Investing in news brands brings long-term benefits

Advertisers record better business effects, and over a longer term, when they invest in news brands, according to a new study by marketing consultant Peter Field.

Why it matters

Advertising in news brands has a significant effect on key drivers such as market share, pricing and profit, Field found from an analysis of 182 campaigns from the IPA Effectiveness Awards.

The detail

• Ads appearing in news brands are increasingly associated with trustworthiness and high quality by readers – two growth factors for advertisers.
• Fake news and disinformation online have driven record numbers of people to news brands looking for reliable news and analysis, and this has a knock-on beneficial effect on advertisers.
• Over the last six years, the study found, the effect on trust in brands that advertise on a single news platform was up by 17 percentage points. And this rise was almost 50 percentage points when ads ran across a brand’s print and digital platforms.

Soundbite

“News brands … deliver incredibly strong business effects for brands. They are able to do this because of their strong impacts on brand trust and quality perceptions – two brand effects that are now most strongly linked to profit growth” – Peter Field, marketing consultant.

Global TV media costs surge almost a third post-pandemic

Media inflation is driving up the cost of advertising across channels, with TV most affected, according to an analysis by WARC Media. 

TV costs are rising fast

The latest Global Ad Trends* report, The rising cost of incremental reach, finds that, globally, TV CPMs (cost per thousand) have increased 31.2% since 2019 – the steepest incline in more than two decades – and are up 9.9% year-on-year in 2022. 

The trend is especially pronounced in the US, where TV CPMs are forecast to reach $73.14 in 2022, an increase of 40.0% on pre-COVID costs. 

For some categories the impact is heightened. According to WARC Media data, advertisers in the food category spent on average 79.8% of their budgets on TV in 2019, and in the automotive category, 67.7%. If they were to have maintained that same level of investment, by 2021 the volume of impressions would have decreased by 18 percentage points. 

Digital media costs are increasing too 

This twin trend of declining linear television viewership and rising TV media costs is encouraging advertisers to look elsewhere for incremental reach, but price pressure is being felt across the online media landscape. 

Paid social CPMs increased by 33% between 2019 and 2021 (source: Skai) and the growing popularity of retail media formats is pushing up the cost of advertising on platforms like Amazon. 

Channels such as broadcaster video on-demand (BVOD) provide an alternative source of incremental reach. However, over-the-top (OTT or streamed video) ad costs are rising too: inflation in advanced TV formats in the US is forecast to reach 9.9% in 2022, as per World Federation of Advertisers (WFA) figures.

Relative bargains can still be found in channels like radio

The pursuit of incremental reach has generally focused on digital audio-visual channels, as they offer a more straightforward transition from television. In comparison, offline channels are often under-utilised, despite not having witnessed the same levels of price inflation since 2019.

In Australia, the cost of radio media in 2022 remains 1.1% below pre-pandemic levels, while prices in the US are largely unchanged three years on. 

A similar picture emerges in out-of-home (OOH), incorporating both static and digital panels: in the UK, outdoor ad prices are 3.1% lower than before COVID-19, while, in the US, OOH remains 5.8% cheaper than it was in 2019.

Key quote

“As the global economy teeters on the brink of an inflationary recession, media costs may experience further volatility. Nonetheless, non-video channels are worth consideration if they are right for the audience” – Alex Brownsell, Head of Content, WARC Media.

*Global Ad Trends is a bi-monthly report which draws on WARC’s dataset of advertising and media intelligence to take a holistic view on current industry developments. A complimentary sample report of WARC Global Ad Trends: The rising cost of incremental reach is available here.

Sourced from WARC Media

Australian News Media Bargaining Code spurs growth in media firms

News that Australia’s News Media Bargaining code has achieved major changes is setting policy pulses racing around the world: the law that gives media companies the means to negotiate with global “unavoidable” platforms – read: Google and Facebook – shows that another settlement is possible.

Why it matters

Since last year, when Australia’s News Media Bargaining code came into law, the questions of whether it would work and, if so, whether it could work elsewhere, have dominated discussion.

A new piece in the media-focused trade publication Poynter notes that it has brought more than AU$200m (US$140m) into the country’s media industry now that almost all qualifying companies have struck deals. The Treasury is currently reviewing the code, with findings expected to be made public in October.

Refresher and effectiveness

The legislation allows the Australian government to decide that a digital platform comes under the news media bargaining code, which means it is required to negotiate with news publishers over revenue, and if this fails, final-offer arbitration can be called for, with platforms facing tough penalties for non-compliance.

