WARC Rankings 2023: Effective 100 revealed

McDonalds is the number one most effective brand in this year’s WARC Effective 100, joining FCB New York, Wavemaker Mumbai, WPP, and AB InBev in this year’s top spots.

The WARC Effective 100 Ranking is produced by combining the results of the industry’s most important global and regional effectiveness award shows of 2022. The awards tracked are determined by a global industry panel survey and consultation with the WARC Rankings Advisory Board.

#1 Campaign for effectiveness: Contract for Change for Michelob Ultra by FCB Chicago and FCB New York

The most awarded campaign for effectiveness is ‘Contract for Change’ by FCB Chicago and FCB New York, for which Michelob made the US agricultural sector more sustainable by creating a programme that incentivised farmers to become organic growers. 

Andrés Ordóñez, Chief Creative Officer, FCB Chicago, said: “Creativity has the power to grow businesses and also to fuel change. We are beyond proud that Michelob ULTRA’s ‘Contract for Change’ was named the top campaign for effectiveness by WARC. This work has the power to reverse the damage done to our farmland and ecosystems and to create a healthier diet for millions of Americans.”

#1 Creative Agency for effectiveness: FCB New York 

After entering the top 10 for the first time last year, FCB New York has risen from #7 to become the top creative agency. It had three campaigns in the top 100 including the #1 campaign, Contract for Change.  

Ranked second is Alma Miami, the most improved agency, rising from 45th last year. In third place is Energy BBDO, Chicago, a new entry to the Effective 100 Ranking. 

# 1 Media Agency for effectiveness: Wavemaker Mumbai

Up from fifth position last year to claim top spot, Wavemaker Mumbai’s best performing campaign was ‘Not Just a Cadbury Ad 2.0’, ranked second this year. Mindshare New York entered the top ten to claim second place, up from #17 last year. Zenith Bogotá is ranked third.

#1 Digital/Specialist Agency for effectiveness: Semetis, Brussels

The highest ranked agency is a new entry - Semetis Brussels. Its top ranking is down to its work on The Breakaway for Decathlon, which ranked third. 

Narrative Los Angeles, jumps up from 41st to claim second place. Taking joint third position are BlueMedia Shanghai, up from #40 last year and new entry WeberShandwick Singapore.  

#1 Network for effectiveness: Ogilvy

After nine years of placing in the top five networks for effectiveness, Ogilvy has risen one place to become the #1 network for the first time ever. The network has nine campaigns in the top 100 and seven agencies in the creative agencies ranking.

DDB Worldwide moves up from fifth to take second place this year with a total of seven campaigns in the top 100 and three creative agencies and two digital/specialist agencies ranked in the top 50. Leo Burnett is in third, rising from 9th last year. The network has nine campaigns and three creative and one digital/specialist agencies in the top 50. 

#1 Holding Company for effectiveness: WPP

WPP has ranked in first place for the fifth consecutive year, with nine networks in the top 50, including Ogilvy in first place. The holding company has now claimed top position across all three WARC Rankings.     

“We're extremely proud to have topped the WARC Media 100, Creative 100, and now the WARC Effective 100 lists for 2023”, said Mark Read, CEO, WPP.

“Our strong agency representation across the three rankings showcases both the power of our ideas and the strength of our partnerships with clients. This recognition from WARC is a great endorsement of our amazing teams and their ability to deliver creative and innovative work that has a transformative impact around the world.”

Omnicom Group is in second place and Interpublic Group in third.

#1 Brand for effectiveness: McDonald’s 

McDonald’s is the highest ranked brand for effectiveness for the fourth year in a row, accruing more than twice the points of second place. Three of its campaigns ranked in the top 100 and 35 more campaigns from 24 different countries contributed to its total points. 

KFC moves up one place to be ranked second and Cadbury’ in third, moves up from #17 last year.

#1 Advertiser for effectiveness: Anheuser-Busch InBev

After topping the advertiser ranking for effectiveness for the first time last year, Anheuser-Busch InBev has retained its position. It had four campaigns ranked in the top 100, three of which are from Michelob Ultra. 37 other brands contributed to its total points including Corona, Cerveza Presidente and Pony Malta.

Climbing up two places from last year, McDonald’s claims second place and Unilever comes in at third. 

#1 Country for effectiveness: USA

The top three countries have remained the same for the past three years, with the USA claiming first place, followed by China in second and India in third. The USA has 25 campaigns in the top 100, while China and India had four each.

