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. 

Global brands’ carbon offset problem

Many major brands have identified a quick route to low emissions or even carbon neutrality, but a new study shows that such swift and relatively cheap solutions don’t actually work, and don’t replace the profound changes businesses must make to achieve 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 $2 billion.

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 embarassing.

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

Urban Outfitters Inc. sees shopper ‘bifurcation’

Urban Outfitters Inc – owner of Anthropologie, Free People, Nuuly, and its eponymous brand – is reorienting its strategy to accelerate growth in premium brands, where it is seeing more demand.

It’s hoped the strategy will offset spending drop-offs in its lower-priced brands, driven by inflation. 

Why it matters 

Companies with a portfolio of brands serving various price points may be able to hedge more effectively against downturn, while using real-time insights to identify consumer spending changes, and responding accordingly.

The ‘bifurcation’ of consumers

According to CEO Richard Hayne, the company has seen its target audiences – mostly younger women – “bifurcate” across its brand portfolio, mostly driven by affordability.

Brands offering higher price points and serving a more affluent customer – such as Anthropologie and Free People – posted better results in the latest quarter, he said on the company’s Q3 earnings call. 

But the outlook wasn’t so sunny across the portfolio of brands, Hayne revealed. 

“Not all our brands, however, serve an affluent customer. Urban Outfitters' customers are younger with less discretionary income and accumulated assets. The current elevated inflation around necessities like rent, food and energy has had a greater impact on them. These customers are transacting less often, and when they do shop, they’re looking for a deal.”

By the numbers

• Anthropologie – which offers premium fashion and homewares – delivered 13% growth (retail segment comp) in Q3. New customers in the quarter increased by 24%.
• This compares to a 9% decline for Urban Outfitters, which offers fashion and homewares at a lower price point. Urban Outfitters recorded double-digit negative store and digital comp sales. As a result, the brand in North America will need to be more promotional to clear through excess inventory in the holiday season.

Next year’s outlook

The impact of high inflation on Urban Outfitters shoppers has left the company less room to manoeuvre on pricing, the CEO said. 

“I think that we’ve made a couple of mistakes. I think that we probably raised our prices a little more than we should have. I think the customer is telling us loud and clear that she doesn’t like that. And she’s buying more when we offer her promotions,” he added. 

While these mistakes were likely an oversight, Hayne also judged it to be the “result of the macro-climate with that particular customer group who is a little bit more challenged economically”.

As a result, the company will lean on more marketing investment to further accelerate growth in its higher-end brands, Anthropologie and Free People.

“Given the inflation environment … I don’t think there’s going to be a lot of room to increase prices dramatically,” Hayne said. 

“So we are going to be spending more money on marketing to get new customers and we will hopefully convert those customers in greater numbers than we did this year.”

ESG credibility can boost revenue

One in four UK consumers has already changed food and grocery brands based on sustainability perceptions, a new study claims, and they’re switching to brands with the strongest sustainability credentials at twice the rate of the average brand.

That’s according to the 2022 UK Brand Sustainability Benchmark Report from research technology company Glow, based on polling 16,000 respondents on their views of 102 brands. 

Why it matters

Glow’s proprietary Social Responsibility Score (SRS), which assesses consumer perceptions of brand ESG performance, finds that moving to a more sustainable footprint makes economic sense for businesses: a two-point increase in ESG credibility scores equates to an additional one percentage-point increase in revenue growth.

The top 10 brands

1. Ecover
2. Method
3. Beyond Meat
4. Linda McCartney Foods
5. Pact Coffee
6. Who Gives A Crap
7. Rude Health
8. The Cheeky Panda
9. Simple
10. Tony’s Chocolonely 

What consumers want 

“Consumers now almost universally expect Food & Grocery brands to be stepping up in relation to environmental issues and reducing their impact on the planet,” says Rachel White, market leader of NielsenIQ, UK & Ireland. 

“Younger consumers in particular are also increasingly judging brands on how they support their communities, partners and suppliers,” she adds.

Consumers also report gathering their ESG messages primarily through news and media coverage, product packaging and advertising. But they want to get more information via brand-owned channels such as packaging and in-store/online at the moment of purchase.

