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CMOs adopt ‘low risk, low return’ strategies for 2021

Almost three-quarters (73%) of chief marketing officers in North America, the UK, France and Germany intend to play it safe by relying on existing customers to fuel growth in 2021, according to a new survey from research firm Gartner.

Its inaugural CMO Strategic Priorities Survey 2021, which is based on responses from 381 CMOs in September and October 2020, suggests they will take a low risk approach this year following a tumultuous 2020 even though many would like to rescale their marketing strategies.

Key findings

• When asked “what is your company’s primary strategy to fuel growth in 2021?”, 39% of CMOs said they plan to increase sales of existing products to existing customers, while 34% intend to introduce new products to existing customers.
• Just 18% said they would enter a new market using existing products, while 7% said they would enter a new market by introducing new products. Zero sales growth was anticipated by 1% of CMOs.

Recommendations for 2021

• Gartner advised CMOs to be more selective in what strategies they choose to reinvent, rescale, reduce or retire, and to focus their efforts on what is most essential in the short-term.
• They should document their decision-making process to reassure fellow managers that marketing’s priorities are focused on the highest possible returns.
• CMOs are also encouraged to draw up formal scenario and contingency plans which can be adjusted as the year progresses.

Key quotes

“Focusing on existing customers has a number of benefits for CMOs, namely being low cost and low risk. But low risk is matched by relatively low return” – Jay Wilson, VP analyst in the Gartner Marketing practice.

“CMOs must try to avoid reinventing the wheel in 2021 and remember: For every strategy you rescale, you must choose another to reduce or retire. For every strategy you try to reinvent, another must return to pre-pandemic levels and approach” – Augie Ray, VP analyst in the Gartner Marketing practice.

Luxury brands tap the influence of Korean TV dramas

Korean TV dramas, popularly known as K-dramas, are becoming an increasingly important channel for luxury brands to connect with consumers, not just in South Korea but across the wider Asia-Pacific region.

Hit shows that feature luxury goods are benefitting brands ranging from French accessories label Roger Vivier to Belgian handbag brand Delvaux and Boon the Shop, the South Korean clothing retailer.

Top tips

• Netflix, which has signed up to releasing more than 40 K-dramas to its users by 2022, is a key choice for marketing budgets, but brands need to be careful to bet on the right show and ensure their strategies for K-drama deliver good return on investment.
• Apart from investment in traditional celebrity endorsement and brand ambassadors, sponsorship of popular shows, which few luxury brands have opted for in the past, is expected to become a major area of growth, with US jeweller Tiffany & Co. leading the way.

Key quote

“If you want to go nationwide and reach out to [viewers in their 30s and 40s] who actually spend a lot of money, dramas play a more powerful role than social media” – Stephanie Kim, Korea country manager at Roger Vivier.

_{[Image: Teemah, Creative Commons]}

News Media Bargaining Code fight escalates with Facebook, Google ultimatums

Social media giant Facebook has added its voice in opposition to the proposed News Media bargaining Code (NMBC), saying it would have to prioritise other markets and stop hosting news in Australia; Google, meanwhile, has said it would need to pull out of the Australian search market.

Why it matters

Termed blackmail by one senator, the escalation of now both companies’ opposition to a law that would vastly strengthen the position of news media companies against platforms, is a significant new step.

The talk from the platforms comes during a week that Google agreed to pay French publishers for news, and struck a global deal with Reuters. While Facebook agreed a deal in December with a handful of UK newspapers.

Bottom line

A compelling read comes from the New York Times, which suggests that the companies' concern is less about payment, and more about having to pay publishers on terms other than their own.

Critics such as Sir Tim Berners-Lee argue  that as it stands the law could set a dangerous precedent over payments for linking, links being the basis of an open internet.

It’s an important argument, given that Google and Facebook (with its coming News product) don’t simply link and provide traffic to news publishers; they slightly repackage or reframe the news in order to add a richer experience. It’s this experience that they advertise against.