The WARC Effective 100 is available to  view in full here, and includes the world’s top 100 awarded campaigns for effectiveness, top 50 creative, media and digital/specialist agencies, agency networks, brands, advertisers, countries and top holding companies. The campaigns, case studies, credits and subsequent insights reports are available to WARC Creative subscribers.

The WARC Creative 100 and Media 100 were revealed recently.  

WARC Rankings 2023: Media 100 revealed

Cadbury is the number one brand for media excellence in this year’s WARC Media 100, in which Unilever tops the advertiser rankings, and EssenceMediacom leads the networks with its New York office the standout agency.

The WARC Media 100, an independent global benchmark celebrating advertising media excellence, is produced by combining the results of the industry’s most important global and regional creative award shows of 2022. “This year, the top campaigns aimed to inform and educate through strong media strategies,” says Amy Rodgers, head of WARC Creative. 

#1 Campaign for media: Break of Silence for INLesco by PHD San José

The most celebrated campaign for media of 2022 is ‘Break of Silence’ for INLesco, a sign-language school in Costa Rica. The country’s first silent TV commercial break, interpreted in sign language, was aired to raise awareness of the challenges facing the deaf community and drive change across the country. 

In second place is ‘Beyond the Surface – Liquid Billboard’, the world’s first swimmable billboard created by Havas Dubai for adidas, to encourage women in Dubai to feel comfortable swimming in public. Ranked third is ‘Versus’ for skincare brand SK-II for which EssenceMediacom Singapore / Grey Tokyo created an animated series in which each episode addressed social issues such as cyber trolling and beauty rules. 

#1 Agency for media: EssenceMediacom, New York 

Taking the top spot, EssenceMediacom New York has three campaigns ranked in the top 100, including campaigns for Ally and Walgreens, which took fourth and seventh place respectively. 

Joining the global Media 100 for the first time, Havas Dubai’s highly successful Liquid Billboard campaign for adidas pushed the agency straight into second place. PHD San José climbs to third, up from 25th last year. 

#1 Network for media: EssenceMediacom

Following a highly successful year, the newly merged media agency tops the network table with six agencies ranked in the top 50, four of which are in the top 10, including EssenceMediacom New York in the top spot. Overall, the network has 14 campaigns in the top 100.

PHD Worldwide moves up one place to claim second position with six agencies in the top 50 and nine campaigns in the top 100. IPG Mediabrands is in third, up from fourth last year, also with six agencies and 10 campaigns ranked.

#1 Holding Company for media: WPP

The top seven holding companies are the same as last year, with the top three remaining unchanged for the sixth year in a row. WPP sits comfortably at the top of the ranking, with four networks ranked in the top 10. Omnicom Group is in second place and Interpublic Group in third.

#1 Brand for media: Cadbury 

Cadbury, ranked 45th last year, takes top place for media excellence. The chocolate brand has four campaigns in the top 100 for the India and UK markets.

New to the global Media 100 ranking, SK-II comes in second with two campaigns listed, including its multi award-winning Versus campaign ranked third. Sportswear brand adidas has moved up to third place, from sixth last year.

#1 Advertiser for media: Unilever

Unilever tops the advertisers table for the fourth year in a row, with 15 brands contributing to its overall tally; two – Dove and Lifebuoy – were in the top 50. 

In second place, Mondelēz International has achieved its highest ever ranking in the Media 100, up from 20th last year. In third place is Anheuser-Busch InBev with four brands earning points: Corona, Vickys, Brahma and Carling Black Label.

#1 Country for creativity: USA

USA remains in first place for the sixth year in a row, with 14 campaigns in the top 100 having run in the country. Two made the top 10 – Fintropolis by Ally and Vaccine Readiness Model by Walgreens. 

The UK sits in second place for a third year. India moves up from fifth place to claim third. Germany has achieved its highest ever ranking, rising from 11th to fifth, and the United Arab Emirates is the most improved country, rising from 16th to sixth, its highest ranking in five years. 

The WARC Media 100 can be viewed in full here. It includes the world’s top 100 awarded campaigns for media, top 50 agencies, agency networks, brands, advertisers, countries and top holding companies. The campaigns, case studies, credits and subsequent insights reports are available to WARC Creative subscribers.

The WARC Creative 100, revealed recently, can be viewed here. The WARC Effective 100 will be announced on 21 March.