Of course, the real point of the law is to force the platforms to negotiate before the government gets involved, which appears to have happened. This is, however, a significant criticism: individual deals mean that the details are not known, and many smaller publications could be ripped off.

Does it work?

According to Poynter, yes. Many publications have been able to grow their editorial departments, with The Guardian adding 50 journalists to its Australian operation. Things are good for the moment, but once these deals end, the ball is once more in the platforms’ court.

Then there are the publications that didn’t make the cut. Facebook, for instance, has resisted deals with some non-commercial or small publishers, which has led to calls from MPs for the government to step in and force negotiation.

Around the world

Canada is closest to passing an Online News Act similar to the Australian code but with additional clauses on transparency.

The United States has seen a similar bill tabled.

Of course, what has also happened is that the platforms have been able to get ahead of the game by making deals with major and influential publications before laws come into force, thereby dampening calls for urgent reform.

Lawmakers ought to consider not just the impact on the largest but how to better the landscape for the smallest, most vulnerable publications, with transparency at the core.

Sourced from Poynter, WARC

Target’s key business metrics for inflationary times

Target, the retailer, is focusing on metrics including sales growth, market share and unit share as key metrics for its business as it navigates through inflationary times.

The background

In its last quarter, Target saw like-for-like sales rise by 2.6% on an annual basis, while traffic rose by 2.7%. The downside for the company was that quarterly profits declined by almost 90%, driven by price reductions on unwanted inventory. Such results hint at the challenges facing brands as they navigate a very fluid shopping environment.

The metrics

• Christina Hennington, Target’s chief growth officer, noted on an earnings call that “overall sales growth is one key indicator of the health of our business.”
• Market share, she continued, is “an equally important measure that we use to understand how we’re performing.”
  
• “And notably, during inflationary times like these, we heavily focused on unit share, specifically to better understand our relevance as compared to our competitive set, given that growth in both traffic and units is a strong proxy for the guests’ overall engagement with Target,” she added.
  

The reasoning

“Time and time again, these metrics have proven to be a better barometer for lasting success as compared to growth solely through average retail prices,” Hennington told investors.

Sourced from Seeking Alpha

Back to school spending is slow this year, but still a priority

Parents with school-aged children are spending for the upcoming school year at a slower rate than last year, but still expect to spend a significant amount despite inflationary concerns, according to a recent report by market research firm Ipsos.

Why it matters

Marketers should note that parents are coming into the 2022 school year with different concerns than last year: though COVID-19 is still present, other issues, such as school safety, and inflation, are taking precedence. Despite this, spending is up, albeit at a slower pace.

Takeaways

• Only 34% of parents with school-aged children have started back-to-school spending this year, compared to 42% percent last year.
• But the expected volume of spending remains high; parents plan to spend an average of $864 on back-to-school items this year, $15 more than last year’s average of $879, and $168 more than 2019.
• College back-to-school spending remains consistent; parents of college-aged students expect to spend $1,200, the same as in 2021.
• Expectations amidst the COVID-19 pandemic are relatively positive: 74% of parents surveyed said they felt that “the 2022-23 school year will go smoothly, without major COVID interruptions”.
• Further, a majority of parents prefer in-person learning experiences, with 65% of women and 50% of men reporting a desire for students to learn in an entirely in-class environment.
• Parents with concerns about in-person learning reported a higher concern over school safety than COVID-19, with 56% of parents reporting concerns for student safety. In addition, women reported a higher level of concern for school safety than men; 63% of women, vs 52% of men, cited this issue as top-of-mind.
• Sixty percent of parents surveyed said they would not let inflation affect their back-to-school spending.

The big idea

Marketers looking to leverage the back-to-school wave shouldn’t be deterred by inflation, as parents are still expecting to spend this year on school supplies and extracurriculars.

Sourced from Ipsos

Walmart: Advertising burns bright in a complex environment

When a retailer is as large as Walmart, its situation can tell you a lot about what is going on: with inflation at a 40-year high, sales are up, margins are down, the profile of buyer is shifting, and the retailer looks to new sources of growth – here’s what we know.  

Why it matters

Not only is Walmart a bellwether of the broader US economy, and therefore an indication of how people are reacting to phenomena like inflation, it is also a leader in high-margin brand expansions as it plays a ‘flywheel’ game similar to Amazon’s.

Key numbers

• Sales are up 6.5% year-on-year, but operating profit is still expected to be down between nine and 11% (a slight improvement on July’s expectation of a 13% profit decrease).
• More mid- and higher-income shoppers are using Walmart in light of squeezed household finances. The retailer attributes the majority of its market share gains to shoppers earning more than $100,000 a year.
• E-commerce continued to grow 12% over the quarter. Walmart now takes 55% of the US online grocery market.

