Digital brands grow in different ways to those suggested by established marketing theory: it’s time to review the current model and recognise these new driving factors, says creative network R/GA’s global chief strategy officer Tom Morton in a WARC Exclusive.
Walmart sees diverse shopper response to inflation
Money & financeSupermarkets & grocery storesUnited States
Walmart, the retailer, is seeing diverse reactions from US shoppers due to rising inflation, as some trade down on grocery items while others snap up big-ticket items like gaming consoles.
Why it matters
Consumers are not a monolith, and a spike in the cost of living will impact people in varied ways. Marketers should aim to understand how their particular target audience is behaving instead of relying on assumptions.
Walmart reports consumer “strength”
John Furner, president/CEO of Walmart US, discussed how consumers are responding to inflation in a quarterly earnings call.
“We do serve a wide range of customers and certainly have seen strength in the consumer,” he said.
And Walmart is performing well across income groups: “We've seen strong growth with higher-income consumers, middle income, and lower-income [shoppers],” Furner added.
Consumer behaviours are inconsistent
Walmart’s insights are sufficiently granular that it knows many shoppers are switching from, say, full gallons to half-gallons of milk.
The company observed consumer switching when in categories like dairy, deli, bacon and lunch meat, with private-label goods often benefitting.
“[In] categories like Deli, lunch meat, bacon, dairy, where we see customers trading from brands to private brands,” Furner said.
At the same time, higher-priced items like games consoles are enjoying growth. Warmer weather is also boosting demand for items like grills and patio furniture.
“We see both of those things happening at the same time. But, as we reported strong topline results, we see a wide range of consumer behaviour,” said Furner.
Price rollbacks are popular
The company has introduced 10,000 rollbacks, with a focus on seasonal and general merchandise categories.
As well as the inflationary environment, these price cuts reflect improved availability of inventory, the company noted.
“The store is excited about the rollbacks and the customers are responding,” Furner said.
The big idea
“Where we see the switching from brands to private brands, we'll continue to watch that for a group of customers, but we've got to all work harder to keep prices low for the American consumer.” – John Furner, president/CEO, Walmart US.
Cycling, already having had a moment during the pandemic, has been given further impetus by a new Ford initiative and a UK campaign that aims to normalise the activity across age, sex and community.
When COVID lockdowns first struck, cycle stores remained open and rapidly sold out of stock as people invested in two wheels, partly to avoid the perceived dangers of public transport, partly to have an out-of-home exercise option. But as life has returned to normal, so too have ingrained transport habits.
Park the Car
The President of auto maker Ford Europe raised eyebrows recently when he announced his Park the Car initiative to encourage walking and cycling. Half of European car journeys are less than 5 km, he pointed out, and, especially in cities, can often be made by bike or on foot instead: that’s good for the environment (less emissions, fewer jams) and good for people’s health.
If we can, you can
Ford’s effort happily coincides with a UK campaign that wants to get everyone on their bikes. As a session at Advertising Week Europe heard, a big deterrent to cycling is that many people in the UK simply feel it isn’t for them – the MAMIL image persists – and isn’t all that safe.
A new ad from the Bike Is Best movement challenges those cultural perceptions, and, by showing a wide range of people in everyday cycling situations demonstrates that women, black people, older people, younger people – everyone – can cycle safely.
While the cycling industry doesn’t have a big advertising budget, it does see it as having an important role in helping inspire behavioural change.
“Enlightenment is coming – and it’s coming from organisations that have massive budgets, have done research and can see what's coming down the track” – Will Butler Adams, CEO, Brompton Bicycles.
New legislation heading to Congress with bi-partisan support would, in its strongest form, break up some of the biggest ad companies, but even a watered-down bill would have global implications for the advertising industry, not least a requirement for greater transparency – here’s what you need to know.
What it means
As the body with ultimate jurisdiction over California-based Google, if the US Congress enacts the law, known as The Competition and Transparency in Digital Advertising Act, the change to the digital advertising landscape would be massive. It wouldn’t just hit Google but would also force Meta and perhaps even Amazon to divest some of their ad products.