With the exception of Gen Z, they also want to be less reliant on their social media feed.

 Sourced from Glow

Budweiser called ... it wants its money back

Brewer AB InBev, owner of the Budweiser brand, is reported to be seeking to almost halve its previously planned sponsorship investment with FIFA, in the run-up to the next World Cup taking place in North America in 2026. 

The 2023-26 deal was said to be worth around $112m but reports indicate AB InBev wants that reduced by $47m. 

Context

The Qatar authorities bounced FIFA into restricting alcohol sales just 48 hours before the 2022 tournament opened, a decision that raised obvious questions about the value of Budweiser’s $75m sponsorship. 

At the time the brand tweeted, ‘Well this is awkward …’ but clearly there was a lot of frantic activity taking place behind that droll comment.

Press reports now suggest that a deal covering the 2023-36 period is being revised downwards to take account of the ban on selling beer inside stadiums in Qatar (although the alcohol-free Bud Zero remains available). 

The brand has announced that any beer that isn’t sold during the course of the competition because of that decision will be given to fans of the nation that wins.

Sourced from Just Drinks

[Image: AB InBev]

How the automotive market is adapting to a volatile economy

The UK car market is facing a period of change as rising interest rates and changing market dynamics mean existing financing models are coming under pressure. 

Why it matters

After a house, a car is probably the most expensive item that most households will buy. Apart from the obvious factors that influence choice – from what it says about the individual to practical matters like fuel consumption – there’s also the pressing issue of how to pay for it. 

A long period of low interest rates and the development of new sorts of financing deals encouraged many consumers to acquire vehicles they might previously have thought beyond their reach.

But as interest rates rise and the cost of living soars, the affordability of both existing and future purchases is likely to be reconsidered. Marketing will have to be adjusted accordingly. 

Background 

PCP deals (Personal Contract Purchase) now account for around three-quarters of all new car sales in the UK (Ford, for example, has two million customers using its Options PCP product). 

These involve paying instalments that cover only a part of the cost of a new car – usually around a third of the list price – so it generally works out cheaper than a loan to buy a car.

There is the option to buy the car outright at the end of the deal by making a final (large) payment, but consumers will often start a new, typically three-year contract for another new vehicle. 

Market dynamics are changing 

The cost of finance is likely to be uppermost in consumers’ minds but a buoyant second-hand car market means that they may have more equity in their vehicle at the end of a three-year contract than they expected. That money can reduce the final payment if purchasing, or be rolled over as a deposit for another new vehicle. 

With the sale of new petrol and diesel cars banned from 2030, The Financial Times notes an increasingly popular route for buying electric vehicles (EVs) – and one that’s cheaper than a PCP. The British Vehicle Rental and Leasing Association has seen a 33% year-on-year increase in EVs bought via salary sacrifice schemes, with 84% of salary sacrifice deliveries being for EVs over the past 12 months. 

Meanwhile, a touted shift from ownership to access hasn’t yet happened; subscription models have yet to take off widely, although they have been successful in some European cities. But that could start to change as more EVs hit the market, and mainstream consumers unfamiliar with the internal technology feel more comfortable not committing to an outright purchase.

Key quote

“The car industry is utterly reliant on people buying cars they don’t need with money they don’t have” – Stuart Masson, The Car Expert website.

Sourced from Financial Times, Auto Express

PwC: what top marketers are missing

PwC, the professional services firm, identifies a “frustrating catch-22” in which marketers lack modern technological and human capabilities, but struggle to get the initial investment that would allow them to demonstrate the difference they would make.

Why it matters

Based on in-depth interviews with UK-based chief marketing officers and a survey panel of 77 chief marketing officers – both from July 2022 – PwC’s report examines how top marketers are feeling and responding to the strategic pressure around them.

Many feel that they are falling short, getting neither the best from their technology nor from their people. There remains, too, a marginally higher interest in spending on tools and tech (83%) than on talent (75%).

Effectiveness

Of the organisations surveyed, 78% put a strong focus on measuring the commercial impact of marketing activity (though only half would do the same for the environment).

