This month: podcasts’ growing popularity for audiences and advertisers, luxury’s new opportunities and the expansion of subscription models.
Podcast opportunity expands as audiences and advertising spend grow
Podcast consumption and advertising spend has gone from strength to strength in recent years and this shows no sign of slowing, according to the latest available data.
Firstly, podcast consumption has grown rapidly as the amount and availability of content expands. Global podcast downloads rose from 62.3m in September 2020 to 85.2m in March of this year, according to data from podcast hosting company Buzzsprout.
This isn’t just existing users consuming more content, either. Data from the United States show that 41% of the population listens to podcasts monthly, double the level in 2016.
As a result of this strong growth, major players are battling it out for dominance. Both Apple and Spotify are investing heavily in the content available and the product experience, with the latest data suggesting Spotify has managed to take market share from Apple.
Both apps have seen growth in the number of downloads from September 2020, but Spotify has increased its share from 25.5% in September to 29.4% in March. This data puts the platform tied with Apple Podcasts’ 29.3% share.
Audiences are also proving receptive to creative messaging in audio campaigns. Research from audio branding agency DLMDD in the UK shows that one in three (33%) adults under the age of 35 feels more favourable towards brands with a sonic identity than those without.
Brands are recognising this opportunity, with podcast advertising spend growing 19% in the United States to reach $842m last year. Investment will likely accelerate in the future as well, as the coronavirus pandemic has led to more experimentation with emerging channels like podcasts.
Brands are also tapping into new opportunities with the channel. Half of podcast ads in 2020 lasted longer than 30 seconds, suggesting a move towards more creative storytelling. Podcast audiences in the US are also more diverse than the wider population, so offer a distinct opportunity for brands.
WARC has recently launched its own podcast series which includes conversations with some of the industry’s finest to bring you closer to insights, stories and lessons behind great marketing.
Luxury’s rebound proves uneven as new channels emerge
Some of the largest companies in the luxury category have seen a strong start to 2021 but European sales have dragged behind, according to data from the latest company reports.
Global revenue on an organic and constant exchange rate basis rose 44% for Hermès, 30% for LVMH and 26% for Kering year-on-year in Q1 2021. All three companies saw revenue grow above 2019 levels.
However, European sales in Q1 2021 were down for all three companies, suggesting an uneven recovery for luxury. Revenue from the region dropped 4% for Hermès, 9% for LVMH and by a third (34%) for Kering.
Part of the reason for luxury’s decline in 2020 was a reliance on the travelling shopper, though new opportunities are emerging that can help fuel future growth.
For example, an increasing number of luxury fashion brands are tapping into the accelerated growth in e-commerce and are choosing to distribute and trade via online fashion marketplace Farfetch. The platform’s expansion into China, the second-largest and fastest-growing luxury market, is likely to attract more brands to this opportunity.
However, Chinese consumers have a preference for in-store shopping for some categories like luxury jewellery, suggesting a careful balance between online and physical retail needs to be established.
Luxury brands also need to balance this push with the new directions in which the industry is heading. Younger audiences are increasingly emphasising sustainability in luxury purchases, so the role of brand purpose will become more important in the future.
However, in order to succeed, luxury brands need to find their unique position in these emerging trends, as many have a similar look and feel in their marketing strategies.
Convenience and cost savings drive subscription growth
Subscription services grew in popularity last year and this purchase model offers brands clear benefits, according to the latest research.
Four in five (78%) adults say they currently have at least one subscription service, an increase from 71% in 2018, per a survey from subscription management company Zuora. Usage is even higher in China (89%) and Spain (84%).
Entertainment subscriptions prove most popular, with 53% of adults saying they are interested in a TV and movie on-demand subscription, up from 46% in 2018.
However, this growth extends into other categories as well. The share of adults interested in grocery delivery services reached nearly one-third (30%) last year and meal delivery services reached almost a quarter (22%).
The pandemic helped drive growth last year, with subscription models being a safer way to shop which ultimately proved attractive to consumers.
However, this growth in popularity is unlikely to be isolated to COVID-19’s impact, as it was more fundamental features that proved most important to consumers. Zuora’s research found that convenience is the most-reported benefit of subscribing to a product or service instead of owning it, cited by 42% of adults. Cost savings and more variety follow, both at 35%.
For brands, product subscriptions can mean a higher lifetime value from those customers. Data from Spotlight by Ascential suggest a ‘subscribe and save’ customer is worth 2–2.5x the value of an average non-subscriber.
For many brands, though, online subscriptions will likely remain a small minority of sales. It is important not to disregard the benefits when this happens, though, as subscriptions can be useful for getting first party data and profiles of likely buyers.
This can be supported by attracting more consumers, which requires clear messaging around the subscription’s benefits and costs – consumer concerns around extra fees like delivery is the main factor limiting adoption.
The new WARC Guide to Customer Retention examines the nuances of retention marketing and explores the role of subscription models in 2021.