WARC Rankings 2023: Creative 100 revealed

Burger King is the number one brand for creativity, while WPP tops the holding company rankings, Ogilvy leads the networks, and Publicis Milan is the most creative individual agency in this year’s WARC Creative 100.

The WARC Creative 100, an independent global benchmark celebrating marketing’s creative excellence, is produced by combining the results of the industry’s most important global and regional creative award shows of 2022. A strong theme of promoting societal concerns through creativity is evident across the top campaigns. 

#1 Campaign for creativity: The Lost Class for Change The Ref by Leo Burnett Chicago

The most creatively celebrated campaign of 2022 is ‘The Lost Class’ for Change The Ref, created by Leo Burnett Chicago to raise awareness about mass shootings. A ceremony was held for the 3,044 high school students in the US who didn't graduate in 2021 due to tragically losing their lives to gun violence. 

#1 Agency for creativity: Publicis Milan 

Publicis Milan tops the table for the second year in a row with four campaigns for Heineken and one for Bottega Veneta among the top 100 campaigns.

Area 23, New York, jumped from 32nd last year to claim second place with four campaigns in the top 100 for a variety of brands covering different product categories. BETC Paris is in third place with three campaigns in the top 50.

#1 Network for creativity: Ogilvy

Ogilvy was the most awarded network for the third year in a row, with 40 different agencies contributing to its total, including five agencies in the top 50. Furthermore, it was responsible for 10 of the top 100 campaigns.

DDB Worldwide moves up one place to claim second position with four agencies in the top 50 and seven campaigns in the top 100. FCB, in third, is up from sixth, also with four agencies and nine campaigns ranked.

#1 Holding company for creativity: WPP

Up from second position last year, WPP returned to the top of the holding company table with seven networks in the top 50 and two networks in the top 10: Ogilvy and VMLY&R.

#1 Brand for creativity: Burger King 

For the fifth year in a row, Burger King tops the brand table. It has four campaigns ranked in the top 100 by three different agencies; the joint highest of any brand alongside Heineken, in second place, which also had four campaigns ranked. Google climbs up from 31st last year to claim third place.

#1 Advertiser for creativity: AB InBev

After topping the advertiser table for the first time last year, Anheuser-Busch InBev remains in first position. The brewing giant has three brands in the top 50: Corona, Michelob Ultra and Budweiser, and four campaigns in the top 100.

Unilever and Restaurant Brands International swap places this year, with the multinational consumer goods company moving up to second place and the fast food company moving down to third place.

#1 Country for creativity: USA

The top five ranking countries remain the same as last year, with the US and UK maintaining their positions for the past nine years. India is the most improved country, climbing from 23rd to seventh.

WARC says 

“In an industry that sometimes struggles to defend its place in the C-suite, the rankings offer an opportunity for marketers to reflect on the best campaigns in the business and to review the impact their own work has on their brands” – Amy Rodgers, Head of WARC Creative.

The WARC Creative 100 Ranking can be viewed in full here. It includes the world’s top 100 awarded campaigns for creativity, top 50 creative agencies, agency networks, brands, advertisers, countries and top holding companies. The campaigns, case studies, credits and subsequent insights reports are available to WARC Rankings subscribers.

The WARC Media 100 will be announced on 14 March and the WARC Effective 100 on 21 March.

India’s celebrity ad culture remains film-focused

Three in 10 TV ads in India last year featured celebrity endorsements and the majority of those came from film stars, according to a new report from TAM AdEx. 

The audience measurement company’s Celebrity Endorsement Report found that, among celebrity-endorsed ads, 85% featured film stars, and female actors were more prominent – in 46% of ads compared to 39% for male actors.

Why it matters

Marketers need to understand what approach works best in which channel. A recent study suggested brands were turning towards the use of micro-influencers on social media as they tend to have higher engagement rates. 

When it comes to TV, however, celebrities still have clout. In fact their use has increased in recent years: from a base year of 2020, celebrity-endorsed ads increased 44% in 2021 and 60% in 2022. 

Takeaways 

• Celebrity-endorsed ads account for between 7% and 10% of monthly ad volumes, appearing to peak around the beginning and end of the IPL.
• Sports stars account for just 11% of celebrity-endorsed ad volumes. MS Dhoni was the most visible sports person and also the celebrity endorsing the most brands (52). 
• Akshay Kumar (pictured) topped the list of the most visible celebrities through endorsements done on TV – visible for an extraordinary 36 hours every day across all channels, almost twice as much as Vidya Balan, the next on the list. 
• More than half the ads endorsed by celebrities fall into three categories: Food & Beverages (26%), Services (13%) and Personal Care/Personal Hygiene (13%).

