The Feed

The China census: Marketing insights for an evolving consumer landscape

Brands that get ahead of national policies which are based on data from China’s decennial census are the ones that often gain the most consumer traction in the market and Initiative China’s Abby Wong has insights for those planning their strategies.

Why it matters

China’s census, conducted once every decade, reveals the demographic trends of its vast and vibrant market, and brands that react quickly and demonstrate cultural relevance to these developments will be the most successful.

Takeaways

• The end of the one-child policy will see rapid growth in innovation for education formats, technology and facilities.
• With the growing number of single millennials in tier one cities, brands must evolve to address the single consumer’s needs.
• Revamping old and traditional brands with fresh and hip designs can expand their appeal to Gen Z.

The big US brand strength test

With costs increasing for companies across the board, American brands will need to continue to raise prices in order to protect margins. Most firms, however, expect this to be a temporary state of affairs.

Why it matters

Inflation is on the rise in the US as a recovery in demand drives prices up. But for many companies, their costs are increasing faster than they can raise prices (or at least do so at a level that customers will accept). Economists expect inflation to level off in time, but the medium-term effect on companies is likely to be a slight drop in profits.

Takeaways

• A poll cited in the Wall Street Journal finds that consumers are expecting prices to rise by a rate not seen for 12 years.
• Retail and manufacturing sectors are leading the price-raising. Restaurant brands are also raising prices, with many company leaders reading strengths into what is likely a combination of brand strength and heightened consumer appetite after a year of lockdowns.
• Others see higher levels of savings among consumers during the pandemic leading to lower price sensitivity. Raising prices too high, too quickly could soon sour attitudes. Other efficiencies will be key.
• This is no purely economic phenomenon; marketing will play a significant role in effective pricing, with price a crucial gauge in the assessment of good marketing.

Key quote

“[Companies] are enjoying demand, they’re enjoying the high prices they’re getting, but I don’t see them leveraging their businesses to double production … they’re telling you they don’t trust what they see as permanent.” - Steven Blitz, chief U.S. economist at TS Lombard, a research firm, talking to the WSJ.

Sourced from the Wall Street Journal, WARC

The future of packaging: sustainable and as media

Compostable packaging is as effective as conventional plastic and may even outperform it for shelf-life of fresh produce, two peer-reviewed studies have shown.

The news comes on top of a recent report on the plastic alternative packaging market, which found an increasing number of companies investing in alternative packaging materials that are better for the environment.

Why it matters

Packaging – and especially plastics packaging which is particularly damaging in terms of carbon emissions and ocean pollution – is at the intersection of sustainability and marketing in today’s consumer society. Brands have an opportunity to both burnish their eco-credentials and to develop packaging as a lead media. 

Context 

• FMCG giants like Nestlé, Unilever, Diageo and Mars are already developing materials that can be easily recycled.
• Brands are rethinking aspects of their packaging in the light of the damage it can cause; many breweries, for example, have switched from using plastic rings to hold four or six-packs of beer cans together to using cardboard cartons or glue.
• In WARC’s database, 22% of digital packaging case studies use sustainability or responsibility as a creative strategy.

Improved analytics and measurement to drive DOOH growth

A shift in budgets to digital advertising, improved campaign analysis and a growing focus on measurement and evaluation are expected to be the main reasons for higher digital out-of-home (DOOH) investment in the future, according to research from DOOH company Alfi.

Why it matters

WARC Data forecasts global out-of-home advertising spend to rise 17.4% this year and a further increase of 11.2% is expected for 2022, with digital expected to be key to this expansion. Smarter use of data is already emerging in DOOH and looks set to be a core reason for the medium's growth in the future.

Takeaways

• Two-thirds (66%) of senior advertising professionals said DOOH advertising spend will grow in the future as a result of a more general shift towards digital advertising.
• As well as this, at least three-fifths said advances in campaign analysis (62%) and a growing focus on evaluating advertising (60%) will be a reason for higher investment.

Sourced from Alfi, WARC Data

Coca-Cola braces for more lockdowns with proven strategies

Global beverage giant Coca-Cola has told investors that it is prepared for surges in the Delta variant with a strategy built around its core brands. 

With the Delta variant in the ascendant across the world, raising the possibility of further lockdown restrictions, Coca-Cola’s top brass outlined their plans in a call to investors, Reuters reports.

Why it matters

Innovation can spur growth in the good times, but when the macro-environment grows rocky, it is core brands and a solid supply chain that will power the business. 

