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Tag: Brian Wieser

  • Brian Wieser on the impact of US Capitol Insurrection last week on the media

    The Insurrection & The Media

     

     

    By Brian Wieser

     

    Key takeaways from this week’s note:

    • Twitter’s permanent suspension of U.S. President Donald Trump’s account in the aftermath of this week’s insurrection in Washington, D.C. is an important and necessary action. Beyond helping to limit real damage to people and society, it will help to improve the platform as an environment for brands.

     

    Unfortunately, this was the most newsworthy issue of the past week. The Donald Trump-inspired insurrection and related fatalities in Washington D.C. on Wednesday was an unfortunately unsurprising consequence of many years of extremist rhetoric and misinformation.

    While the individuals who originally conveyed knowingly false information certainly bear the bulk of the blame, they would not have been as likely to succeed if they did not have some means of amplification.

     

    Over the past decade, in many countries around the world, misinformation has been widely shared and violence has been directly encouraged or organized by individuals using social media platforms. There are signs of changes to limit related content, but more still needs to be done. Historically, platforms often tolerated incendiary content and, in many cases, they amplified it. Efforts intended to address negative consequences have broadly been insufficient.

    News on Friday that Twitter would permanently suspend U.S. President Donald Trump’s personal account, along with separate reports that Apple and Google are threatening to ban Parler from their app stores, was a significant illustration of an enhanced focus on addressing the problems that have followed.

    On the other hand, for however many actions platforms take, problematic activities will likely continue to originate on social media because small percentages of lesser-known users can still equal millions of individuals or more than enough people to inflict significant harm to societies.

    What will catalyze the platforms to pursue more impactful changes?

     

    Sufficient force probably won’t come from consumers, who don’t generally pay for access to social media in the first place. Consumers have not significantly altered their reliance on these platforms and don’t seem likely to change their habits in meaningful ways any time soon. Social media’s underlying algorithms are undoubtedly effective at contributing to usage even among consumers bothered by what they know about the problematic content on the platforms.

    But why is this?

    Is it because consumers don’t consider the possibility that their activities and consumption patterns may partially enable the presence of conspiracies consumed by others?

    Or because they know platforms broaden the availability of hate-inspiring content but accept this reality as a trade-off to access the content they believe they need?

    Or perhaps because they typically only see their feeds and generally agree with what they see and determine that the problems are due to other users?

    Whatever the underlying reason, consumers are not likely to force platforms to take comprehensive actions.

     

    How about advertisers? Not likely here, either. Advertising collectively enables the good and the bad associated with social media, as there is virtually no other revenue stream for these media owners.

    Advertisers’ historical efforts to force platforms to eliminate the bad, however well-intentioned, have proven to be insufficient because even very large groups of budget-holders are far too fragmented to make much of an impact on companies with millions of individual customers.

    The vast majority of marketers have generally decided that, if audiences are using these platforms, it’s reasonable to try to reach consumers where they are regardless of any indirect or long-term consequences that may follow. If users don’t abandon the platforms and don’t attach negative considerations to sponsoring brands, it’s hard to imagine noticeable spending changes.

    Of course, brands still need to consider long-term implications.

    In the same way they can be connected to positive societal outcomes associated with the media owners they support; they can also be connected to negative social consequences enabled or encouraged by those same companies. At a minimum, marketers can ensure they limit the degree to which their brands are attached directly to problematic content on short notice with rapidly implemented “circuit-breaker” processes to pause spending or enhance content filters at sensitive times.

     

    Government may offer one partial solution to the problem. In a potentially ironic coda to the Trump era, the events in D.C. could contribute to increased interest among legislators in repealing Section 230 of the Communications Decency Act, as this would potentially expose platforms to financial consequences if they are deemed to have enabled or failed to prevent harm.

    Ensuring that platforms hosting or amplifying content that brings harm to individuals bear some financial or other legal consequences would likely deter much of the problematic activity on those platforms.

     

    These platforms need to take even more responsibility, too. They could choose to make changes themselves, if only out of the self-interest of preferring to operate in a society driven by fact and with less civil strife. Certainly, we can view Twitter’s actions on the Trump account through this light.

    More generally, if they want to continue to ensure they provide an environment for everyone to share content, they could choose to host problematic content without supporting the mass distribution or sharing of that content.

    Perhaps they could formally authorize only a select number of people—again, as determined manually by the platform itself—to benefit from automatically amplified content. Such solutions would undoubtedly be costly, although not necessarily prohibitively so, and probably would reduce usage.

     

    Perceived costs would not be as severe as the platforms (and investors) think they are. They likely deter change, but we would argue they shouldn’t. Platforms tend to believe that reduced usage levels would lead to reduced advertising revenue, based on the flawed premise that a change in supply directly causes a change in demand for a medium.

    Although this can be true in very broad strokes—a medium with 10x more or 10x less consumption will undoubtedly see an impact on total spending—within most realistic ranges, spending on a platform would be unchanged if usage falls.

    Of course, there could be an impact on the share of advertising inventory a given media owner has to sell within the medium; this would have a revenue impact for any given company. The impact, however, would likely be modest.

    More importantly, lost consumption from reduced amplification of incendiary content could be partially offset by increased consumption by consumers who have been bothered enough by what happens on the platforms to stay away from them. This is especially true for individuals who have been trolled or who hear hateful content directed to them.

    Brands that want to minimize their exposure to toxic content might also feel more favorably disposed toward media owners who don’t tolerate it and allocate relatively more money to those media owners as a result.

    In the case of Twitter specifically, we would expect that a reduction in incendiary content will make the platform more favorable to its advertiser base, given their larger-brand skew.

    Of course, social media platforms aren’t the only media companies transmitting the misinformation or incendiary content that is so damaging to societies. Content supported by advertising and consumers’ subscription fees on radio, television and streaming services plays a significant role.

    Over many years, every packager of incendiary content could more aggressively attempt to limit its production and distribution. At least they should because the aggressively oriented elements of modern society are unfortunately unlikely to back down on their own any time soon. Responsible citizens, social media companies and companies of all kinds should do everything they can to avoid enabling them.

     

    Brian Wieser is Global President, Business Intelligence, GroupM. Republished from https://www.groupm.com/global-marketing-monitor-weekly-market-trends-jan-9-2021/

  • Changes in the way business is conducted have forced marketing to rapidly transform itself, writes Brian Wieser of GroupM

    The Great Shift, Given Covid

     

     

    By Brian Wieser

    The Covid pandemic, as it has with nearly every other business around the world, has completely upended the way we perceive the limitations on ways business can be conducted, and the way marketers can interact with their audiences. The use of virtual sales channels and other digital transformation strategies have undergone remarkable acceleration.

     

    All of these changes have forced marketing to rapidly transform itself, all without the aid of any playbook or standard operating procedure.

     

    This publication serves as a guide for how Covid has shifted the landscape for four major sectors (Auto, CPG & E-comm, Telecom and Financial Services) and another (Entertainment) where the industry has gone through significant change and, as a result, we must alter the way we think of them as sources of inventory. Each section ends with some critical takeaways for marketers.

     

    Some key takeaways:

    :: Auto has rebounded from 40-45% declines at the low point in April to current levels of flat or better.

    > Car manufacturers have shifted to direct online relationships with consumers.

    > As a result, it will be vital for them to invest heavily in consumer insights to integrate new desired experience from customers in the buying process.

     

    :: CPG manufacturers experienced a significant transition in how their products are sold, leading to a 277% increase in retail sales via e-commerce channels for food & beverage and health & personal care companies in 2Q20.

    > Manufacturers relying primarily on third parties like Amazon or other online retailer.com-like sites will find tremendous opportunities in prioritising investments in DTC initiatives since consumers are more primed than ever to buy online.

     

    :: Telecommunications consumers have exponentially increased internet usage – telco has responded with faster, more robust broadband services to support working or schooling from home and streaming service growth to telehealth needs, e-commerce and contact tracing systems.

    > IoT connectivity is more favourable for mobile carriers because network improvements like 5G will enable wireless communications companies to offer today’s home-based services on a more equal footing.