While a breakup of major ad exchanges (and supply and demand side platforms if they are all owned by one company) is the headline, many more firms would be affected by the Act’s efforts to combat lack of transparency in the market by forcing the disclosure of performance and transaction data to clients.
For Google, this is difficult news. It’s not the only instance of political heat heading for the company – whose presence across the ad process is, as one Google employee put it, as “if Goldman or Citibank owned the NYSE” – as it faces allegations that it exploits its inherent advantage both in the US and in Europe.
For a detailed snapshot of platform dominance, the UK’s Competition and Markets Authority (CMA) undertook an in-depth study into the online ad market, which WARC covered here.
Predictable resistance from online ad lobby groups throws up one of the most interesting aspects of this kind of legislation: the fundamental reinterpretation of what competition rules are supposed to do when users (not customers) pay nothing for the services we understand as the internet.
This is the trouble. Google and Meta make a huge amount of money offering ad services to small businesses that wouldn’t have advertised in the first place, and therefore open up a huge amount of opportunity.
Meanwhile, the programmatic ad market is already hopelessly opaque and complicated – few are satisfied that the ecosystem is the best it can be. And yet few clients want to see more fragmentation and more complexity.
What the law proposes
The core of the legislation is to prohibit large ad companies ($20 billion or more in ad transactions) owning more than one part of the ecosystem, according to the press release announcing the legislation on the website of lead sponsor Sen. Mike Lee (R., UT). But it also takes aim at a deeper opacity in the market.
This would mean different rules for different sized firms.
Companies dealing with $20 billion of ad transactions:
Ad exchanges can’t own supply- or demand-side platforms.
Supply-side platforms can’t also own demand-side platforms, and vice versa.
Buyers and sellers of digital advertising cannot own a demand-side or supply-side platform.
Companies dealing with $5 billion of ad transactions:
Must act in the best interests of their customers.
Must provide transparency to their customers so that those customers can verify they are acting in their best interest.
If they operate on both sides of the market, companies must erect firewalls to prevent conflicts of interest.
Must provide fair access to all customers with respect to performance and information related to transactions, exchange processes, and functionality.
Enforcement would come from the Department of Justice, states’ attorneys general, and includes a provision for clients to sue directly for violations at both the $5 billion and $20 billion levels.
“Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks. And at a time of heightened inflation, it would handicap small businesses looking for easy and effective ways to grow online”, a Google spokesperson argued to the Wall Street Journal.
“The real issue is low-quality data brokers who threaten Americans’ privacy and flood them with spammy ads”.
The IAB has also come out against the proposed legislation, arguing that “the market would lose the scale and precision the internet offers, ad costs would rise, and growth opportunities for brands and publishers would disappear.
“Small businesses and content creators across the country wouldn’t exist without integrated technologies helping them to attract and retain customers.”
Sourced from Sen. Mike Lee, Wall Street Journal, WARC
TV & Connected TV planning & buyingEurope (general region)
In terms of shifting viewing habits, Europe has much in common with the US, as consumers steadily move toward streaming, but connected TV (CTV) advertising is far more complex in Europe because it is not one, homogeneous market.
Why it matters
European brands have to figure out how the CTV marketplace works despite its complexity, or they will find it difficult to get the reach they need or leverage CTV’s enhanced targeting opportunities.
Retail sales in Britain grew in April, driven by supermarket sales of alcohol, even as consumer confidence was sliding towards a new low.
ONS data shows retail sales were up 1.4% in April (economists had expected a dip of 0.2%).
Supermarket sales of alcohol, tobacco and sweet treats were the main driver according to ONS (which could also indicate people not spending in pubs and restaurants).
GfK’s Consumer Confidence Index hit its lowest-ever point in May: -40 is even worse than the depths of the global financial crisis in 2008.
Inflation reached 9% in April; the Bank of England’s chief economist anticipates interest rates will rise further in order to bring it down from a 40-year high.
It’s not getting any better
The impact of rising National Insurance contributions and energy bills won’t have fully worked their way through in April’s retail sales figures. “The outlook for consumer confidence is gloomy, and nothing on the economic horizon shows a reason for optimism any time soon,” said Joe Staton, client strategy director, GfK.