Even so, around 40% of CMOs find it difficult to convince the C-suite of the returns on their investment, while a minority of senior leadership (35%) contribute to setting ROI targets.

Marketing misunderstood

• 65% of CMOs say their board still view marketing as a cost.
• 83% of CMOs have prioritised short-term performance marketing in the last 12-18 months.
• 32% aren’t satisfied with the way their organisations perceive marketing.

Tell that to the board

Just 52% of CMOs surveyed are represented at board level. Yet 77% believe that those organisations leading in their marketing data and automation capabilities do have representation at the top table.

Data management in the spotlight

One fascinating aspect of the study is the perception that having too much data can cause problems:

• 83% of CMOs note that the organisation’s data sits across multiple functions.
• 55% agree they are collecting more data that they can usefully interpret.

Sourced from PwC

Six steps for ‘intentional’ media strategies

“Intentional” media strategies can help overcome long-standing biases by focusing on issues like “human safety”, inclusive innovation and building progressive partnerships. 

That’s according to Rachel Lowenstein, global head of inclusive innovation at media agency Mindshare.

“Media buying is not just transactional anymore,” she said at a media summit in New York*. “Every decision that we make as an industry has very material impacts on the real world.”

Why it matters

Media planners and buyers have the power to effect tangible social change with their decisions. Supporting media that's owned and run by diverse communities, and withdrawing funds from those not committed to enhancing inclusion and equity, are demonstrations of this influence in action.

The six principles

While noting that every brand operates in a unique context, Lowenstein outlined some general principles which have shaped intentional media choices at Mindshare:

• Morals matter: “Broadly speaking … moral decisions and business decisions cannot be decoupled today; they are fundamentally, intrinsically linked,” she said. “Consumers are demanding that, but we also know that more and more sources of growth will come from diverse people.”
• Economic muscle: “We also firmly believe media has the economic weight to manifest change. Creative messages are incredibly important, but they're only half of the equation.”
• Human safety: “Brand safety must be inclusive of human safety,” Lowenstein added. “I think a lot of the ways that the brand safety industry has talked about protecting brands online has unfortunately, and not intentionally, ignored the human impact of a lot of editorial content.” 
• A broad approach: This shouldn't be implemented in an isolated way, she said, because isolated change brings isolated impact. “We need to be as broad as possible when applying these ideas.”
• Inclusive innovation: This is an enhancement to media, not a departure from it. “I oftentimes say my job title of ‘inclusive innovation’ is very purposeful and intentional. If you're thinking about innovation, inclusion has to be a part of that.”
  
• Pushing partners: “You should always push your agency partners, and your partners in general, to take your core values as a company and help translate that into your media and marketing behaviors at large.”

Turning principles into action

Some of the ways Mindshare has translated these guidelines into tangible action include:

• Supporting content from historically marginalized groups to help overcome “algorithm bias” on digital and automated buying platforms. That includes rolling out private marketplaces that direct their adspend to community journalism produced by under-represented groups.
• Working with tech giant IBM on a toolkit that deploys artificial intelligence to measure potential bias in ad targeting, measuring campaign plans against 75 “fairness metrics”.
• Encouraging “human safety” with the Impact Index, an algorithm-powered tool that assesses the social impact of editorial content on minority communities.

As a result, Lowenstein said the agency now understands the impact their ad dollars are having on a specific group “from the positive down to the toxic”. 

Final thought

“We need to redirect our energy, because energy flows where our intention goes” – Rachel Lowenstein, global head of inclusive innovation, Mindshare.

*Lowenstein was speaking at the Unstereotype Alliance Global Member Summit, a platform for engaging the global advertising industry to eradicate harmful stereotypes. 

[Image: Clay Banks for Unsplash]

Coinbase leans on brand trust after FTX crypto ‘earthquake’

A top executive at Coinbase sees an opportunity for the company to lean into brand trust in the wake of FTX’s extraordinary collapse and the resultant pall cast across the wider crypto industry. 