Takeaways

• Kill your darlings. Extraneous brands can be dead weight, as the pandemic year proved. The company either shuttered brands like TaB diet soda, or sold off others, like ZICO coconut water.
• Brands are a moat for margins. CEO James Quincey told investors that forecast cost increases are expected towards the end of the year, but that pricing power is expected to hold up margins. 
• Distribution matters. Coca-Cola’s larger share of out-of-home consumption, whether in cinemas, restaurants or sport venues, means a greater share of the economic recovery dollar (powering 41% revenue growth in Q2), but also a weakness should lockdowns return. But value share gains in at-home consumption through the pandemic year are expected to protect the firm’s position. 

Key quote

“When things are more constrained, the bigger brands are the ones you focus on” – John Murphy, CFO, Coca-Cola.

Sourced from Reuters, Seeking Alpha

Industry measurement metrics fail to reflect marketing effectiveness

A significant proportion of current industry measurement metrics highlight campaign delivery performance rather than true measures of effectiveness, a new report finds.

The details 

• There is no common language around campaign measurement: the DMA’s ‘Meaningful Marketing Measurement 2021’ report found 167 different methods of articulating campaign results being employed.
• Of these 167 measures, 59% related to response, brand and business measures; 41% related to campaign delivery measures (that obscure the true picture of campaign impact).

Why it matters

When it comes to campaign evaluation and post-campaign reports, the aspiration should be for 100% of campaign effectiveness measures to relate to response, brand or business impact. 

Key quote 

“The ability to connect campaign activity to business effects that are meaningful to the board is what sets great marketing teams apart” – Jonathan Beeston, Product Marketing Director, EMEA, Marketing Cloud at Salesforce. 

Background

The study is based on analysis of the DMA’s Intelligent Marketing Databank which contains five years’ of entries to the DMA Awards.

Sourced from DMA

Australian brands and the difference between efficient and effective ROI: ThinkTV study

While most media channels deliver positive ROI, some channels generate sales for longer periods, making the return on investment more valuable as the channel drives greater and sustainable business growth. 

Why it matters

That’s  according to a new report from ThinkTV which looks at how to maximise ROI by choosing channels with the ability to deliver positive ROI as well as short- and long-term sales. Media ROI is only half the picture for Australian brands and chasing ROI without adequately considering campaign time frames could be at the expense of media-driven sales.

Five findings

• Channels drive markedly different levels of demand: TV with an average of over 50% media allocation delivers more than 50% of media-driven sales, versus around 18% spend to out-of-home accounting for less than 16% of media-driven sales.
• Channels with strong ROI may not sustain sales volume over campaign investment periods – search has the strongest ROI but is one of the weakest media selections when it comes to generating sales beyond short-term timeframes.
• Search is driven by other media and is a demand harvester, not a demand driver; consumers are already in the purchase funnel, hence the channel lacks the long-term ability to drive growth.
• The rate of return for media channels differs, as does the potential for sales growth – the rate of incremental sales for TV reduces more slowly than any other channel, which means increased investment in TV will improve ROI over time.
• The risk in achieving a return varies by channel, with digital video being the least risky channel and cinema being the most; unlike share portfolios, a higher risk media mix does not necessarily deliver better efficiencies or growth.

Background

The latest edition of ThinkTV’s Payback Series is an Australian study that analyses the campaign performance of 60 brands with a collective annual turnover of A$23 billion and an annual media spend of A$450 million. 

Sourced from ThinkTV

Netflix marketing spend grows 39% as competition heats up

Netflix's marketing spend has grown at the quickest rate in more than two years as the video streaming market becomes more competitive, according to a WARC Data analysis of the latest company data.

Why it matters

Netflix is seeing competition from multiple different video streaming platforms and other media channels, including gaming and social media. However, the company argues there is a clear opportunity for growth as streaming represents just 27% of US TV consumption, per Nielsen figures.

Takeaways

• Netflix's marketing spend rose 39.0% year on year in Q2 2021, the largest increase since 2018, to reach $604.0m.
• Subscriber growth has slowed - the number of paying subscribers rose just 0.7% in Q2 2021, the slowest rate of increase in at least four years.

Sourced from Netflix, WARC Data

B2B CMOs and brands primed to accelerate growth

Most B2B marketing leaders consider their role to have altered over the past couple of years, moving well beyond simply generating sales opportunities to become more focused on growth.

The B2B mindset is changing

That’s according to the initial findings of the 2021 Growth Marketing Maturity Study from the ANA (with input from Stein IAS and WARC), which, in addition to noting how resilient B2B brands have been during the pandemic, charts a shift in mindset as B2B marketers progress from regarding themselves as ‘sales enablers’ to ‘growth enablers’ and ‘growth drivers’ . Almost half (45.5%) say this shift in focus has happened within the past two years.