Sourced from GfK, Financial Times
20 May 2022
A genderless future: Beauty and the young Thai adult
A genderless future: Beauty and the young Thai adult
Diversity & portrayal in advertisingCosmetics, beauty aidsToiletries & cosmetics (general)
New research by agencies i-dac (Bangkok) and MI Group investigates the impact of gender-neutral trends on Thai consumer attitudes toward "beauty", providing marketers with insight into the next big thing in beauty advertising.
Why it matters
By keeping beauty communications genderless and focusing on defining beauty as “self-care”, brands can connect with more potential consumers in a category that has been traditionally female.
Self-focus and self-care are strong traits seen among young adults, who prioritise their own physical and mental well-being before looking after those in their family or social networks.
Brands must consider developing gender-neutral brand activities to create brand relationships with both men and women.
They should position beauty as part of self-development because for consumers, beauty isn’t just about how they look but about being well-groomed and respectable adults.
To continually grow the fan base and turn it into sales and repeated conversions, brands can maintain momentum of their communications by routinising beauty behaviours and inspiring its fans.
In-store experiences complemented with social commerce and e-commerce activities can trigger more purchases.
Offline media drives “explosive discovery”, while digital media is ideal for “quality reach and engagement”.
The joint research by digital communication and technology agency i-dac (Bangkok) and media agency MI Group reached out to Thailand’s urban straight men 16-30 years old with middle-to-upper-class household income who regularly use makeup and with at least three types of women’s cosmetics, and urban women 20-35 years old with middle-to-upper-class household income who regularly use makeup and are passionate about K-pop culture, through an online quantitative survey of 414 target consumers (201 males and 213 females), with the findi
Brands and sustainability: The many points of intersection
There is no question that sustainability needs to happen and Indian brands looking to embark on their sustainability journey can leverage on four different dimensions.
Why it matters
Sustainability can be built into the brand journey through communication, new product development, manufacturing, and the sourcing of materials, but for a brand to be truly sustainable, it cannot focus on just one aspect.
Kroger/Roku partnership is example of targeting at scale in CTV
Brand partnershipsUsing customer dataOnline video planning & buying
The partnership between streaming platform Roku and Kroger Precision Marketing (Kroger’s retail media arm) proves that in connected TV advertising, scale doesn’t have to be sacrificed for targeting.
Why it matters
Even though many brands look to CTV to deliver on the targeting more commonly associated with digital advertising, they may also need it to drive scale, as viewers move away from linear TV. Partnerships that do both are worth studying.
Understanding the emotional impact of music on advertising
EmotionMusic & soundCreativity & research
Music influences mood and can play an important role in advertising; a new study quantifies the subconscious impact of music – and, crucially, how it differs from the conscious response.
Why it matters
The effectiveness of music in advertising to reinforce the mood or narrative of the message being delivered depends on emotional synchronisation with visual content to optimise the desired subconscious response.
Following a 12-month research project* by sonic branding company SoundOut, in partnership with the Music, Mind and Brain Research Group of Goldsmiths, University of London, brands can now begin to develop strategic plans for when and how to use music at both a conscious and subconscious level to produce the emotional impact they want to achieve.
The right music can increase the emotional response to a video by up to 16.4%, depending on the emotional attribute being evaluated.
Music is particularly powerful in changing the emotional response for some emotional attributes – like Peaceful, Intense and Defiant – but less so for others – like Technical, Spontaneous and Simple.
SoundOut is launching a fully benchmarked suite of technology tools to enable brands to identify the best music choices for brand and marketing impact at both a conscious and subconscious level.
Further analysis of the project, its findings and outputs will be presented in the following free-to-attend webinars hosted by WARC:
Unlocking the Subconscious Power of Music 1: New Discoveries in Testing (Wednesday, 25th May, 3-4pm BST). Register here.
Unlocking the Subconscious Power of Music 2: Optimising the branding/marketing music mix (Wednesday, 1st June, 3-4pm BST). Register here.