“I think it's hard to avoid the news, given what a major earthquake this was to the overall crypto economy,” said Alesia Haas, Coinbase's chief financial officer, at the Oppenheimer Blockchain & Digital Assets Summit.

“This is just a sad day as none of us from the outside saw this coming,” she added. 

Why it matters

Coinbase, which does not have material exposure to the FTX collapse, has prevously been bullish: it advertised at the Superbowl in 2022, for instance. But the crash of FTX has severely damaged trust in the wider crypto industry, with Coinbase shares recently collapsing to their lowest point since the exchange's market debut in April 2021.

Trust as a core brand proposition

In Haas’s view, there are now opportunities for Coinbase to level up on brand trust and leverage the company’s transparency as a publicly listed company, to distance itself from “bad actors” such as FTX.

• “When we really step back and look at how this moment has changed for us, really what I think is we have a new, important opportunity to be a louder voice on the international market, [where] our value proposition has long been to be the most trusted and easiest to use,” Haas said.
• “In light of what's happened to FTX and their concentration in non-US market share, I think there's an opportunity that opens up for a brand like ours [as] the most trusted to think about how it wants to approach these international markets.”

Building the foundations of web3

Haas also wants Coinbase to put brand trust at the center of building Web3 foundations, which many brands are looking into as a future game-changer. 

Coinbase sees opportunities for its crypto wallets in various areas of Web3, such as:

• Decentralized social media
• Gaming
• The metaverse
• Decentralized Autonomous Organizations (which is like a new corporate LLC)
• Owning and paying for digitally native items inside the Metaverse or inside various Web3 games

“A lot of the crypto journey starts with custody, and that value proposition starts with trust,” Haas argued.

“What we're trying to do is make sure these things get easier to use over time and easier to access. That is what we're building with products like our Coinbase wallet, it's just the power of these new and emerging use cases … A self-hosted wallet is like a passport. It allows you to go anywhere in Web3.”

Sourced from Seeking Alpha, CNBC, Yahoo Finance

Farfetch remains bullish on luxury growth

Farfetch, the luxury online fashion portal, is optimistic that demand for luxury will remain resilient in 2023, and as such, the company intends to keep its products at full price and avoid discounting in the holiday season, choosing instead to focus on driving repeat purchases from high-value customers. 

Why it matters 

Luxury tends to be less impacted than the overall retail sector by economic downturn and consumer changes in spending, because it caters to an affluent consumer who is less reactive to these pressures.

In a Q3 earnings call, group president Stephanie Phair said: “Our customers are highly engaged, and the demand generation leverage delivered indicates that we have become more efficient in interacting with them. This is also a reflection of our investments in building our brand, which is particularly beneficial in times like these.”

In numbers

• Farfetch saw Q3 revenue grow 14% year-on-year, despite high inflation impacting the wider consumer economy and its decision to pull out of Russia, formerly a key market which represented 7% of global GMV.
• Farfetch’s stores grew revenue 54% year-on-year.
• 90% retention of private clients, whose average order total was circa US$1,100, with continued demand for high price-point items.
• Double-digit percentage growth of active existing customers, as well as 500,000 new customers in the most recent quarter. 
• Significant efficiencies achieved in customer acquisition costs, which were down 18% year-on-year.

Avoiding the discount temptation

Farfetch is not engaging in discounting this holiday season, as it chooses to focus on high lifetime value customers instead. 

Elliot Jordan, Farfetch's chief financial officer, explained that their gross margin was up “significantly” year-on-year because it's not copying the promotions of some of its competitors. 

“It's a deliberate decision to maintain a focus on full price for our participants on the platform and drive our own margins,” he added. 

Focusing on repeat purchases 

Phair said the company's investments in marketing tech has helped the company attract customers, including over the pandemic. 

“We really leaned in and acquired a lot of customers. That hasn't stopped … this is also a deliberate strategy to really lean into our most valuable customers and valuable targets in terms of new customers,” the group president explained.

“Where we're really leaning in is our retention efforts ... we've really been leaning into that over the last year or so, everything from increasing personalization, curation, and driving sales from the app, where you really see strong retention and focusing on those higher cohorts,” she added.

[Image: Farfetch]