    > Reliability, ease of use, access to additional services, etc., will become even more important as those get reinforced by ongoing consumer interactions.

     

    :: Financial Services has fared well during the pandemic, aided by liquidity from central banks from around the world paired with new government-backed loan programs and stimulus payments made to consumers.

    > Banks have served as a digital role model for other industries with more digitally focused services into their product portfolios, if only because most of what banks offer, including trustworthiness and perceptions of durability and, are mostly virtual.

    > Banks will need to sustain their investment in branding to reinforce trust, as well as heavy investment in data-related infrastructure

     

    :: Entertainment, particularly streaming services, soared in large part because spending on content packaged by streaming services has been growing much more rapidly than spending on content packaged by incumbents.

    > Going forward, studio owners will need to invest heavily in capabilities to aggregate and analyse data to understand consumers’ content and platform preferences, optimising assets accordingly.

     

    Brian Wieser is Global President, Business Intelligence, GroupM. Republished from https://www.groupm.com/the-great-shift/

  • Brian Wieser looks at leading trends related to small and medium-sized businesses given the Covid-19 pandemic

    SMBs: Transforming Businesses, Transforming Advertising

     

    By Brian Wieser

     

    We review key trends related to small and medium-sized businesses (SMBs) during the pandemic. The shifts these marketers are taking to survive now and, ultimately, thrive in the future are a window into the business transformations larger businesses will also take, if they haven’t done so already.

     

    Small businesses have been hit hard during the pandemic.

    It has often been said that small businesses are the lifeblood of an economy. While the reality is that small businesses have generally been losing share of economic activity to larger ones over time, they retain a significant amount of importance. In the United States, small businesses – defined here as companies with fewer than 500 employees – account for approximately 40% of total payrolls and 47% of total employment, according to our analysis of U.S. Census Bureau data.

    With the pandemic disproportionately hurting small business because of their relative lack of capital, policies designed to help ensure they are positioned to quickly recover are particularly critical in preventing long-term disruption to the economy. In the United States and countries around the world, hundreds of billions of dollars of loans have been authorized specifically to address this issue. Whether or not policies will be successfully administered or sufficient in scale remains an open question.

     

    Companies with less than $50 million in revenue average $10k in ad spending, account for greater than 20% of total ad spend and a greater share of digital and print.

    How small businesses fare is not only important for the general economy; it is important for the health of the advertising industry and marketers as well.  According to our analysis of 2014 data from the IRS in the United States, the most recent year data was available, companies with less than $5 million in annual revenue—and average spending on advertising amounting to $5,000 annually—accounted for 10% of total ad spending. Companies with less than $50 million in revenue, where average ad spend was $10,000 on average accounted for 21% of economy-wide ad spending. Our guess is that that share likely rose in subsequent years.

    Most importantly, these companies accounted for substantially higher shares of spending on print and digital media given the relatively low price points at which advertising can be purchased in most instances. Their presence matters to larger advertisers because the capacity of many of their media channels to thrive is at least in part also dependent upon the health of smaller businesses.

     

    The ongoing economic driven downturn appeared ready to pulverize the media owners that small businesses depend on, but their spending may not have declined by as much as we might have expected. 

    However, something somewhat unexpected happened during April: they evidently did not cut their spending by as much as we might have expected. Data provided during Facebook’s recent earnings results indicating “approximately flat” trends during the first three weeks of April represented an approximate reduction of around -20% to -25% from the pace of growth observed during the first couple of months of the year. Spending trends were similar between large and small advertisers alike.

    By contrast, other digital media owners whose revenue bases are more heavily skewed away from small businesses, appear to have experienced more significant rates of deceleration or decline.  While depth and breadth of data and targeting capabilities undoubtedly helps to capture a large share of performance-advertising budgets from marketers of all types sizes, it is hard to ignore that Facebook is a primary seller of media for many small businesses (along with Google, which also saw a similar pace of deceleration during March at least).  To the extent that small businesses make up a larger share of Facebook’s revenues than other digital media owners, we have at least one indication that small business have been disproportionately resilient as advertisers during the pandemic, at least on digital media.

     

    The expansion of e-commerce activities by small businesses reflected in Shopify data probably helps to explain this trend.   

    E-commerce has plainly expanded at an accelerating clip around the world. For example, Amazon’s online stores saw growth of +25% during the first quarter, ahead of the fourth quarter’s +15% pace. Comments from most of the world’s largest marketers have generally reinforced this view in comments on their own e-commerce sales. Was it also true that the same trends occurred for small businesses?

    Anecdotally, most people can probably describe a favorite local store that closed but who made their products available for sale online in some form. And, as it turns out, data from Shopify – whose customer base is heavily skewed toward small businesses – supports this notion. While smaller than Amazon – whose total global GMV (including its own sales and marketplace sales) was well above $300 billion last year – Shopify’s base of GMV last year of $61 billion is primarily small businesses.

    During the first quarter of 2020, Shopify GMV accelerated to grow by +46%. While GMV through point-of-sale channels using Shopify declined by -71% between March 13 and April 24 relative to the comparable six-week period immediately prior, retail merchants managed to replace 94% of lost point-of-sale GMV with online sales over the same period. A range of other notable statistics provided by the company provide additional snapshots of the transition in commercial activity during the six weeks following the middle of March, illustrating some of the changes in the economy since that time, including:

    • New stores created on the Shopify platform grew 62% between March 13, 2020 and April 24, 2020 compared to the prior six weeks.

    • The number of consumers estimated to have made a purchase for the first time from any Shopify merchant grew 8% between March 13, 2020 and April 24, 2020, compared to the six-week period immediately prior.

    • Over the same period, the number of consumers estimated to have purchased from Shopify merchants they’d never shopped at before grew by 45% compared to the six-week period immediately prior.

     

    Small businesses finding ways to survive via e-commerce will change their media skew and illustrate business transformation at a small scale.

    Our takeaway from all of these data points and observations is that small businesses are generally going to get hurt much harder than others during the current environment, and larger businesses will probably take shares in every given sector. At the same time, though, smaller businesses that have been able to find ways to adapt to a digital-first orientation by virtue of necessity are positioning themselves to thrive for the economic recovery that will eventually follow.

    And while many of the familiar commercial activities that took place before this year will return as if a pandemic never occurred, it seems hard to image we won’t see a permanent shift for others. The coffee roaster who newly discovered shipping beans in bulk to consumers directly, or the yarn store that found the benefits of a strong online presence outweigh the costs of maintaining a retail environment may very well continue doing so well after social restrictions have been eliminated. These simple illustrations of “business transformation” will inevitably lead to an increased emphasis on digital marketing to support the e-commerce activity that will drive growth in small business sales.

     

    Implications follow from these takeaways for marketers and media owners alike.

    Marketers who depend even in part on small businesses for distribution of products will need to increasingly adapt their own commercial activities to reflect this shift of orientation. Similarly, media owners who historically depended on small businesses will also need to evolve to reflect the evolving needs of the marketers they work with as well. Otherwise they will lose a more significant share of revenue than they already have.

    Small businesses are not likely to be the lifeblood of the economy in the near-term, but the bigger picture transformations the most successful ones will go through are illustrations of changes that large brands will be well-served to emulate, if they haven’t already done so themselves. The implications that follow for the media owners that large brands generally work with are far from clear, in part because larger media owners still have time to adapt their own offerings to anticipate changes that will become more pronounced for their customer base over time.

     

    Brian Wieser is Global President, Business Intelligence, GroupM. Republished from https://www.groupm.com/smbs-transforming-businesses-transforming-advertising/

     

  • Consumers will change the ways they interact with people and brands for the foreseeable future, writes Brian Wieser of GroupM

    As Society Changes, Will Your Marketing Plan Change Too?

     

    By Brian Wieser

     

    KEY TAKEAWAYS

    We review changes relevant to marketers that will occur as the coronavirus crisis evolves. We specifically consider new ways consumers will spend time, how they will change media consumption and how B2B marketing will evolve.