*The project involved individually testing over 3,000 audio/video and audio/image pairings alongside silent control videos in over 100,000 consumer tests where participants were asked to rate the video (not audio) across a standard inventory of emotional attributes.
Mars Petcare has taken five of its brands into the direct-to-consumer (DTC) space over the past two years and it’s been a steep learning curve.
Why it matters
DTC is more than just another sales channel. Get it right and you understand customers better and serve them better, leading to more valuable long-term one-to-one relationships. But also accept that DTC may not be right for your brand.
The ‘shape’ of attention, rather than duration, may matter most
Behavioural researchBiometric researchAttention
A greater understanding of the ‘shape of attention’ may supplant attention seconds as the basis for attention measurement in the media industry, new research suggests.
The six shapes of attention
In a new WARC Exclusive, Amplified Intelligence CEO and founder Professor Karen Nelson-Field and data scientist Hayun Jung outline how, when reviewing attention data based on gaze or facial recognition, six systematic clusters of viewing behaviour can be found at an individual view level.
These clusters appear when considering the interplay between different features of viewing. Some shapes drive brand choice (lower funnel) while others drive mental availability (upper funnel), even if the absolute number of active seconds is the same. The shapes include:
Long Look – The longest opportunity-to-see time, with 1.5x probability of active attention occurring than passive attention (mobile specifically).
Like Glue – Complete concentration on ad view (only 2% of sampled ad views).
High Flyer – A high attention peak during opportunity-to-see time.
Flicker – Relatively long opportunity-to-see time, with shifts between passive and active attention.
Scroller – Fast scroll speed with mainly passive attention.
Super Scroller – Shortest opportunity-to-see time and fewest active attention seconds, indifference to ads.
Why it matters
Each platform and format has a unique attention profile made up of different proportions of these shapes, which is why even if active attention seconds are similar, one will perform better. An understanding of these attention shapes can guide advertisers to bid only for the attention required for their campaign objectives.
Brands and sustainable marketing: What Indian corporates must do
The key to understanding the future is sustainability and corporate India has a pivotal role to play in society’s embrace of sustainability values.
Why it matters
Brands that strive for sustainability will futureproof their reputation and get ahead of the curve, while media has a role to play in inspiring, influencing, and enabling organisations and stakeholders to embrace measures that can be a positive force for change.
Ad industry leaders’ fine words on empathy aren’t cutting it with staff, as new research from Australia indicates an “empathy gap” between those at the top and middle managers/junior staff.
Why it matters
Workplace wellbeing shot to prominence during the pandemic and lockdowns, as many people struggled to cope with fear, grief, isolation and burnout. Issues around diversity and inclusion have also risen up the business agenda in response to campaigns like #Black Lives Matter. But the findings of this study from the Mentally Healthy Change Group into empathy within the media, marketing and creative industry, based on a survey of more than 500 people, suggest that companies’ actions may often have been more about ticking boxes than genuinely addressing the issues. Creating a sense of disillusionment among staff is hardly the way to retain them at a time when it’s difficult to recruit people in the first place.
The great majority of people surveyed (86%) said empathy at work was personally important to them, but only 38% believed their employer valued empathy.
The main barriers to empathetic workplaces were time pressures (80%), a focus on client satisfaction over employee satisfaction (68%) and lack of understanding of the role of empathy and business metrics (66%)
Seven in ten (70%) respondents in leadership roles felt they worked in an inclusive workplace compared to only 55% of respondents on middle or junior levels.
Half (51%) of respondents were considering leaving in the next 12 months, rising to 61% among more junior staff.
The big idea
Empathy in the workplace is seen to bring real benefits including better collaboration between teams, improvement in job satisfaction and a more inclusive work culture.
“It appears respondents are not always seeing empathetic intentions modeled because often 'the business comes first'. Indeed, the stronger the belief that a business puts profit first, the stronger the likelihood for people in the company to want to leave” – Andy Wright, co-chair of the Mentally Healthy Change Group and founder of Never Not Creative.
TV channels, services, programmesTV & Connected TV planning & buying
Disney+, the new titan on the streaming block has explained what advertising will actually look like on the platform.