Sourced from TAM AdEx

[Video still: Akshay Kumar for Berger Paints]

Subscription economy more resilient than expected

Subscription-based companies have grown faster than the S&P 500 over the past decade and did so again in 2022, says a new report.

The 500-plus companies in the Subscription Economy Index (SEI) report, compiled by Zuora – a supplier of subscription management software – experienced 3.7x faster growth rates than the S&P 500 over the past 11 years. Last year, the SEI experienced 12% revenue growth compared to 10.6% in the S&P 500, despite economic headwinds.

Context 

Businesses and consumers grappled with inflation, ongoing supply chain disruptions, rising geopolitical tensions and the continued threat of Covid-19 variants in 2022. The result was often tighter budgets and a difficult year. 

Why it matters

The latest SEI report shows recurring revenue businesses – including those in SaaS, Media and Manufacturing – continue to grow by acquiring new customers, retaining existing ones and expanding revenue with new add-ons and packages.

Takeaways 

• Subscriber acquisition is trending up since pandemic lows: companies acquired new subscribers at higher rates in 2022 compared to the two years prior. 
• Churn rates remain relatively consistent: SEI average quarterly churn was 6.36% in 2022 compared to 6.13% in 2018.
• Average revenue per account (ARPA) growth slowed in 2022, decreasing from 1.89% in Q2 to 0.97% in Q4. This can happen when companies offer customers the flexibility to downgrade or pause their subscriptions, or when using promotional pricing to attract new subscribers. 
• SaaS outperformed other SEI sectors in terms of cumulative revenue growth in 2022, with 12.3% revenue growth on average.

 Sourced from Zuora

Ad industry needs to cut carbon emissions from travel

There is a huge opportunity for carbon reduction in the process of ad production around the world, according to AdGreen, a UK body working towards a sustainable future for the industry. 

AdGreen’s first Annual Review, based on data collected from 515 assorted ad projects across 2022, gives a snapshot of the industry while also calling for data collection and analysis from a higher volume of campaigns.

Why it matters

Significant changes to ad operations are crucial for the industry to meet its net zero target, including fresh approaches to travel and transport, and renewable energy choices in production facilities and locations. 

Key stats

• 2,446 tCO2e (metric tonnes of CO2 equivalent) were emitted in 2022 from 515 completed projects (for comparison, the average annual carbon footprint of a person in the UK is 13 tonnes).
• Travel and transport accounted for most of the emissions as a result of all recorded activities (62.4%). Energy and fuels used to power spaces accounted for almost a quarter (24.6%), materials for 12.4%; the activity area with the least impact was disposal, at just 0.6%.
• For the four projects sitting at over 100 tCO2e, 74% of emissions came from travel and transport, with 49% from air travel alone. As these projects are indicative of the work being created by many large ad campaigns, the total impact of flights taken for production work across the industry will be significant. 
• For projects with shoot days recorded, the mean impact per shoot day was 2.2 tCO2e.

AdGreen says 

“It’s clear that engagement is needed from organisations working on larger scale productions so that we have a more even picture. As more of these larger projects are recorded in the tool, we expect the average project size to rise, along with the other related datapoints” – Jo Fenn, Global Director of AdGreen.

The carbon calculator 

AdGreen’s Carbon Calculator allows users to work out the carbon footprint of motion, stills and audio projects in advertising campaigns, and to assess the environmental impact of production activities. “The ability to calculate and predict the potential impact of production choices on emissions creates the opportunity for an active discussion right at the start of the process, rather than just reporting and mitigating at the end,” says Sebastian Munden, chair of Ad Net Zero.

Sourced from AdGreen

Boom times for India’s influencer community

The number and influence of India’s content creators continues to grow post-pandemic and they are attracting brands which see a way to engage with new audiences at relatively little cost.

Why it matters

Brands in India continue to make heavy use of celebrity endorsements. A study ranking the brand value of Indian celebrities, by valuation advisory firm Kroll, estimates that the overall value of the top 25 in 2022 was US$1.6bn, up 29% on the previous year (the figures are derived from brand endorsement portfolios and relative social media presence). The report also noted the rise of South Indian movie stars and sports celebrities.