    In assessing the behavioral changes following from the current crisis that will impact marketing, we must lay out our assumptions regarding the path forward for the virus and societies around the world alongside our expectations for the evolution of the economy.

    In general, we can assume that while containment efforts will generally be successful in most countries and that the phase of the crisis involving country-wide formal lockdowns will come to an end, risks of further outbreaks will persist until a vaccine is both discovered and widely distributed.  As a result, while there will be a gradual and at least partial resumption of many pre-crisis behaviors over the course of the next year, a complete return of old social patterns will not occur any time soon.  Because of the sudden shut-down and related disruptions in economic activity, we can also assume the economy is likely weak for the foreseeable future, with a disproportionate impact on workers in retail and hospitality sectors who tend to be lower income.  Any concentration of negative outcomes among certain groups of people could exacerbate existing trends, which could play out in public policies related to populism, global trade and taxation among other issues.

    For all of these reasons, it is reasonable to assume that some behaviours will permanently shift because of the time people will have had to get used to new patterns and because of the new products and services that will evolve to meet changing needs between now and then.   From here, with an eye toward identifying the behavioural changes from societies under lockdown, the changes that will follow as society gradually opens up and the changes that will follow once a vaccine is widely distributed, are worth noting.

    Following from these assumptions, in the remainder of this note we consider three general groups of behaviours relevant to marketers, including ways consumers will spend their time and money, how their media consumption patterns will change and how work – which impacts B2B marketing in particular – will evolve over time.

     

    HOW WILL THE WAYS IN WHICH CONSUMERS SPEND TIME CHANGE?

    Behaviour Description
    Spending on being at-home vs. away-from-home Consumers will alter their mix of spending where choices involve avoiding leaving the home or not and could involve trade-offs of services for products. While some people may initially look to reconnect with distant family, most will presumably spend less on vacations. Consumers may choose to spend more on home improvement or expensive home-based products (backyard jungle gyms or staycations, for examples).
    Physical proximity to large vs. small numbers of other people Going to see live sports or live events won’t be an option if venues are closed and large crowds are not allowed to congregate; however, even going out to large venues – such as clubs, bars and restaurants or sports-related environments – may be out-of-favour even where it is allowed. Socialising may become home-based or more focused on smaller groups.People could become less focused on conspicuous consumption of certain luxury goods, but could consume different ones, such as wines or lipsticks especially where they are objectively superior or personally preferred products.
    Changes in time allocations beyond media Home-based hobbies will expand.
    Other social preferences Owning your “space” takes on new importance. “Rental economy” companies such as Zipcar, VRBO, WeWork will require a mix of reinvention and repositioning or may be negatively impacted.  Additionally, many companies are realising that more physical space is not necessary to accomplish their business goals, which may have additional consequences at a social level
    E-Commerce purchasing habits E-Commerce growth accelerates, especially within certain categories and for certain people where penetration rates were previously low (groceries, older people).

     

    HOW WILL MEDIA CONSUMPTION CHANGE?

    Behaviour Description
    Video consumption More at-home video-based entertainment will be consumed, although there is risk of screen “fatigue” prompting consumers to look for different types of media exposure.With Hollywood/professional content production in question, more potential for viral content (virtually produced).

    AVOD probably becomes bigger because of appealing value proposition.
    Outdoor advertising consumption There will be fewer opportunities to reach consumers with OOH ad products until normal social patterns return, although advertising could very well be more impactful if there is less clutter.Different places may become differently valuable: for example, pharmacies or places where essential workers travel may become much more valuable on a relative basis
    Event marketing Event marketing falls off or needs to get reinvented.Virtual / home-based experiences explode in importance.
    Audio consumption Audio platform consumption patterns will change and to the extent that audio associated with commuting, it will probably fall.  On the other hand, some of these providers will evolve to produce content that is more desirable to consumers while at home.  To illustrate: consider that if podcasts were primarily consumed by commuters, can they evolve to be consumed by people at home?
    Digital media consumption Breadth of users of platforms might expand along with depth; niche digital platforms probably widen their audiences if more free time causes more people to experiment.Video game usage explodes.
    Other activities New activities could redefine media (gardening, cooking, DIY) and could have new media assets attached to them.

    HOW WILL B2B MARKETING CHANGE?

    Behaviour Description
    Influencing sales / senior decision-makers and managing ongoing relationships Sales and service involves fewer in-person meetings. More is accomplished via webinars, digital platforms, white papers.  Historical relationships may be worth more than before.Senior managers / influencers / decision-makers may spend more or less time managing than before, which alters how they prioritise their time.  Those managers will likely spend more time interacting with distributed teams, and degree to which those teams influence decisions may also change.

    Sales efforts could become more objective (less subject to casual lobbying by salespeople or internal constituents).
    B2B vs. B2C orientation / disintermediation B2B businesses looking to avoid retail disruption in the future will invest more in B2C / DTC wherever possible.

    Opportunities to disrupt supply chains (i.e. movie studios “breaking” the windows) will emerge.

     

    Societal changes seem highly likely to occur as a consequence of the current crisis, and consumers will change the ways they interact with people and brands for the foreseeable future.  While many behaviours will revert to historical patterns once a vaccine is discovered and distributed, there will be many that will become permanent.  Brands have opportunities in the interim to find new ways to become relevant or maintain relevance.  They will also be able to find new ways to be tangibly helpful as consumers adapt to the new behaviours they will adopt.  Planning for those opportunities now will help brands drive growth in the future as economies eventually and inevitably improve.

     

    Brian Wieser is Global President, Business Intelligence, GroupM. Republished from https://www.groupm.com/changes-following-the-crisis/

     

     

  • With difficult times in most of the world, marketers everywhere are revisiting their budgets, writes Brian Wieser, Global President, Business Intelligence, GroupM

    Managing Through Crisis

     

     

    By Brian Wieser

     

    Key takeaways
    With difficult times in most of the world, marketers everywhere are revisiting their budgets. Marketers have opportunities to become more holistic, focus on better (rather than worse) metrics, improve how they manage for contingencies and set the stage for future growth.

    With the apex of the spread of the coronavirus around the world still weeks away, marketers are facing highly uncertain times. Most countries are, therefore, now taking actions to mitigate the human and economic impact as much as possible. While there are some “green shoots” of economic activity in areas hit early on, such as China, decline is almost certain to occur in most parts of the world this year.

    Industry practitioners generally recognise that any brand or company should avoid cutting their marketing budget. Brands that invest through a downturn should be better positioned to capitalise on an eventual economic rebound in the near-term, and brands that sustain their presence in consumers’ lives are maintaining relationships that should persist in commercial terms in the long run.

    Unfortunately, the present reality is that marketers – meaning anyone who is responsible for sales of any given product or service – will often lack ultimate control of the current situation, as the current phase of the crisis will more likely see CEOs and CFOs looking for aggressive actions.  At the same time, CEOs and CFOs may also be more open to new, and potentially radical, ways of managing their businesses, making them more open-minded than they might be under different circumstances. Subsequently, while marketers may feel as if they have less control over their budgets on one hand, they are potentially in a powerful position to advocate for change in pursuit of near-term efficiencies and longer-term growth. In some cases, marketing organisations may benefit from redesign. In many cases, the ways in which budgets are managed can be improved and, in other cases, there are opportunities to deepen relationships with customers by re-imagining supply chains, customer experiences and broader direct-to-consumer propositions in order to make the most of the current environment.

     

    Four considerations related to such opportunities follow:
    •  Revisit the manner in which budgets are set in order to optimize “forests” rather than “trees”
    •  Focus on contribution margins and generally review financial metrics used to judge success
    •  Always have a best alternative to a negotiated agreement (BATNA)
    •  Prioritise resources towards growth opportunities

     

    Optimise forests, not trees. As we have written previously, marketers often have hard lines around budgets to make sure individual components of budgets are managed as cost-efficiently as possible. However, if the marketer is optimising costs of individual media choices and looking to reduce spending everywhere rather than optimising an entire marketing budget, substantial sums of money may be wasted.