But there’s a disconnect

There is, however, a striking disconnect in how B2B marketing leaders see themselves within their own organizations and how they view their peers at other companies.

• In their own roles they are primarily Growth Enablers (49%) and Growth Drivers (36%); just 15.2% say they are primarily Sales Enablers.
• But they think that B2B marketers in general are considerably less advanced, believing most remain Sales Enablers (40.2%) with just 38.4% being Growth Enablers and 21.2% Growth Drivers.

And there are barriers to growth

• Top barriers to growth include a more connected digital customer experience (67%), measurable revenue impact (52%), upskilling across growth responsibilities (52%) and investment in realizing growth (49%).

Sourced from Stein IAS

For Unilever, opposition with Ben & Jerry’s is the point

Ben & Jerry’s, the Unilever-owned ice cream brand that maintains an independent board of directors from its UK-based parent, has illustrated the importance of that separation.

What’s happened

Ben & Jerry’s announced this week that it would be halting the sale of its products in Occupied Palestinian Territory, the West Bank and East Jerusalem, regarded internationally as land annexed illegally after the 1967 Six Day War.

This put Unilever in hot water, as Israel’s prime minister, Naftali Bennett, warned of “serious consequences” for both the ice cream brand and parent company Unilever. For its part, the parent company has stated its commitment to a presence in Israel and has also emphasised the ice-cream brand’s independence.

Why it matters

Ben & Jerry’s has, since its inception, regarded itself not only as a values-driven brand but even an activist. This has always been core to its image and, a useful consequence, a way to maximise the reach of its messaging beyond its media budgets.

But the different stances being taken here, amid reports of a rift with Unilever, reflect why keeping an activist brand independent to make its own decisions is good for both parties: the mothership is insulated from some of the smaller brand’s more contentious stances while keeping it open to capitalising from any reward should it lead to a bounce.

Where this is going

• The situation will remain complex. Some sources have pointed out that the move was less a considered stance and more of a reaction to heightened pressure both on the brand and on NGOs with which it collaborates following the violence in Gaza in May.
• Companies boycotting or withdrawing from trading in the Occupied Territories have seen mixed results. According to the liberal Israeli daily, Haaretz, a Dutch pension fund divested from Israeli banks that financed settlement construction. However, in 2018 Airbnb reversed a decision to remove listings in the West Bank following the threat of legal action.
• Ben & Jerry’s has spoken out about other countries’ politics, too. In 2020, the brand criticised the British home secretary’s calls for the Navy to stop migrants crossing the channel between France and the UK, drawing predictable rebukes from right wing media in the UK.

​Sourced from Ben & Jerry’s, Haaretz, WARC, BBC, Daily Mail

90% of brand TikTok videos have product placement

Almost all brand videos on TikTok feature a product, according to an analysis by video editor company InVideo.

Why it matters

Brands are giving more attention to TikTok as the platform's user base grows rapidly and popular strategies are emerging. While product placement is widespread on TikTok, just 4% of brand videos include a call to action, suggesting a tendency from brands to avoid explicit advertising and messaging.

However, the most common strategy (product placement) has one of the lowest average number of views per video. Instead, brand events are far less common but attract the most views.

Takeaways

• Nine-tenths (90%) of brand videos on TikTok had some form of product placement.
• Influencers and celebrities are also common, with a quarter of videos featuring an endorsement or collaboration.

Sourced from InVideo, WARC Data

Over 40% of UK marketing budgets are spent on digital

Digital now receives the largest investment of the UK marketing & communications budget: at 40.7% it has increased 18.5 percentage points since 2015, according to research company SCOPEN. 

The remainder is divided between above-the-line actions (37.5% of marketing budgets) and below-the-line (21.8%). The findings are contained in the 4th edition of SCOPEN’s AGENCY SCOPE UK 2021/22, published today in partnership with WARC and with the participation of ISBA members. 

Key findings 

• Digital budgets in the UK are higher than most of the markets in which AGENCY SCOPE is conducted (40.7% vs. 35.7% average investment from the ten market-benchmark). 
• Around six in ten marketers in the UK like to work with different specialist agencies for particular disciplines, while four in ten prefer to work with an integrated agency to solve all their marketing and communication needs under one roof.
• Pitching (92.6%) and Workshops (67.6%) are the most frequently used method to select an agency.
• Two thirds of UK marketing professionals say their procurement department is involved in the negotiation process. The involvement of Procurement has increased worldwide in the last few years but is highest in China (77.1%).

• Metrics and proving results remain a key challenge for companies (cited by 29.1%).
• Companies think the biggest challenges for creative agencies in the coming years will centre around being more innovative and able to deliver bigger creative ideas (29.0%) and having an understanding of different communication platforms and channels (20.2%).