GMI indicates collective approach to pandemic paid off in APAC

During 2020, WARC’s Global Marketing Index saw the strongest recovery in the APAC region, reflecting the success of the measures taken to reduce rates of COVID-19. 

The regional headlines 

• While APAC showed the greatest rates of decline early in 2020, the region ended the year with the highest GMI value at 62.4 in December. Since an index value above 50.0 indicates growth – 50.0 indicates no change, below 50.0 indicates decline – APAC is showing a strong rate of growth going into 2021. 
  
• Europe was the only region to start the year in growth, but after the global decline between March and September has shown the slowest recovery, ending the year just in growth at 50.9. 
• The index for the Americas indicated the fastest recovery, returning to growth in October (56.3).

Why it matters

The COVID-19 pandemic has impacted economies globally, but countries across regions reacted differently. Many countries in APAC implemented strict lockdowns early in the pandemic in an attempt to cap the spread of the virus, enabling a return to more ‘normal’ conditions going into 2021. 

Key numbers

• The index for marketing budgets saw both lifetime high (57.8) and low (13.4) values during 2020.
• Digital and mobile budgets managed to bounce back from temporary decline ending the year at 67.4 and 67.0 respectively in contrast to radio, OOH and press.

China tech giants criticised over use of AI

Chinese tech giants are coming under pressure over their use of algorithms and artificial intelligence, which campaigners say are placing consumers at a disadvantage.

As reported by Caixin, the China Consumers Association (CAA) produced a 14-point document earlier this month, outlining how data-driven algorithms allegedly restrict the rights of consumers in their dealings with large tech firms.

This has come amid a broader national conversation about how tech giants use technology to control information and leverage access to personal data for commercial gain.

Highlights of the CAA report

• The CAA claims that too often complex sales promotions obscure the true cost of a product and that negative reviews can get hidden, while targeted search results create an ‘information asymmetry’ that leaves consumers ‘bullied’ by data-based algorithms.
• Also of concern to the CAA is the practice of ‘algorithmic price discrimination’, where the personal data of an online shopper is used to calculate different prices for different individuals based on what they might be willing to pay.

Recommendations

• The CAA wants a special organisation to be established to regulate the ethics of algorithms and to investigate “unfair” practices that involve them.
• It also calls for tech giants to be forced to turn over their proprietary algorithms to regulators in the case of disputes.

Key quote

“At the moment I don’t think there’s a clear threshold on what’s healthy and what’s not – anything goes. What’s needed is to define what’s healthy, what’s acceptable, and then enforcement” – Nicolas Bahmanyar, data privacy consultant at Leaf law firm.

UK sees six-year leap in e-commerce, ahead of China and the US

E-commerce's share of retail sales reached new heights in 2020 as a result of the coronavirus (COVID-19) pandemic and this look sets to continue, according to a WARC Data analysis of data from national statistical organisations.

Why it matters

Shopping online was an area of strong and sustained growth in 2020. As this looks set to continue, brands need to deliver a seamless online customer experience in order to attract and retain consumers.

Takeaways

• As a result of this growth in e-commerce, brands are expected to increase their e-commerce advertising budgets by 24% this year.
• This should be focused on the "movable middle", as consumers with a 20-80% probability of purchasing will be most valuable.

Sourced from WARC Data, ONS, National Bureau of Statistics of China, Eurostat, US Census Bureau, METI, Statistics Canada, IBEF

DMA Grand Prix: BT Sport organic creativity to spur growth

Against a backdrop of steep budget cuts, UK-based pay-TV brand BT Sport was able to create and ride a wave of conversation by writing the script of the 2019/20 football season using AI, growing subscriptions by almost a third.

Why it matters: The channel, a relatively young challenger in the British sport broadcasting game, and its work reflects the value of a conversation-starting creative idea to force-multiply media spend.   

Details:

• The plan, hatched by agency Wunderman Thompson, was to create a 60-page dossier – a script of the season – compiled in association with data titans like Google Cloud, Opta and Squawka.
• Opta sports data, modelled analysis by Squawka and Google Cloud's platform worked with Wunderman Thompson to write and design the script.
• It was released to pundits, players, influencers, journalists – and the nation – before any paid advertising went out.
• The paid media activation was an Unscripted DOOH campaign, sparking huge conversation up and down the land.