    To draw an analogy with financial markets, it is as if most marketers allocate budgets with an eye to picking the cheapest stocks rather than determining whether they should be shifting resources across asset classes (fixed income, commodities, real estate, currencies, etc.). Better yet, whether they should be shifting resources toward decision-making tools, data and advisory services to better determine financial strategy, timing, asset allocation and individual security selection.

    The greater the flexibility a marketer has with respect to how it allocates resources on all aspects of its marketing spending, the better it can direct those resources.

    In more tangible terms: marketers may be better off not focusing on unit costs or spending with a given media owner if they can focus on a campaign’s media costs for a given level of unit quality. They should not focus on a campaign’s media costs if they can focus on its entire costs, including production costs, services and data for a campaign’s given level of media, production, services and data quality.

     

    Focus on contribution margins, and more generally reassess whether financial metrics used to determine success are the right ones. In many businesses, companies “manage to the margin” and focus on the absolute profit margin that a brand and product might yield. However, in companies that are focused on margins, it may be better to focus on contribution margins, which refers to the incremental operating income/profit generated or lost from an incremental dollar of revenue gained or lost. Wherever possible, marketers should focus on products and countries that generate the highest contribution margins, either limiting the losses or investing against growth of high contribution margin products. Focusing marketing resources of products with high contribution margins will ensure that company-wide margins fare better than when marketers focus on products with higher and generally stable margins.

    More generally, marketers need to ensure that the financial metrics they are judged on are consistent with the best ways to manage their businesses. For example, as brands look for new ways to establish direct-to-consumer relationships, they face the challenge of focusing internal stakeholders on new metrics, such as lifetime value of the customer rather than near-term profitability. In all cases, marketers can benefit from reviewing whether the metrics they use to drive their businesses produce optimal business choices.

     

    Ensure BATNAs are in place. Lastly, marketers should generally work to ensure that there is a back-up plan for any plan or campaign idea because having a best alternative to a negotiated agreement will provide a marketer with a credible ability to walk away from a negotiation. This means that a marketer will be better positioned to secure favourable terms or pricing from a given media owner when they pursue their preferred plan. But at the same time, if circumstances change – as we have seen with the postponement of the Olympics and cancellation of many events – a marketer who has developed an alternative plan may be better positioned to execute on that alternative if circumstances evolve out of their control.

     

    Prioritise growth, even in a downturn, and even if it requires new investments. Even in declining economies, new products and services emerge. Unfortunately, most companies retrench at exactly the time they can capitalise on consumers’ interests in considering new approaches to meeting their own needs. Every company with a product to sell or an idea under development should ask themselves where they would invest resources today if they could. If internal resources are not available, capital markets are generally available to provide companies with capital and liquidity where needed.

    Companies are often concerned about a perceived short-term orientation among analysts and investors, but we might argue that they are only oriented around the short-term if they are not given a persuasive reason to focus on the long-term. Companies such as Amazon, Netflix and Salesforce.com are examples of companies whose CEOs essentially never waver from their long-term focus and have built businesses centered on that. Analysts and investors have generally taken similarly long-term views in assessing these companies. They are generally willing to do so for others, as long as the company’s focus is unwavering in its time horizon.

    Each of these opportunities have pros and cons to consider. Inventing new approaches to managing budgets can be politically challenging and may require new working processes but doing so allows a brand owner to make more efficient choices in the near-term. Emphasising new financial metrics – such as contribution margins – over others may also involve internal political issues, but the benefits can be very real. Establishing BATNAs can require additional work, but optionality can open up new and better ideas and provide helpful contingency plans. Focusing on growth requires a proverbial capacity to change the engines on a plane while it is still flying but doing so helps position a company favourably for the long-term. The best opportunities to pursue will always be company-specific.

    While simpler times are unquestionably less stressful for marketers at an individual level, the complexity and uncertainty of the current era presents the opportunity for significant change.  Much of this change will be negative, although around that change, marketers can always look for opportunities to make their situation as positive as possible.

     

    Brian Wieser is Global President, Business Intelligence, GroupM. Republished from https://www.groupm.com/news/managing-through-crisis

  • Marketers should help stakeholders and manage through the current period as best as possible, writes Brian Wieser

    Grappling with Coronavirus Concerns

     

    By Brian Wieser

     

    Global concerns around coronavirus escalated meaningfully in the past week. Despite some encouraging signs in parts of Asia, the announcement of travel suspension between and the United States for a 30-day period and some country-wide lock-downs, much of the world was faced with the stark reality of the potential consequences of a widening human, societal and economic problem, one that might be prolonged by the actions and inactions of government policies

     

    Capital markets are now better incorporating the pandemic into their expectations. The announcement of part of the US-Europe travel ban policy amplified a stock market downturn already underway.  It occurred as the world’s largest financial markets were beginning more fully incorporate the potential impact of the virus in the near-term, including the likelihood of an economic downturn that may persist beyond the time of the virus’ spread, the limited capabilities of the U.S. Federal Reserve, and further knock-on effects.

     

    For example, the decreased demand for manufacturing and global travel has resulted in a decreased demand for oil. This leads to an oil production and price war between low-cost producers Russia and Saudi Arabia, which leads to less oil production in the United States, a net exporter of oil. This increases the likelihood of economic weakness in oil producing regions of the U.S. and the country more broadly.

     

    Turmoil in the capital markets will have several potential implications for marketers to consider for their businesses and their industries:

     

    • Changing costs of capital and liquidity for different companies can lead to consolidation. Weak stock prices and cheap capital mean companies that are cash-rich are well positioned to make acquisitions of companies that are particularly depressed. Also, early stage companies that were planning on becoming publicly traded hold off on their IPOs rather than doing so under depressed conditions. Although transactions are not typical in times of great uncertainty —or at least great volatility—in certain instances some companies could be at risk of a takeover. However, transactions are not very likely in the early stages of a stock market correction, but as markets recover unevenly and the outlook for businesses become clearer, they can become more likely. Marketers in categories already prone to consolidation will want to be mindful of the potential for M&A— not only transformational combinations, but “tuck-in” transactions (larger companies buying smaller ones) that follow from stock price disruptions.

     

    •  Commodity price changes can alter operating cost structures. Lower commodity prices are obviously negative for producers and the countries that host them.  On the other hand, users of those commodities and the countries in which they live clearly benefit, at least to the extent they still need those commodities. Marketers whose product categories are highly dependent on input costs can fare relatively better than others, especially if they are able to stockpile those goods or lock in prices.

     

    •  Currency changes can make different countries relatively more or less attractive for marketers to invest in. Weak currencies are often driven by the aforementioned commodity price declines, by “flights to safety” and/or changes in interest rates in other countries. This leads to further disruptions, such as higher costs for consumers buying imported goods but lower costs for consumers in other countries buying exports. The impact of such disruptions can vary widely by country. For marketers, these changes can make different countries differently attractive to deploy or withdraw resources to better support short- and long-term growth opportunities on a global basis.

     

    In tangible terms, marketers in much of the world are only beginning to assess how to address evolving circumstances. Some markets have had more time to adapt and marketers have adapted within them. For example, conditions in China have gradually improved or, put differently, have stopped getting worse. Spending declines, however, are still likely as media owners have indicated in their guidance. Other territories in the region are adapting to their “new normal” with business and leisure travel, retail, food and beverage and entertainment all hurt by the absence of travel, people working from home and consumers avoiding crowded places.

     

    While Italy has been hit hardest so far among European markets, this is primarily because it was hit earliest. The impact on media is so far unclear: as Mediaset, Italy’s largest media owner, described matters on its earnings call last week “the advertising trend…is a week-by-week situation. So just to give you the idea, we had the first breakthrough situation on the 22nd of February…the last week of February, 23 to 29 was really, really negligible,” adding that until March 6, “we were in a situation with a moderate impact. Of course, the new restriction rules approved by the government on (March 8 and March 9) change the situation…. we are not able to assess the overall impact on March (yet).”  The company’s management went on to state that advertisers “are obsessed by a key thing, business continuity…and communication is a key leverage in ensuring this business continuity. This is a key leverage now during these days, this week, to stay in touch with consumers, and they are fully aware that will be even more strategic.”

