for brands and agencies. 
• Gartner estimates that by 2025, 30% of all outbound marketing messages from large brands will be from Generative AI.
• Spending on AI is growing and the global generative media market is expected to reach almost $400m by 2025.

Sourced from Wavemaker