Bottom line:

With vast amounts of organic coverage, doubling the paid media budget, and engagement, BT Sport was able to grow its subscriptions 30% year-on-year.

Viewers’ facial expressions can indicate sharing potential for video ads

Understanding facial expressions, such as smiles and nose wrinkles, can help marketers assess the likelihood of a consumer sharing a video ad, according to a study published in the Journal of Advertising Research (JAR).

Daniel McDuff (Microsoft Research) and Jonah Berger (The Wharton School of the University of Pennsylvania) discussed this subject in a paper entitled, Why do some advertisements get shared more than others? Quantifying facial expressions to gain new insights.

Headline findings

• Smiles were found to be most “positively and most strongly associated with sharing”, with a 30% increase in smiling associated with a 10% lift in willingness to share.
• A lip corner depressor, associated with sadness, and a furrowed brow, linked with confusion, were both “negatively associated with sharing”.
• Nose wrinkling, associated with disgust, was “positively associated with sharing”, indicating that specific negative emotions can encourage this activity.
• Smiles recorded at the end of a video had an “even more positive effect” on sharing than the favourable impact delivered by smiles at the start of a piece of content.

The big idea

“Most advertisements already try to make people smile, but the current findings suggest that certain negative emotions, such as disgust, may boost transmission as well” – Daniel McDuff, Microsoft Research, and Jonah Berger, The Wharton School of the University of Pennsylvania.

Audi, BMW car subscriptions hint at stumbling block for new model

News that the German carmakers have each drawn their subscription service trials to a close in the US hints at the complexity of transitioning from ownership to access business models.

Why it matters: In 2019, subscriptions were the future in almost every sector. The retreat of the two companies from their US trials suggests that this isn’t a universal business model to replace ownership just yet.

Reported first by automotive blogs and The Next Web, it would be a mistake to take retreat as a total defeat, especially considering that Audi was working in the large and car-focused state of Texas, while BMW was operating in Nashville, Tennessee.

One conclusion could be that lockdown measures and increased home working has lessened the demand for car use, especially when intended to mix with other transport or mobility options.

In other parts of the world, such as the actively car-hostile Amsterdam, subscription services have worked well. Though it’s interesting that the companies who have made it work have focused on subscriptions rather than a mix alongside traditional ownership.

The other explanation is that, as Oliver Wyman found in 2019, the majority of users (54% in the US) want to pay less than $500, which means that for many people, ownership is still far more viable.

Tubi racked up viewership in 2020

Tubi, the streaming service owned by Fox, reported a sharp rise in viewership during 2020 and a near doubling of streaming hours; it now has 33 million monthly active users. 

The details

• Viewership was up 58%; viewers are, on average, 20 years younger than those of linear television and nearly half of MAUs are under the age of 35.
• Many of those can’t be reached through cable TV; Tubi claims an 80% incremental audience to the top 25 cable networks.
• It also reports a representative Hispanic audience (Index 101) and an even larger African American audience (Index 167).

Takeaway

As the effects of the pandemic bite and many people have less money to spend, they are turning away from cable TV and SVOD and opting instead for ad-funded streaming platforms.

Procter & Gamble outlines consumer habits that will survive the pandemic

Procter & Gamble, the consumer packaged goods manufacturer, believes that a variety of habits that have taken root during the COVID-19 pandemic will have long-term staying power.

Why it matters

The COVID-19 pandemic has boosted demand for household, health and hygiene goods, but marketers in these sectors need to understand which behaviors might endure, and those which are temporary in nature.

Several months of lockdowns, anxiety surrounding personal health, and occasional product shortages have led to a demand spike in a variety of P&G’s major categories, providing a boost to offerings from Tide laundry detergent and Ivory soap to Gain dishwashing liquid and Febreze air fresheners.