     

    As we wrote previously, it is important to note that the changes impacting societies around the world do not necessarily mean that individual marketers should alter their media strategies. Marketers need to be mindful of long-time horizons during crises and make decisions on this basis. We emphasise that marketers should continually assess the relevance of a given medium for a given marketing strategy and creative message.

     

    They can also continually look for ways to add value to the consumers they service, the media owners they buy from and the societies in which they operate. A crisis like this will have many unfortunate consequences, but the changes in behaviours that will follow could create new opportunities for marketers to engage with all relevant stakeholders.

     

    With luck, governments and societies who have not already done so will quickly identify and embrace best practices for managing the crisis.  This will include aggressive moves to encourage or mandate appropriate social distancing and preparing medical infrastructure that anticipates worst-case scenarios for the crisis. Where this occurs, countries and markets may face only weeks rather than months of significant societal disruptions, with casualties minimised. Either way, normalcy will eventually return, and if the choices marketers make during this period resonate, they and the world will hopefully come through all of this better positioned to thrive in the future.

     

    Brian Wieser is Global President, Business Intelligence GroupM. Republished from https://www.groupm.com/news/coronavirus-update-march-16-2020. An earlier version of this article appeared on https://www.mxmindia.com/2020/03/cornoavirus-scare-considerations-for-marketers/

     

  • Marketers need to be mindful of opportunities to service consumers writes Brian Wiser

    Coronavirus Scare: Considerations for Marketers

     

    By Brian Wieser

    The outbreak of Coronavirus in countries around the world is a widening tragedy. Many aspects of life and business will be altered in many countries around the world with the possibility of a recession realistic for many countries, at least on a short-term basis. Shifts in media consumption and other behaviours are important to monitor, and marketers need to be mindful of opportunities to service consumers that may follow along with the media owners they buy from and the societies in which they operate.

    Coronavirus is a widening tragedy. The widening spread of Coronavirus is first and foremost a human tragedy given the lives that have been and likely will be lost. It is secondarily a potentially pivotal societal matter given the implications that appear to have followed so far in China, especially with respect to their engagement with technology (i.e. e-commerce, streaming services, etc.). It may also have political consequences which could play out in different countries around the world. There will also be tangible economic consequences for much of the world to contemplate and manage through. This leads to significant considerations for every marketer and media owner to consider as they look to manage their businesses in the near-term.

    China may show us the path forward. As a starting point, it is important to continue to emphasize all of the uncertainties about how widely and rapidly the virus will spread and how specifically people, groups of people and governments will and will not react. Now that the spread is slowing in China and gradual signs of a resumption of normalcy are resuming, we do have a sense of how this could play out elsewhere.

    With restricted movements in heavily impacted regions, closures of offices, factories and stores alongside cancellations of environments where public gatherings took place, everyday life was severely impacted. Travel was curtailed. Public hygiene practices were altered. Professionals worked from home where they could, and families stayed home as well. They consumed more media and refrained from going out to shop. Marketers often cut spending because of uncertainties around consumers buying products, if those products could even be made available: e-commerce-based delivery was often challenged because of limited availability of drivers and supply chain issues that impacted all forms of manufacturing and retail sales. From Alibaba we heard in mid-February that “some of our businesses that rely on physical means of production on supply side would even show negative revenue growth for the (current) quarter such as China retail marketplace and local consumer services”. This translated into a ~-30%+ change in growth rate relative to the growth that was observed during the fourth quarter of 2019.

    But as the pace of new infections began to decelerate, stores and factories began to re-open. As we heard during the last week of February from Baidu “in the past 2 weeks, however, business activities have started to pick up as people returned to work. At Baidu, our employees are gradually returning to the office applying strict safety measures. We assume businesses across China will do the same in that our marketing services will pick up at a faster pace into quarter end.” With all of the appropriate caveats around the uncertainties of the situation, the company guided towards a change in ad revenue growth that was roughly 20% different vs. the growth rate observed during the fourth quarter, similar to guidance provided by Weibo two days earlier. In short, there appears to be a basis for optimism around a resumption of normalcy – or at least a “new normal” – in the coming months.

    Unfortunately, much of the rest of the world is only now going through what China has gone through over the prior two months. This means that we likely have yet to see the worst play out.

    Many aspects of life and business will be altered in many countries around the world. As we have seen in China we would expect to see less travel, less manufacturing, reduced retail sales and cancellations of many forms of public entertainment. Media consumption at home will likely rise as will e-commerce sales, although because so much of the world relies so heavily on China to manufacture finished goods or components of goods, supply chains will likely be compromised.

    Other elements of society will face new spotlights: For example, the quality and variation of health care within countries will be amplified, which could lead to changes on that front. The contribution of economic activity to environmental conditions may be another dimension that faces scrutiny, especially in countries where activities leading to immediately tangible volumes of pollution are curtailed.

    The possibility of a recession is realistic for many countries, at least on a short-term basis. More generally, there is a realistic chance that countries which were otherwise growing are pushed into recessions because of reduced economic activity. Some countries have deeper integration with the global economy than others and are therefore more exposed to restrictions on cross-border activity and supply chain disruptions. Consumers in different countries may take a more or less conservative approach to spending than in others, although these tendencies will largely be impacted by their ability to buy (and receive) products. And at the same time, governments of different countries may take different approaches to stimulating their economies.

    In the near-term, how much a recession may impact advertising spending in any given country is difficult to anticipate – not least because economic activity is not tangibly correlated with ad spending in every country – although it is highly likely that the impact will be negative, with growth in some countries softening, others going flat and others declining. While it is far too early to anticipate outcomes with any precision, the implied double-digit declines in ad spending within China for the first quarter could play out elsewhere, with reduced declines in subsequent quarters and an eventual reversion back to growth as we have seen following other recessions. Of course, marketers able to avoid making cuts will generally fare better given what will likely be relatively favorable pricing and reduced competition for consumer attention. Longer-term brand-building will benefit from a sustained media presence, albeit with appropriately modified messaging.

    Ad spending might fall, but it also may shift. Given the absence of near-term sales to be realized, advertiser willingness to spend may fall despite higher audience levels for some media (which, as we have noted previously are not generally correlated with ad spending within media). However, if the volume of available budgets for spending on advertising weakens in any given country, it is difficult to anticipate which specific media will be most impacted. It does seem safe to say that the aforementioned supply chain issues with China – and the timing with which Chinese manufacturing returns back to normal – will disproportionately impact global media owners whose ad revenues depend on Chinese manufacturers. Traditional television could fare relatively better because of the likely improvements in audience levels, while outdoor advertising may be worse off with lower levels of foot traffic in many places. At the same, time we emphasize that spending on paid media will not necessarily correlate with spending by marketers on services, such as those provided by agencies.

    The Olympics may still go forward, but also illustrate the importance in making back-up plans. One tangible issue which will be top of mind for many marketers will relate to the upcoming Olympic games. While the games are still moving forward at the present time, because so many marketers build substantial campaigns centered around the Olympics, it will be particularly critical for those marketers to establish potential back-up plans in the event the Olympics do not occur. This point dovetails with a broader point we have also made previously: as a general rule, marketers should generally try to prepare credible alternatives as they develop any given marketing strategy. Towards those ends, the identification of alternative options may prove to be a useful planning exercise which could lead to new ideas for significant campaigns to be used in the future if the Olympics do move forward as intended.

    Shifts in media consumption and other behaviors are important to monitor, and marketers need to be mindful of opportunities that may follow. It is important to note that just because aggregated shifts are likely to occur, it does not mean that individual marketers should necessarily alter their media strategies. Marketers need to be mindful of long-time horizons during crises and make decisions on this basis. We emphasize that marketers should continually assess the relevance of a given medium for a given marketing strategy and creative message. They can also continually look for ways to add value to the consumers they service, the media owners they buy from and the societies in which they operate. A crisis such as this one will have many unfortunate consequences, but the changes in behaviors that will follow from it could create new opportunities for marketers to engage with all relevant stakeholders. If the choices they make resonate while the world works through the current environment, they and the world will hopefully come through it better positioned to thrive in the future.