Across the news

Speaking on an earnings call this week, Walmart executives noted the “flywheel strategy” that saw the retailer make headlines with the news that it would include Paramount+, a streaming service, as an additional benefit to its Walmart Plus loyalty program.

Advertising grows beyond the company average

Walmart’s global advertising business grew “nearly 30% in Q2” explained CFO John David Rainey in the call with investors.

While it remains a small part of a colossal total pie, the shift is part of a longer strategy to find more revenue from high-margin products and services that “result in more durable earning streams as they scale,” Rainey added.

Walmart’s ad offer is compelling to a growing number of advertisers, the number who now advertise through Walmart Connect increasing 121% in the last year.

This is a major area of focus. In June, Walmart explained how its storefront brings in 150m weekly visits, and expanded on its trials of shoppable TV ads

It is also a business that is already more global than the physical retail operation, given its possibilities in Mexico and in the huge Indian market, where Walmart is the majority owner of Flipkart, a major e-commerce company.

“Improvements to search and our large first-party shopper data have led to performance improvements for our advertisers, both year over year and sequentially,” said Doug McMillon, chief executive.

Sourced from Motley Fool, WARC,

Three principles for activating pragmatic purpose

Having a purpose isn’t enough for many sectors, it’s now about what you do with it – and that creates a need for pragmatism when planning purpose: We Are Rival’s DuBose Cole lays out a model for positive brand action. 

Why it matters

These days it seems like every brand wants to have a purpose, but rather than instantly jumping on the bandwagon, measured action and a realistic long term plan is advised.

Key takeaways

• Be realistic about what you can achieve. Adopt a pragmatic approach to purpose by aiming to outperform the ‘moral average’ in your sector. This allows a brand to understand where the ‘floor’ is for business impact.
• Plan an authentic purpose that is reflected in your product. An integrated product / purpose story helps to wrap product benefits and features in additional value, elevating their importance and value. Purpose integration multiplies value in and out of an organisation, as it provides a north star for product development and a goal for employees to push towards.
• Incremental brand action can help businesses build towards the best way to activate a brand purpose. Establish initial actions and developing further towards where impact or consumer engagement is being created can help break down the complexity of purpose into clear steps and tests.

Key quote

“Change and sustained impact come from a series of actions, not one off gestures or announcements – and this requires building a realistic plan for the long term. Brands that set out to become activists on day one risk creating a negative, not positive impact – feeding into cynicism and disbelief that business can’t be a force for good amongst a worried consumer base” – DuBose Cole, Co-Founder & Managing Partner, We Are Rival.

Niche sports boom in China

From sailing and paddleboarding to land-surfing and frisbee, China is experiencing something of a mini-boom in previously niche sports and leisure activities.

What’s happening 

The pandemic and lockdowns have led to a renewed focus on wellbeing and health, particularly in an outdoor context. Social media has helped grow interest in new outdoor sports and leisure pursuits – and those with relatively low costs for entry have particularly benefited. In addition, some variety TV shows have picked up on novel sports as a way of attracting viewers. Marketers need to consider how they might tap into these trends.

Takeaways 

The Global Times highlights several developments:

• Sales of imported skateboard categories on Tmall Global have increased by more than 100% year-on-year since January.
• One Beijing-based land-surfing club reports a 40% year on year surge in new members in July alone; a leading brand suggests the land-surfing market could grow tenfold in 2022.
• More than 200 universities have frisbee societies; sales of frisbee and associated products in 2021 exceeded Y 55m ($8.1m).
• Feizhu, Alibaba Group's online travel booking platform, reported a 13x increase in bookings for hiking and climbing last year. 
• Around 50 coastal cities have launched sailing clubs; clubs are also being established at inland lakes. 

Key quote

“Not all popular sports on social media will develop. There will be fierce competition among emerging sports. The winner should have the ability to guarantee industrial supply chains, and effectively control the operating costs and marketing capabilities of enterprises, and the ability to respond to force majeure such as the epidemic” – Chen Jia, independent analyst.

Sourced from Global Times

Warby Parker ‘normalises’ marketing spend

Warby Parker, the eyewear company, will “normalise” its marketing spend to pre-pandemic levels, a shift driven in large part by consumers returning to its brick-and-mortar stores.

Why it matters

The COVID-19 pandemic led many brands to adjust their marketing budgets as physical stores closed and shoppers made a greater amount of purchases online. As consumers return to many of their old habits, however, brands will need to reassess spending patterns accordingly.

