We’re getting ready to launch Toolkit 2018 – our guide to tackling some of the biggest challenges brands currently face.
This will be the seventh year we have run a Toolkit report. We use it to draw out some key lessons for marketers by pulling together WARC’s best articles, case studies and research on a range of hot topics.
Released next week, the 2018 report will be the most extensive yet. As well as five chapters offering guidance on major industry trends, we’ll have the findings of a global survey we’ve conducted among brands and agencies, plus we’ll have an exclusive interview with Marc Pritchard, Chief Brand Officer at Procter & Gamble, on his priorities for next year.
While we’re putting the finishing touches to the report, let’s see how the trends we looked at in the 2017 report have developed. Overall, we didn’t do too badly…
We said: “Chatbots are the 'next step' into AI for many marketers, and will become key touchpoints for service brands.”
What’s happened: From KFC’s Chinese service robot to IBM’s use of Watson to improve its programmatic ad performance, many brands have been experimenting with AI in 2017. And the signs from the survey we’ll release next week are that it will be a real priority in 2018.
Chatbots are a particular area of focus. One study estimated that chatbots in messaging apps and on websites could save companies up to $8 billion a year from their customer service costs.
The new kid on the block, so to speak, is voice. With Amazon’s Alexa now in more than 13% of US homes (and Google Home in more than 5%), the combination of voice interfaces and artificial intelligence looks like a powerful new frontier for brands. As Marc Lore, President/CEO Walmart Ecommerce US, recently commented: “It won’t be too long – probably within the next five to ten years – before you’ll be able to talk to a voice assistant in the same way that you would to somebody on the floor of a specialty retailer, someone who knows about all of the products, and, more importantly, knows everything about you.” There’ll be more on voice strategy in the Toolkit 2018 report.
2. VR and AR
We said: “Forward-thinking brands are sharing immersive experiences with customers that provide a sensory overload and block out all distractions from TV, websites, and apps. For the time being, the focus of these efforts is on a relatively small number of consumers; it is a complement, rather than a replacement, for reach-based campaigns using tried-and-tested media.”
What’s happened: VR and AR remain promising areas of development, but are still in the experimental stage – there has, perhaps, been less buzz about them in 2017 than expected.
So-called ‘immersive formats’ are seen by publishers as potential new revenue streams, but as Stuart Flint, Managing Director at AOL UK, commented this year: “Consumer appetite is still in its infancy.”
One interesting area where brands have been applying VR is research. Diageo now routinely tests its in-store experience using VR. “In a recent test of an in-store Diageo promotion called ‘Whiskey 5’, virtual-reality testing [accurately] predicted a gain of 5.6% in Diageo products bought per customers,” commented Jason Chebib, VP/Consumer Planning at Diageo North America, recently.
We said: “The rise of a 'broadcast' approach to social media means brands are choosing which platforms will best reach their chosen audience, rather than attempting to entice shares and engagement across all social channels. There is no question that Facebook is the lead platform when it comes to social media audience reach and popularity.”
What’s happened: There’s no doubt that Facebook has benefited enormously from the ‘pivot to video’, based on their recent financial results. The jury is still out on whether publishers can make money from video distributed via Facebook.
From a brand point of view, the past year has seen a growing focus on the power of ‘video’ across channels. As Les Binet and Peter Field wrote earlier this year: “Video advertising, both on and offline, is the most effective brand-building form; within that, TV is still the most effective medium, but online video makes it work even harder.”
And it’s no coincidence that in the first half of 2017, IAB advertisers spent more on video ads than banner ads for the first time, according to the Internet Advertising Bureau UK.
The challenge remains planning ‘video’ across screens, and across a number of platforms with their own measurement tools and metrics.
4. ‘Dark social’ and the rise of chat apps
We said: The rise of 'dark social' has two major implications for marketers. First there may be an impact on social listening techniques, and the quality of information available from monitoring 'open' social platforms. Second, there is expected to be a move away from 'real time' social strategies toward conversation-based approaches.
What’s happened: The shift to private messaging – for example, use of WhatsApp – has continued apace. China’s WeChat remains the most advanced in terms of monetising its platform and creating a link between consumers and brands (including the ability to purchase direct). Nearly 30% of Starbucks China purchases now take place through WeChat.
The impact of so-called ‘dark’ channels on purchases is starting to be appreciated. One study in Southeast Asia found that 30% of e-commerce sales are the result of consumer journeys which begin on social media like Facebook and Instagram, and end on messaging apps like Messenger or WhatsApp. That is driving a push towards ‘conversational commerce’, including use of chatbots. For example, 1-800-FLOWERS.COM in the US is using chat to help consumers identify the right gifts and place orders.
We said: “Brands in sectors such as FMCG and food are increasingly looking at direct-to-consumer opportunities. These cut out or minimise the retailer 'middlemen', allowing brands that previously had no direct relationship with their customers to develop one.”
What’s happened: As a recent Economist article pointed out, direct-to-consumer is one of the biggest trends in the packaged goods industry, with VC-backed, internet-led firms crowding the market. Increasingly, these companies require branding and marketing expertise to cut through.
For the squeezed giants of FMCG, the challenge is developing direct relationships with consumers. In a US survey earlier this year, more than 80% of consumers said they expect to be able to buy direct from a brand online.
Many are working closely with companies like Amazon and Alibaba. Estee Lauder, for example, saw online sales in China double as it developed a branded presence on Alibaba’s Tmall.
Nike is another brand focusing on DTC. It is reducing the number of physical outlets it partners with to focus on online sales. By 2022, it expects to double the proportion of digital sales, both direct and through partner channels, to around 30% of its business.
6. Effectiveness in the digital age
What we said: “The big-picture issue is close targeting (particularly via digital channels) versus mass reach – and a number of FMCG brands have concluded that a renewed focus on reach will drive sales growth.”
What happened: The consensus (as far as it exists) has moved towards reach rather than targeting – a reflection, in part, of the influence of the Ehrenberg-Bass Institute. Several big brands have refocused their efforts on reach. Procter & Gamble was one of the first to announce this shift (and watch out for an interview with P&G’s Chief Brand Officer, Marc Pritchard, in the Toolkit 2018 report).
Others have followed. For example, Eric Reynolds, the CMO of Clorox, recently admitted his brand had erred: “We realised we were getting very short-term focused in two ways. We were targeting the kinds of people who already loved us. Guess what? We sold stuff. The ROI went up. But guess what? We forgot the golden rule of brand building: brands are built through penetration. There's only so many bottles of Clorox our biggest fans will buy.”
Meanwhile, fresh studies by Les Binet and Peter Field in the UK point to long-term brand-building based on mass-reach channels (online and offline), supplemented by short-term activation, as the key to success.
And in a WARC session at Cannes, Ian Edwards of Facebook admitted the social network had been focusing on the wrong sales pitch to advertisers. “When we were talking about targeting five years ago we were actually talking about the wrong things,” he said. “When we were talking about fans and likes and shares and things, I think we missed the huge value that Facebook can offer to advertisers and that is around reach.”