But such big stars tend not to attract significant engagement rates on social media, unlike nano-influencers and micro-influencers. A separate Kroll study, cited in Quartz India, suggests that many brands are now turning to this level of influencer ahead of the top tier as they get a higher return on investment.

Takeaways

• There are around 80 million content creators in India – including video streamers, influencers, and bloggers – and the creator industry is forecast to grow 25% to reach $290m by 2025.
• More than a third of Indian brands have doubled their budget for social media influencers over the past year, according to Kroll. 
• Marketers are diverting digital spending into regional language campaigns with micro-influencers. 
• In one survey (by digital marketing agency iCubesWire), the buying decisions of a third of respondents were driven by influencer posts, reels, and videos on popular social media platforms.

Key quote 

“Influencers will need to self-regulate and participate in policymaking to ensure a positive impact on the industry. More types of content creators will enter the space and the number of influencers will spike in 2023” – Vijay Subramaniam, CEO and founder of talent management company Collective Artists Network.

Sourced from Quartz India, e4m

Grocery e-commerce sees major growth

Online grocery spending has grown by over 300% in the US over the last four years, according to new research. 

Comscore’s 2023 State of Digital Commerce Report* found that digital commerce sales in 2022 surpassed $1 trillion for the first time in the country's history.

Why it matters

Grocery e-commerce surged during the early stages of the Covid-19 pandemic and is now embedded into the shopping routine for many consumers, but to maintain and grow this audience, brands and retailers in this space must understand consumer’s specific preferences and establish a connection that goes beyond purely functional appeals.

The numbers

• US grocery e-commerce was valued at $64bn in the final quarter of last year, compared with $15bn in the same period in 2018.
• Unsurprisingly, grocery e-commerce was among the top-grossing digital categories in the first year of the Covid-19 pandemic.
• Since Q1 2020, grocery spending on mobile devices has continued to exceed other categories, such as apparel.

Building a habit

• Ian Essling, senior director of Survey Insights at Comscore, said the growth of online grocery was not only about current buyers “doing it more often”.
• New users who have “tried it out”, Essling explained, are also contributing to greater demand having grown to appreciate the benefits of buying in this way.
• These shoppers believe that “just because they then have the ability to go to the grocery store doesn't mean that they should put all of their spending back in person,” he said.

*Read the full report, ‘Mobile, social help power digital commerce growth’, on WARC.

Tesla price cuts crash second-hand market

Cuts to the price of Tesla vehicles are not only incurring some anger from earlier buyers but are also hitting the value of second-hand cars, with knock-on effects on financing models in some markets. 

What’s happening

Data from industry pricing agency CAP HPI, reported in the Financial Times, indicates that the value of second-hand Teslas in the UK has declined sharply since the brand began cutting the price of new models, first in China late last year, then in the US and Europe at the start of this year. 

For example, a Model 3 bought in the UK in January this year stands to lose 47% of its value by January next year; that compares with a 4% fall over 12 months for the same model bought in September 2021.

While the figures refer to the UK market, the story within the industry is that there’s a similar picture in other countries.

Why it matters

As Tesla models are depreciating more quickly than rival EVs, the FT explains that this could make its new cars more expensive in the sort of financing deals that are already common in the UK and gaining traction in other markets. 

Personal Contract Purchase now accounts for around three-quarters of all new car sales in the UK. This involves paying instalments that cover only a part of the cost of a new car over a three-year contract, with an option to purchase outright at the end of that period. 

The state of the second-hand car market will dictate the value of equity a buyer holds in their vehicle at the end of the contract and that money can either reduce the final payment if purchasing, or be rolled over as a deposit for another new vehicle. Lower second-hand prices mean bigger payments. 

Elon Musk’s decision to cut the price of new cars to encourage more buyers is having consequences – did he even think about these? – further down the line. It’s notable that competitors have resisted following suit precisely because they want to avoid hitting the second-hand market. Ultimately, the price cuts start to affect the perception of the brand and its desirability. 

Musk famously does little or no marketing for Tesla but it’s arguable that now might be a good time to start, seeing automotive advertising as value preservation.

Sourced from Financial Times

[Image: Tesla]

How a sign language school topped the WARC Media 100

A small sign language school in Costa Rica had a limited advertising budget, but that didn’t mean it was constrained in making an impact for the country’s hearing-impaired population – in fact, quite the opposite.