     

    Brian Wieser is Global President, Business Intelligence GroupM. Republished from https://www.groupm.com/news/coronavirus-considerations-marketers

  • The emergence of DTC is still going to have a big impact on the broader marketing industry, writes Brian Wieser

    Path forward for incumbent brands given Direct-to-Consumer biz

     

    By Brian Wieser

     

    Direct-to-consumer (DTC) businesses have generally been viewed as a disruptive force in the economy in recent years. For some period of time, they caused a degree of fear for incumbent companies in the packaged goods and apparel sectors and presented opportunity for many media owners who saw a new source of spending on advertising.

    However, in the past few weeks news of the demise of Brandless, Edgewell terminating its agreement to acquire Harry’s in the face of FTC opposition, a weaker-than-expected IPO for Casper and other factors have suggested a reversal of these trends may be underway.  The reality of DTC is simultaneously not quite so negative in terms of underlying trends, muted at a competitive level and critical in terms of how these companies will influence the long-term evolution of large brands. 

    To start with, it is important to attempt to define what we mean by DTC companies.  Narrowly defined, we think of a DTC company as one which:
    •  Primarily manufactures (or contracts to manufacture) its own brands
    •  Primarily sells through a self-branded e-commerce site with physical retail or third-party e-commerce as secondary channels or for showroom purposes
    •  Is not primarily an operator of a marketplace
    •  Is not primarily a provider of services
    •  Was founded at some point in the past ~ten years
    •  Is not a multi-level marketer
    •  Is not a business unit of a larger company

    Using our narrow definition of DTC allows us to better understand the degree to which upstarts are impacting larger incumbent brands within any given category. Our narrow definition is arguably a particularly relevant one for manufacturers as it allows us to focus on the companies attempting to disrupt the business models of many of the world’s largest brand-focused marketers, taking share of consumer spending along the way.  For the purposes of this analysis, we put aside the important issues related to working with different third-party retail channels such as broadly-focused e-commerce retail, niche e-commerce retailers and marketplaces.  Learning how to optimise new channels is a separate set of challenges when compared with competing with new brands and new ways of selling to consumers.

    There are relatively few large independent DTC brands.  And, with this definition, there are relatively few companies with any size. Using a threshold of 300 employees at the end of 2018 or 2019 as tracked by LinkedIn (whose data is roughly consistent with actual employment figures where those numbers are available), we can only identify 18 companies that meet this criteria. We also crudely estimate that each of these companies had approximately $100 million or more in revenue either during 2018 or 2019, $7 billion in total during 2019, and, combined, approximately 13,000 employees. If we added in the several dozen companies that have more than 100 employees and meet the above criteria, we would possibly identify a similar number of people and amount of revenue. Perhaps there are scores or hundreds of other companies that meet this criteria with fewer than one hundred employees, but they would only add a similar amount of revenue in aggregate.

    To note: the data set we used to identify companies here tends to skew toward North America and western Europe and may not be comprehensive at a global level.

    Growth is still relatively strong, but consistently decelerating. Looking only at our large (300+ employee) cohort and taking a mix of actual revenues (for public companies) stated in various articles about some of the private companies and our own estimates, we can crudely estimate growth that has generally slowed as these companies have matured. Specifically, we can calculate +22% growth in 2019, which followed on +32% growth in 2018 and +41% growth in 2017. Of course, this is relatively rapid growth when compared to companies with conventional business models, but the absolute scale is small.

    Total spending on advertising by DTC companies, narrowly defined, is probably in the single digits of billions of dollars. With five companies among the group now publicly traded – Hello Fresh, Peloton, Blue Apron, Casper and Purple – we can see, or reasonably estimate, that advertising as a percentage of revenue is relatively high, as much as one third of revenue at Casper and closer to 20% for Peloton and Hello Fresh. Blue Apron is just under 10%. It is difficult to quantify how much the “average” company spends on paid media, but perhaps the 20% figure is appropriate to assume. If so, the large group of companies only spent around $1.4 billion during 2019. Adding in the next two tiers (of 100-300 employees and <100 employees), perhaps we get to $4 billion to $5 billion in total spending on paid media from DTC companies. If it were true that the DTC sector was in trouble, the impact from a collapse in this spending on media owners would be relatively modest given the media industry (and digital advertising sub-sector) is measured in hundreds of billions of dollars. More realistically, growth across the group will simply continue to decelerate.

    The emergence of DTC is still going to have a big impact on the broader marketing industry. The bigger impact from DTC relates to how this group of companies has shown larger companies a path forward for business transformation and innovation.  In many instances, large companies are already doing so through internal initiatives or via acquisition.  Business processes embraced by these mostly small businesses are important for large ones to explore, including their entrepreneurial approaches to “growth hacking,” the establishment of first-party data assets, the focus from many of them on customer acquisition costs and lifetime value as well as the establishment of subscription-based revenue models. All these capabilities will be increasingly important for all kinds of businesses to increasingly embrace on an ongoing basis in years ahead.

     

    Brian Wieser is Global President, Business Intelligence GroupM. Republished from https://www.groupm.com/news/dtc-businesses-still-showing-path-forward-incumbent-brands

  • As a general rule, all companies need marketing leadership to drive a business forward, but that leadership can take many shapes, writes Brian Wieser

    Shaping Success of Marketing Organisations

     

    By Brian Wieser

     

    The marketing function is critical for all companies. It helps them understand what their consumers want and how to balance those desires with what their company can produce. However, not every company positions marketing in the same way.  To assess how marketing is organised in the wild, we recently studied 25 of the world’s largest advertisers to identify reporting lines as a proxy for these companies’ general organising principles. We note that even the firmest of corporate structures have fluid elements, with informal relationships commonly influencing actions.  Further, those personal networks can evolve with great frequency. In some instances, the position in the hierarchy of a senior full-time marketer may not be meaningful if a company has a thoroughly marketing-driven culture. In some companies, the CEOs may, for practical purposes, lead marketing.

     

    With this noted, among our group of 25 companies, we spotted that seven have individuals with marketing oversight who appear to report directly to their CEO, while two maintain concurrent business unit responsibilities.  In another seven instances, the company’s senior marketer has responsibilities covering multiple brands and reports either one or two levels below the CEO. In three cases, that individual appears to directly report to a primary brand leader, while in the other four, the individual reports to a centrally oriented corporate executive. In 11 of the 25, senior marketers operate primarily at the business unit level instead of the parent company. Finally, six companies have a senior marketer with global responsibilities for marketing within their business unit; the other five operate under regional management, sometimes overseeing multiple brands concurrently.

     

    The Direct-report approach.  Marketers who report directly into parent company CEOs are perhaps best placed to balance a portfolio-wide understanding of what their customers want with what their company can produce (given all the likely choices competitors and supply chain partners may make). This may be offset by the risks of removal from where actual business is conducted.  Towards those ends, marketers in these circumstances need to balance field intelligence across their companies with big picture, long-term thinking that they can lead. There can also be challenges coordinating potentially diverging interests of marketing functions across business units.

     

    The Indirect-CEO report (with a senior executive leading a central marketing organisation).   Placing a senior marketer in a central corporate organism can lead to standardised processes, drive costs down and realise economies of scale in fields such as data management. They can also help encourage the application of best practices across the enterprise.  If business trends are relatively stable and marketing does not present obvious advantages in driving growth, or where marketing savvy is thoroughly embedded throughout a company, such a structure could be beneficial.  On the other hand, marketing may be hard-pressed to truly lead growth if it is buried organisationally. Further, if centralisation exists to reduce costs, operating divisions may face constraints on finding their own pathways to growth.

     

    Brand-centric marketing leadership (Global).  Brand-centric marketing leadership (global) In some respects, direct marketing oversight by a brand manager or business unit CEO can be ideal, at least if the brand owner has complete control over their P&L and authority to make long-term investment choices. However, when brands exist in such a structure, one might question why the brand is not a stand-alone business rather than one among a portfolio. Of course, one reason portfolios of brands exist together is because their owners believe they can balance cost efficiencies, long-term financial planning and access to capital with some level of brand empowerment to maximise any return on internal investments. Doing this well can be challenging, although not impossible.