“Those increased levels of consumption are accompanied in many cases by new habit formation or habit strengthening,” Jon Moeller, P&G’s chief operating officer and chief financial officer, explained on a quarterly earnings call.

”Unfortunately, we've not been at this for four weeks or eight weeks where … behavior might snap back to pre-crisis levels. We've been at this on a global basis, even in the US, for a year. And that does tend to form habits, which means some higher level of consumption should continue to occur post-crisis.”

Takeaways

• While people will revel in freedom from lockdowns, the comforts of home are set to have an even greater importance than before the crisis.
• Health and hygiene is an area where consumers have necessarily placed greater focus due to the spread of Coronavirus, and this habit can be expected to outlast the pandemic.
• For a house of brands like P&G, categories that have struggled during the peaks of COVID-19 could be critical to driving post-crisis growth, when pent-up demand is unlocked.

IPA Bellwether: UK marketing budgets continue falling, recovery expected in 2021

As expected, UK marketing budgets continued to decline into Q4 2020, though less sharply than in Q3, but with recovery on the horizon, marketers are echoing consumer sentiments of macro gloom while also being more positive about the prospects for their own company.

What it means 

The turmoil of 2020, where lockdown restrictions actively shut down certain advertising formats (such as cinema), appears to be edging closer to equilibrium in 2021. Greater positive sentiment, despite a strange macro picture, suggests that brands are planning to lay the foundations for recovery.  

Details

• A net balance of -24.0% of panellists from the Institute of Practitioners in Advertising's (IPA) latest Bellwether Report logged a contraction in marketing budgets during the final quarter of 2020.
  
• Just 16.4% of firms noted an increase in available funds.
• Some 40.4% of firms experienced a decline.

Looking ahead to 2021

• The coming financial year, 2021/22, is more optimistic, with a net balance of +12% of firms expecting total marketing budgets to be revised upwards.
• Interestingly, optimism abounded when panellists talked about their own company's prospects, with a net balance of +18.1% of firms now more confident of an improvement, compared to -3.9% three months ago.

Analysis: What the WhatsApp exodus says about trust

The backlash against the popular messaging app’s privacy policy changes won’t destabilise either WhatsApp nor parent firm Facebook, but it points to the high cost of trust when you haven’t built it – Sam Peña-Taylor.

On Saturday, the Financial Times reported that Facebook-owned WhatsApp would be delaying the privacy policy changes that had sparked outcry from users and led many to at least introduce themselves to smaller rivals able to tout their privacy credentials more compellingly. The reversal, the company says, is at least partly to “clear up the misinformation” around its privacy policies.

It is true that fears got ahead of facts, especially around sharing message content, which WhatsApp itself can’t access, let alone Facebook. But behind every widespread rumour there’s the kernel of a deeper truth.

WeChat racks up $250 billion in transactions in 2020

Products worth almost $250 billion were sold last year through WeChat, the Chinese messaging app, more than double the year before.

Transactions were via WeChat’s “mini programs”, which allow brands to sell services and products directly to app users, TechCrunch reports.

The details

• Interest in the use of mini programs shot up as brands looked to e-commerce to counter the drop in sales when physical stores closed during the pandemic.
• Mini programs have now expanded to cover a wide range of WeChat users’ everyday needs, with transportation, department store shopping and sporting goods especially popular.
• The number of active daily users was over 400 million by December last year, the company says, up from 300 million the year before. WeChat has 1.2 billion monthly active users.
• The number of mini programs used by each user was up 25% during the year. 

The context

The numbers signal Tencent, WeChat’s parent company, is a growing challenger to the e-commerce sector’s well-established giants, which include Alibaba, JD.com, and Pinduoduo.

Analysis: Lessons in out of home from the Media Awards’ Data winners

WARC’s Chiara Manco looks at 2020 WARC Media Awards winners that have used data to inform innovative out-of-home strategies.

Among winners of the 2020 WARC Media Awards’ Best Use of Data category, were many examples of effective uses of out of home. From the informative to the emotive, they show how data can enrich out-of-home communication through contextuality and personalisation.