The background 

Alongside agency partner PHD Costa Rica, InLesco collaborated with some of the country’s biggest brands to launch the first TV commercial break in sign language and top the WARC Media 100 for 2023.

Alan Vainrub, CEO of PHD Latin America, emphasized the importance of creativity, collaboration and teamwork in creating a stand-out media campaign that made a hugely positive impact for InLesco.

“We worked on it really hard. It was complicated to put this together, and to actually make it happen and to see the effects that it had, especially on the InLesco sign language school, and then the snowball effect it had with advertisers. The awards and global recognition is really something special for us,” the CEO told WARC.

“There are no sign language interpreters in most schools or in advertising at all in Costa Rica. We definitely thought that we had to do something about it, and to help them increase their enrolment in the school, but also make a difference, in terms of how the advertising industry can make a difference and can include more people,” Vainrub added.

The execution

• InLesco understood that for deaf people to be included in conversations, those who hear must also be able to speak sign language.
• To do this, InLesco created the first silent three-minute commercial break in which all commercials were dictated in sign language.
• InLesco and PHD convinced the top television network in Costa Rica to run the commercial break and got the five top advertisers to join the cause, of which 10% of investments went to scholarships for InLesco students.
• The campaign reached 12% of the Costa Rican population, increased enrolment by 117%, and increased scholarship applicants by 20x during the campaign.

Why it matters

Small budgets don’t necessarily have to mean small ideas: creativity was the ‘secret sauce’ to breaking through to a mainstream audience who didn’t know much about sign language.

“I think you have to be as creative as you can. In media, creativity is key to actually make that leap from something small to something amazing. It’s about creativity and, at the same time, being true to the core of your brand,” Vainrub said.

Takeaways

• Try to look for simplicity in making something big, and always think about what's core to the brand.
• Collaboration, teamwork and hustle is essential to bring in partners that can make an even bigger impact.
• Small budgets don’t have to mean making a small impact.

Ukraine and Germany’s ‘fear economy’

The Ukraine war is contributing to a strong sense of uncertainty about the personal and collective futures of German consumers and leading to the emergence of a “fear economy” – one driven more by expectations and fears than by today’s reality.

That’s the conclusion of research undertaken for WARC, by Dr Peter Steidl of neuromarketing business Kochstrasse, as part of a new Spotlight series on the impact of the war in Ukraine. The report is based on a survey of 1000 people in Germany in February 2023. (Read more here.)

Takeaways

• While some consumers are relatively indifferent or complacent, 33% are overwhelmed with fears about the potential impact of the war on them personally and on their country, both in the near and longer term, and another 27% are mainly fearful of the impact on them personally.
• The greatest fears are for their personal financial situation and quality of life, now and in the future; 30% are strongly convinced the Ukraine war will force them to reduce their spending.
• Consumers are looking for strong leadership, an escape from stress, to support those who speak out and demand action, and the company of others.
• The message for brands is that in times of great insecurity, anything that promises respite from fear, or an even fleeting sense of control, will be welcome.
• This can be achieved through tactical communications and promotions, but the bigger opportunity is for brands to step up and take a leadership position on something that matters. Authenticity and creativity will be key to developing compelling new ideas that offer hope that they will make a difference.

Why it matters

The war – along with climate change, the refugee crisis, political upheaval, inflation and the legacy of the pandemic – is having a significant impact on buyer behaviour in Germany. Dr Steidl suggests that we’re witnessing a shift from a growth economy to a “fear economy” and that marketers need to align their strategies with this rapidly changing market environment and move to exploit significant opportunities for demonstrating brand leadership.

Why APAC marketers need to master three balancing acts

Marketers across the Asia Pacific region need to rebalance their marketing strategies for a complex, post-pandemic retail landscape, according to a new report from WARC and Google. 

Retail’s balancing act: your guide to sustainable performance says that digital is likely to be the foremost playground for consumers to interact with brands, making it important to understand how to navigate this transition.

Why it matters

As businesses respond and rapidly digitise their operations to keep up with new ways of shopping, the shift has created new opportunities for retailers to connect with their customers online and leverage data-driven insights to cater to the omnichannel consumer. 

“But this shift also means balancing an intricate web of factors to respond to the pressures on profitability,” notes Ed Pank, managing director of APAC & VP Advisory, WARC. 