     

    Regional brand, business unit or brand portfolio-centred marketing leadership.  Organising at a regional level may be best when regional P&L management is optimal for an industry – perhaps because channel partners or product portfolios are unique to different geographies – and probably helps to meaningfully control costs.  The downside to this approach is that (as with the indirect-CEO-reporting structure), marketing is not optimally positioned to drive growth for global brands. Furthermore, such organisations may be particularly complicated to manage given the matrixed reporting lines that likely exist in these situations.

     

    Ultimately, companies possess a wide range of corporate structures, and there are pros and cons to every approach. As a general rule, all companies need marketing leadership to drive a business forward, but that leadership can take many shapes. CEOs or brand managers may be marketers at heart, and such capabilities will serve their organisations well. But if they are not, the better their businesses are tied to marketing functions, the more consumer-focused those businesses will be and, therefore, the more likely they will benefit from superior long-term outcomes.

     

    Brian Wieser is Global President, Business Intelligence GroupM. Republished from https://www.groupm.com/news/gradual-shift-age-gender-audiences This article originally appeared in Blink Magazine, Published by Mediacom

     

     

  • Age and gender-based 'targeting' on TV has diminished appeal for media owners and marketers alike, writes Brian Wieser

    The Gradual Shift From Age & Gender to Audiences

     

    By Brian Wieser

     

    Most of the world’s largest marketers focus on age and gender when they plan and buy media. This is especially true for campaigns designed to build brands and even more true for those which rely on video. To meet this focus, demographically-based audience guarantees were established as a standard transaction term, and they persist as a means for helping marketers prioritise which inventory they want.

     

    Trading media based around audiences within a limited range of age and gender, understandably, had innate appeal when media companies began offering the delivery guarantees, most notably in the US television market in the 1960s. At the time, marketers had relatively less sophisticated ways to identify their target audiences, and probably didn’t need to do so given the novelty and intentionally widespread appeal many of their products had in that era.  As time progressed, new brands targeting narrower groups of people emerged, and existing brands evolved their businesses to more appropriately focus on the differing characteristics of their customers and prospects. These attributes included life-stage, complementary product ownership, geography or any of a myriad of other elements.

     

    Media owners and marketers indicate they want to change. While television-based media owners were probably content to trade as they did through most of the 20th century, over the past two decades many of them began to express an interest in transitioning away from age and gender-based conventions. Core demographic groups (adults 18-49 or adults 25-54) weakened while broader audiences were relatively stronger; media owners generally came to believe that they could more efficiently sell their inventory if they were better aligned with the criteria marketers actually use in their business planning.   Increasing numbers of buyers – agencies and marketers’ media directors – also became inclined to believe alternative media trading conventions could be superior, especially if doing so might help them to more efficiently manage their media budgets. The proposition for consumers was also potentially going to be favourable, especially if advertising was made more relevant to viewers’ actual needs and interests.

     

    But change is difficult; TV media buying conventions are mostly stuck on age and gender for very practical reasons. Even where marketers have changed how they manage their businesses, sources of friction with processes for buying media persist. They include marketers’ needs to establish and beat historical media pricing benchmarks; the belief that propensities to buy products are formed during specific ages; the difficult efforts required to persuasively demonstrate that changing approaches and workflows can offer tangible benefits; and the need to determine new approaches required to allocate budgets. Making all of this harder: attribution modelling limitation; long time horizons required to properly assess alternative approaches; and the inability (or unwillingness) of many large brands to properly perform the controlled tests required to prove the superiority of such changes. All of these factors help to explain why demographic conventions persist.

     

    Change will be incremental unless marketers and media owners taking bigger risks. None of this is to say that audience-based buying will not become increasingly important with every passing year. As the younger demographic groups advertisers prioritise account for falling shares of TV audiences, and as reach and frequency-based metrics become increasingly expensive and harder to manage against these groups, marketers will show greater urgency in looking for new ways to prioritise their media investments.  Some marketers will make changes in any given year because of these factors, although the fragmented nature of marketers relative to media owners means that no one marketer can cause a noticeable change for the industry.

     

    By contrast, the supply side – media owners – are probably better positioned to force changes more widely and more rapidly, at least theoretically.  For example, they can refuse to offer audience guarantees based on age and gender. This is already occurring on a small scale (some refuse to offer audience guarantees against adults 18-34 because delivery can be so hard to predict). Doing this across all of a network owner’s properties would be very risky. Some marketers unable to alter their internal conventions might shift spending to other media owners, initially. However, this would concentrate demand with those advertisers who do offer guarantees and cause the recalcitrant marketer to effectively pay higher prices. Marketers would be compelled to adjust tactics in time, at least if the inventory now only available on a non-age-gender-basis was sufficiently significant. Alternately, a media owner could potentially reduce the risk of revenue loss by finding ways to incentivise marketers – and incurring significant one-time costs – to make changes.  Either way, bold actions are needed to cause accelerated industry evolution.

     

    The transition away from cookies in digital advertising may show what a “big bang” change looks like. An interestingly similar experiment is likely to play out in digital media over the next couple of years.  With news that Google would deprecate cookies from its dominant Chrome browsers (following on similar actions from other browsers), marketers are going to be forced to establish alternative ways to target, measure and manage the audiences they buy online. The similarities to the situation television has with age-gender targeting could be even stronger when we consider the widely-known limitations and flaws of using cookies. Nonetheless, the industry still requires someone to effectively force them to go away.

     

    Change is typically incremental in any industry. This is especially true in advertising as the industry is dependent upon marketers whose organisations are complex, internally and across external partner relationships. Radical changes can eventually take root, but only to the extent that a change is widely viewed to be substantially better than alternatives. Companies looking to drive change quickly need to demonstrate the advantages or otherwise find ways to worsen alternatives.  In lieu of that, change will occur, but the pace will likely be gradual.

     

    Brian Wieser is Global President, Business Intelligence GroupM. This article was first published at https://www.groupm.com/news/gradual-shift-age-gender-audiences

  • There was no shortage of new gadgets at CES 2020, writes Brian Wieser, Global President, Business Intelligence GroupM

    CES: Invisible Revolutions

    Photo courtesy: CES®

     

    By Brian Wieser

     

    Despite the volume of new products on display, CES is not really about shopping for gadgets anymore, and hasn’t been for a while. Over the past five years CES has been overtaken by the less sexy – yet much more significant – enabling technologies which themselves have been developed over many preceding years. The resulting software and connectivity that drives interoperability between devices, access to cloud computing resources and massive data storage along with improvements in battery life are now central to new consumer experiences and service layers, even if they aren’t always easy to demonstrate in a booth or a press release.

    In tangible terms, there was no shortage of new gadgets at CES 2020. Some may never make it to market, and others like AI Toothbrushes, 8K and MicroLED TVs, and smart speakers certainly will.

     

    We saw products that perform more complex functions but are simpler to use thanks to artificial intelligence. Intelligent assistants have made information retrieval easier, but they’re not yet evolved enough to be invisible. AI has also made personalization easier, but the “black box nature” of the algorithms has made it nearly impossible to understand why certain personalization decisions are made. The dominance of Google and Amazon in this sector was also very clear. Relatedly, voice was hot again this year. This was evident in the technology displayed for smart homes, including increasing numbers of appliances with voice-facilitated intelligence which helps ensure components of the ecosystem are working together seamlessly.

     

    We saw products becoming smarter, but also dumber. Some companies are playing out their products’ intelligence to illogical conclusions; for example, autonomous vehicles that potentially make travel safer in the long term, but which remove nearly all manual control from the operator, creating risk in the short term. This points to the need for more study into the interface between humans and machines.

     

    Contrasts were also evident on the environmental front: some of the new products were more sustainable while others were more disposable. In general, technology is ever resource hungry, consuming electricity and bandwidth. Further, greater numbers of products are disposable which are made of plastics. At the same time, as people and business further embrace sustainable practices, we saw smaller footprint personal appliances like single-serving dishwashers which consume far less electricity and water while generating less heat.