Why it matters
Home to Marvel, Star Wars, and most of your childhood viewing, the prospect of advertising on Disney+ is tantalising, especially as the service continued to post stable subscriber growth (over 6% in the Q2) in what has been a difficult market. Advertising is expected to open it out to a vast new audience of viewers.
Bottom line seems to be that Disney’s highly controlled ad product will prioritise quality over quantity.
What they’re going to do
Show four minutes of ads per hour (versus around 18 to 23 on traditional TV)
The reincorporation of ads is similar to the eventual strategy of a lot of news brands: ads and subscribers can mix, and not only that, ads shown to signed-in, verified users are far more profitable.
Nevertheless, Netflix’s upcoming ad offer has been read as the company on the ropes. Its CEO has his past anti-ads hubris to thank for that. So if you take one thing from this, it’s to never say never.
But from an advertising perspective, this is a way into previously unavailable premium media. It will also be a fascinating snapshot into the kinds of effect that ads on streaming platforms can offer.
Frequency capping in a post-cookie media ecosystem
Data protection & privacyUsing customer dataReach and frequency, recency
The withdrawal of third-party cookies poses a serious challenge to frequency capping, risking increased user fatigue from repeated ad exposures, and potentially compromising advertiser ROI.
Instead, advertisers must explore alternatives including frequency management on a publisher-by-publisher basis, estimating capping on probabilistic signals, and browser-level capping via initiatives like Google’s Privacy Sandbox.
Destinations and locationsTransport & tourism (general)Asia (general region)
Tourism and international travel is picking up across Asia as borders reopen and COVID testing requirements are lifted – welcome developments for a sector that now has to reassess its marketing approach.
Why it matters
During lockdowns when no one was travelling, tourism brands had little option but to focus their continued marketing efforts on brand-building and other upper-funnel activities. Now that travel is a realistic option once again, they need to switch attention to lower-funnel activity to capitalise on what they can expect to be a lot of pent-up demand.
The industry is stirring
Tourism bodies across the region are ramping up their promotional efforts, Campaign Asia reports – an important step in giving confidence to travel brands and operators.
Travel ministers from ASEAN countries, including Singapore, Malaysia, Indonesia, Thailand, the Philippines, Cambodia and Brunei, have pledged to work together to rebuild air travel in the region post-COVID.
Japan has announced it will trial package tours of foreign tourists to see how well travel agencies can “manage behaviour”, the Straits Times reports.
Tourists have changed
Returning tourists are likely to have a subtly changed outlook – still conscious of things like hygiene but also more conscious of issues around sustainability. Travel brands will need to find a balance between safety and inspiration.
Tone is important
“Tourists want to feel welcome at these places and not be reminded of the difficulties of the past two years. They want campaigns that are optimistic and upbeat” Anish Daryani, president of M&C Saatchi Indonesia.
Sourced from Campaign Asia, Straits Times [Image: Getty]
Rising raw material prices and high inflation are pushing India’s fast-moving consumer goods (FMCG) brands to shrink pack sizes in order to maintain crucial price points at the same time as they are cutting back on advertising.
Why it matters
Keeping a product’s price constant but reducing pack sizes – so-called shrinkflation – is a frequent response by manufacturers at such times. Dabur India’s CEO recently spoke of the need to “protect sacred price points like Re 1, Rs 5 and Rs 10", especially in rural markets.
Urban markets, with higher incomes and spending power, are more likely to see price increases on large pack sizes.
Businesses are also adopting “bridge-pack” strategies, which offer the consumer slightly more volume but at a higher price.
As profit margins are squeezed, FMCG companies are also becoming more cautious about advertising expenditure, with observers suggesting many are cutting spend by up to 15%.
"Most FMCG categories have lower unit packs of Re 1 to Rs 10 accounting for 25 to 35 percent of their sales. Even when downtrading happens, the consumer remains with the brands” – Abneesh Roy, ECP Edelweiss Financial Services, speaking to Economic Times.
Sourced from Economic Times, e4m, Financial Express [Image: Getty]