Takeaways 

• Balance investments over the long and short 

Choosing between long and short-term strategies, namely brand and performance marketing, is a ‘false dichotomy’ that does not enable sustainable brand growth and profit. Both tactics are complementary and needed for successful marketing; marketers should find the balance between the two in order to maintain consumer demand.

While brands may be tempted to discount to secure short-term wins, marketers should invest in brand equity to deliver value, build trust, and loyalty to create future demand. 

• Balance the use of brand.com and marketplaces

The proliferation of emerging digital channels and touchpoints, such as brand.com and marketplaces, has provided brands with exciting new creative playgrounds to experiment with, but it also means more channels to trial and evaluate with limited resources. 

In Southeast Asia, marketplaces account for 75% of all post-pandemic online spending and 55% of shoppers utilise brand.com along their path-to-purchase journey.

To ensure ROI, marketers will need to consider budget and find the right balance across platforms to leverage both marketplaces and brand.com. 

• Balance the intricacies of omnichannel

Omnichannel shoppers have proven to be higher value customers, bringing in 1.5 to 2.1x more value than non-omnichannel customers. To achieve omnichannel excellence, brands must break down silos and evolve legacy staffing models, both of which are barriers to getting a holistic view of the customer.

Creating a holistic measurement program is a starting point for marketers to gain insight into the multitude of touchpoints, known as the ‘Messy Middle’, that are most effective in driving consumers into a purchase decision.

One way to achieve holistic measurement is by adopting Marketing Mix Modeling (MMM) techniques, which allows marketers to measure the impact of their campaigns and determines how various channels contribute to their goals.

A complimentary copy of the report, which includes expert insights from Castlery, FairPrice, Intel, Merkle, Shopee and The LEGO Group, and case studies from Honda, IKEA, Juzt Jelly, Nestlé, Uber Eats and Unilever, is available to download here.

Xiaohongshu wields ‘grassplanting’ power

Xiaohongshu, the Chinese app which describes itself as a ‘lifestyle bible’, continues to attract brands thanks to its ‘grassplanting’ appeal. 

Why it matters

Zhongcao means ‘planting grass’ and is Chinese internet slang for the experience of seeing a product owned by others and immediately wanting it too. It’s a trend that preceded livestream shopping and that is still relevant on a platform like Xiaohongshu, which has successfully fused social media and e-commerce.

In fact, the model has proved so successful it’s been copied by TikTok owner ByteDance and launched overseas: the Lemon8 app was soft launched in the US and UK earlier this year and is reported to be paying creators to post on it.

Takeaways 

• Xiaohongshu presents an idealised urban lifestyle, covering everything from skincare routines and weekend brunches to foreign holidays. It’s the “ the go-to guide on how to live better by buying more”, according to Rest of World. 
• Xiaohongshu has 200 million monthly active users, with around 70% being women under the age of 30. Around half its users come from first- and second-tier cities. 
• For many of these users, Xiaohongshu is their primary search engine. 
• Some observers are concerned about the level of expectations and consumerism being generated by influencers.
• An expanding user base has meant communities have formed around interests other than just shopping. 

Key quote

“At first, Xiaohongshu was about showing off a privileged life, and making everyone else want that. As more creators join, they are bringing new hobbies and styles to the app” – Luo Kai, co-founder of Shanghai-based influencer agency Tomatogo.

Sourced from Rest of World, Gizmodo

[Image: Xiaohongshu]

Who pays for an AI’s training?

ChatGPT and Google’s Bard need lots of information, much of it gathered from professional publishers who need to protect their businesses, raising questions of who owns the data that trains large language models. 

Solving this problem will be a critical aspect of the coming phase of commercial AI.

Why it matters

Generative artificial intelligence chatbots don’t yet have an obvious business model, but the potential costs of providing them continue to grow. OpenAI has piloted a subscription service for power users, but will that scale? Google’s Bard and Microsoft’s ChatGPT-integrated Bing are chasing the next phase of search, albeit one in which the model of ad-funded sponsored links will come under significant strain. What happens then?

A bigger question surrounds the information that was used to train the AI, often professionally created images and writing, and who pays for it when the point of access is a chatbot’s response rather than a site visit. Who gets to profit from the results?

In its totality, the story indicates how pervasive the effect of successful AI could be. For publishers, it may or may not change the writing operation, but it’s likely to affect its core advertising businesses if successful.