    Another key theme was the notion that these products can help humans better manage their own conditions along dimensions of sustainable wellness, health and prosperity. Several “empathy electronics” made their debut, including Tombot (a robot for good helping seniors with dementia), CyclePath (prompting movement in young gamers), Mateo (for body and posture analysis), and Pillo (healthcare at home).

     

    It is rare when a CES-related new product announcement has a “this will change everything” feel for the advertising industry, and this year was no exception.   We can point to some product launches which were impactful for the advertising industry, such as the launch of TiVo in 1999. Announcements which were made were much more incremental with an abundance of focus on advanced TV and applications of artificial intelligence to advertising. Implications for advertising and marketing tied to the roll-out of 5G networks and related devices were also frequently discussed, even if the impact is far off in the future. Separately, social media networks made relatively minor announcements: Twitter said consumers would be able to customize how they view replies while Facebook announced it would allow users to exclude themselves from being targeted by specific advertisers via Custom Audiences. Brand safety continues to be a background context in these developments.

     

    Incrementalism is not unimportant: industry change takes time.  Changes to most industries take time because there are so many inter-locking elements of technology and processes and so many different companies involved in any one piece of workflow, with no one company able to change much by themselves typically. Alternatively, few companies are willing to risk blowing up their own businesses in order to cause change. But over time incremental changes enabled by new technologies do have an effect. In much the same way as a better product first displayed decades ago makes possible a business model that gets invented today, new transformative opportunities and future commercial revolutions will be made possible because of concepts or products introduced this week.

     

    Brian Wieser is Global President, Business Intelligence GroupM. This article was first published at https://www.groupm.com/news/ces-invisible-revolutions

     

     

  • It's vital to understand where and how relevant information is produced, testing ideas, and building models, writes Brian Wieser

    Habitual Analysis: How We Study the Media Industry

     

     

    By Brian Wieser

     

    Key takeaways: Analyzing the media industry – or any industry – well depends on efforts to understand where and how relevant information is produced, testing ideas, and building models (conceptual ones, if not spreadsheet-based ones) in order to focus on the data and the associated insights that matter.  We review some of our best practices in this week’s note.

    January is always full of announcements, whether at CES, other trade shows, or with public companies revealing key initiatives ahead of or during earnings. This means it’s also a particularly important time to analyse the news well rather than take every piece of information in at face value. I was recently asked how we go about doing this work, and in response, I identified several habitual actions that help with our analyses. Some of these approaches may be useful to others who also need to form views on a given topic. We can loosely organise them into three groups:

    a) Understand where and how relevant information is produced.
    b) Test ideas and observations and refine analyses with other people.
    c) Build models and gather requisite data to firm up your ideas and concentrate on the data and the associated insights that matter.

     

    Understand how information Is produced and how it makes its way into news or content that may inform analysis. Much of what we think we know about our own industry comes from reporting in the trade press and through general business news, while other information comes from academics or from thinktanks. Often, reporting may have started with a press release, through public / government records, or through work originally produced by other news organisations. In some instances, news may have originated because a company has provided a publication with information either uniquely or broadly, and in other instances, reporters may have performed their own research, outreach and interviews. Different participants in the news-generating process may have different motives for participating (or not participating) with varying degrees of forthrightness, and different publications have different thresholds for assessing and including or omitting pieces of information, which can get repeated in all subsequent reports. As an example, in 2011 a prominent consulting firm prophesised that by 2017 CMOs (Chief Marketing Officers) would spend more on information technology than CIOs (Chief Information Officer or Chief Information-Technology Officer). While the direction of the report wasn’t wrong, few bothered to note that the underlying survey was focused on high-tech organisations, not companies across the different sectors, and the interpretation of the report was applied more broadly than was likely intended.

     

    • Be conscious of basic statistical measures and data gathering processes. When we hear of surveys that indicate a preference one way or another for a given population, what we often need to know is what the distribution curve looks like.  And even when the questions asked have binary yes/no answers, we need to know how, if at all, the sample might be skewed or non-representative, and what the sampling error is. More fundamentally, be mindful of biases in different processes for gathering information and then try to understand how information was gathered. For example, surveys performed using mobile phones will have a different skew than surveys performed using land-lines; passive media measurement panels will always be more accurate than self-reported media measurement. Further, different countries will have different cultural biases in different kinds of responses that may make cross-country analyses difficult.

     

    • Question what you know (or think you know). Far too often, conventional wisdoms persist and sometimes dominate. This can be because those wisdoms may have reflected the best ideas of the past, given limited availability of better data, or because ideas which sounded plausible were never tested. Or, perhaps they were truths under some circumstances but not under all. Of course, sometimes those conventional wisdoms are actually true even if they were never formally tested. Great examples often live on in the form of clichés.

     

    Test ideas and observations and refine analyses with other people. Ask “dumb” questions; try to prove your ideas wrong. Sometimes the questions that an individual has when studying a topic for the first time are the questions that no-one else has dared to ask, perhaps because of a perception that everyone knows the answer. Those questions are often the best ones to ask because they may relate to topics which have gone unchallenged. Relatedly, if you think you have an interpretation of a fact that is not widely held, ask practitioners with opposing views to poke holes in that interpretation. The relative success or failure of that effort will help to reinforce or counter your view. And, even if the conventional views turn out to be well-founded at the present time, they won’t necessarily hold for all times.

     

    • Interact with practitioners at all levels within the industry. When trying to prove ideas wrong or more generally looking for broader points of view on a given topic, consider that sometimes the most knowledgeable people will work in parts of the industry which are less credentialed (because of formal education levels, corporate affiliation, titles, etc.). Such individuals can serve as go-to experts, in part because they are less exposed to the group-think that can dominate other parts of the industry or because they are on the frontlines.

     

    • Explore similar ideas from other industries. To the extent possible, it can be helpful to talk to experts in other industries about similar concepts that might exist in unrelated industries, as lessons learned in those other industries might help to better understand our own.  This will be especially true when trying to study issues which are opaque and understood in-depth by relatively few people.

     

    Build models or think in terms of models you would use to describe what you are observing or expecting. While spreadsheet models aren’t necessarily the goal of every given analytical exercise, it is very useful to think in terms of models because of the numerical discipline imposed by them. Toward those ends, it is worth remembering that a model is meant to be an abstraction of reality, and all analytical work can help capture inputs which help to build that abstraction. Often, numbers around a given topic are available, but if they are not the true drivers of the model, they should ignored. Research should focus on finding ways to estimate the numbers that actually drive the behaviours we are trying to model. As a general rule, when an actual model is needed for making decisions, it is beneficial to build one’s own models, but if it is not possible and someone else is responsible for model building, it’s still important to understand the model in depth — and spot-check the math (perfect models are an ideal, but rare in reality).

     

    • Relative-size things as you go, when you can. Whenever a claim is made around a dollar figure, for example, compare it to a broader industry or the overall economy. For example, billions of minutes of time with a given service among a group of people over a given number of days or months could be compared to all activities or all consumption of a medium such as television. All spending on a given product could be compared to the size of the broader industry that product is part of, or possibly the overall economy in the countries that product is available in.  As well, be conscious of inappropriate comparisons: for example, comparing the value of a company or asset to the GDP of a nation is essentially never analogous, as one is a figure determined at a fixed period in time based upon an accumulation over all periods of time, while the other is a metric based upon a flow of money over a limited period of time.

     

    New information is often provided by companies looking to put their best foot forward when they communicate information; journalists almost uniformly try to produce what reporter Carl Bernstein described as “the best obtainable version of truth.” Such truths commonly inform perceptions of reality, although there can still be gaps between some press reports, what the industry believes and reality. While the actual truth may be elusive to everyone in some instances, efforts to find it are helpful for participants within an industry. Doing so helps everyone better understand the environment, make better decisions as competitors, customers and suppliers — and ultimately help make the industry both more efficient and more resilient.

     

    Brian Wieser is Global President, Business Intelligence GroupM. This article was first published at https://www.groupm.com/news/habitual-analysis-how-we-study-media-industry