Visitations

The big issue for publishers is the potential evisceration of a page-visit-dependent online advertising model. “Clearly, [the AI companies] are using our proprietary content – there should be, obviously, some compensation for that,” said Robert Thompson, CEO of News Corp, at an investors’ conference reported by the Wall Street Journal. 

In action

The question has already reached the courts. In January, Getty Images took legal action in the UK and US against Stability AI, alleging that its text-to-image Stable Diffusion tool had infringed on its intellectual property rights. The suit is likely to be foundational to the question of fair use in the AI era.

The question gets really knotty when third parties, like brands or TV production companies or even rival publishers, start to integrate AI into their work. The cases are likely to take months if not years to take place, likely far too slow for the revolution that might take place. But users in commercial settings should understand that these questions will need answering eventually, even amid the fog of AI excitement.

The way of the internet? 

This is not just a question for the AI era. During the tussle over Australia’s News Media Bargaining Code – a set of collective rules for publishers that other governments around the world are also considering – the issue of platforms like Google listing answers to users’ searches as well as links to websites was a vital argument in favour of payments for the use of publishers’ content.

Google (through Google News Showcase) and Microsoft (through MSN) are likely to have some existing relationship with publishers, but these tend to be major publishers with clout; the fate of smaller players is much more uncertain. The US is now considering a bill to allow publishers to bargain collectively and is expected to contain AI provisions.

Sourced from WSJ, WARC, OpenAI

Brands see growth in TikTok user interaction

Users of TikTok, the short-form video app, are responding in greater numbers to posts from consumer goods and retail brands, according to report* from research firm Comscore.

Why it matters

TikTok is becoming a platform for new product discovery and purchase, with users posting their purchases under the viral hashtag ‘#TikTokMadeMeBuyIt’ and brands setting up TikTok Shopping. Understanding the app’s influence on social commerce can help brands maximise their marketing efforts on this platform.

Takeaways

• TikTok had 207 million actions – defined as the sum of likes, shares and comments – in the consumer goods category in 2022.
• The figure represents growth of 33% in two years, as the app saw 156 million actions relating to content from the consumer goods category in 2020.
• The retail category had 62 million actions in 2020 on TikTok; that number had grown to 155 million in 2022.

*Read the full report, ‘Mobile, social help power digital commerce growth’, on WARC.

What's happening to John Lewis?

Not only is retailer John Lewis looking for a new creative agency, it’s also looking at a new ownership structure that may forever change how it’s viewed by loyal shoppers and remove an important point of differentiation.

Context 

In recent years, John Lewis has been uniquely successful among department stores. Others have gone into liquidation (eg Debenhams in 2020) or administration (House of Fraser in 2018, before being bought by Sports Direct), but the retailer to the UK’s middle classes has navigated the choppy waters of the high street. Until now.

Covid clearly had a major impact, with eight stores not reopening in 2021 when pandemic restrictions were lifted. But there have been other signs that things were changing, including plans to move into the residential rental market. 

The marketing angle 

In August last year, John Lewis retired its long-running “never knowingly undersold” policy, first introduced in 1925 and a “cherished sign of trust”, executive director Pippa Wicks acknowledged at the time. She added that the pledge no longer “fit with how customers shop today as more purchases are made online”.

Then in February this year, the advertising world was caught off guard when the John Lewis Partnership decided to call a pitch for a new creative agency, effectively ending its longstanding and fruitful relationship with adam&eveDDB.

Now, a few weeks later, the news that the 100% employee-owned business could sell off a minority stake to raise money for investment has some observers concerned about what retail consultant Mary Portas calls “the soul of the brand”. 

More than a shop

Andy Street, a former managing director of John Lewis who is now mayor of the West MIdlands, told the BBC that such a change would be a “tragedy … because I think John Lewis goes a bit beyond a shop”.

The retailer, he suggested, was “about a way of doing business, showing the market there was a better way almost – and that’s potentially under threat”.

Why it matters

John Lewis holds a special place in the UK retail landscape, one that’s been built over many years through a combination of its price promise, its customer service and its treatment of associates (not “employees”). All of that is now at risk as it sets about addressing a £234m loss in 2022. But, Portas told the Guardian, the fight is not just financial.

“The battle in hand is far more nuanced. It’s about what makes up the soul of [the] brand. The intangibles, the shared beliefs, the beautiful things that can’t be captured in financial projections but earn a little space in people’s hearts.”

Sourced from Guardian, BBC, John Lewis, The Drum, Marketing Beat

[Image: John Lewis]