The background

• While Warby Parker initially rose to prominence as an online direct-to-consumer brand, by the end of its last trading quarter, the brand had over 175 physical stores.
• Steve Miller, its chief financial officer, said on an earnings call that its marketing budgets were shaped in part by the varying economics of online versus offline retail.
• “In general, we tend to see that our e-commerce business is more highly correlated with marketing spend and performance marketing dollars,” he said.
• By contrast, “our stores serve as billboards and don't need as much marketing support,” Miller added.

The strategy

• As consumers switched online during the pandemic in 2020 and 2021, the brand “elevated our marketing spend as a percentage of revenue” accordingly.
• However, as the sales mix now more closely resembles that from 2019, before the onset of COVID-19, Warby Parker is refining its marketing strategy.
• “We are normalizing back to a level that we observed pre-pandemic that we think matches the business mix,” said Miller.
• As a percentage of revenue, that means a drop from 15.6% in the second quarter of 2021 to 13.8% in the same period in 2022. Long term, the aim is to reach the “12% level that we were at pre-pandemic,” Miller said.

Sourced from Seeking Alpha

Women’s media readership grows in post-Roe US

Following the Supreme Court’s undoing of Roe v Wade, the 1973 decision that had blocked states from banning abortion, the New York Times reports that readers are seeking out writing about women’s issues with in-depth coverage of broader civil rights in the US.

Why it matters

While the core of this story is not about advertising, the implications for brands are that they cannot sit on the fence and please both sides. Brands should already be aware of the ethics (or lack thereof) of their data brokers, and the position of the websites they work with should also be critical.

What’s going on

A slate of different publications and websites, which had seen declines in recent years, are seeing new interest in civil rights coverage from a feminist perspective:

• Jezebel, of Gawker and now G/O Media, has seen +18% traffic since May (when the Supreme Court’s draft decision leaked)
  
• The 19th, a non-profit on gender politics and policy, has seen +67% readership for abortion-related items
• The Cut, part of New York Magazine, has seen traffic to abortion rights stories almost triple.

The Times piece indicates that not only have these publications met their moment but are chiming with their audience’s position, while giving context and exploring the implications of developments around the US.

Context

It comes at a time of an intensely fragmented US media environment. The influence and ideological isolation of Fox News and its viewers has been well-documented. Less well-documented but also troubling are the stories of TikTok influencers freelancing reproductive advice, especially with many encouraging their viewers to reject hormonal birth control. Critics of these influencers argue that they are playing into the hands of the far-right.

As a WIRED story points out, influencers deploy varying levels of scientific accuracy, but generally focus on options that are seen as more “natural”. Stories like this might help indicate why women-focused media are finding a receptive audience at a time when women’s rights are under attack from groups both knowing and, sometimes, unknowing.

Sourced from the New York Times, WIRED

Utilities are on a par with tobacco and gambling brands

Utility firms are now viewed as negatively as tobacco and gambling companies by Britons, according to new data from research firm YouGov.

What’s happened

Six in ten (63%) Britons have a negative view of utility companies, very similar to the proportion having negative views of tobacco companies (66%) and gambling firms (62%).

The negative trend in consumer sentiment has been evident for some time, but marketing efforts to address people’s growing worries have not always been stellar. Back in January, it was already evident that UK utilities faced particular challenges in the year ahead, especially related to surging energy bills for customers, and some responses were woefully inadequate.

Why it matters

It’s a disaster – and not just from a marketing point of view – when brands supplying essentials like power and water are bracketed in the mind of the public with “vices” like smoking and betting. 

Pressure is rising across the political spectrum, with suggestions ranging from pushing energy firms to invest in green energy right through to arguments in favour of capping prices and potentially nationalising these vital industries.

Marketers need to up their game – and they need help from a C-suite that isn’t raking in excess profits and trousering huge pay packets while hiding behind concepts like “maximising shareholder value”.

Sourced from YouGov, Reuters, Financial Times, The Week, WARC

Product placement works best in combination with ads

Using 30-second ad slots in tandem with product placement can significantly increase key metrics, from sales to website visits, according to research. 

A study* by BEN, a firm working in the product placement field, tied ad and product integration exposure to brands to actions taken by consumers within the following two weeks. Marketing Brew detailed the highlights.

Takeaways

• Doritos, with a product placement within The CW drama Riverdale, saw a 61% lift in sales among audiences who saw both a TV commercial and a product placement in the series – that was almost twice the 37% lift in sales resulting from audiences who only saw the TV commercial. 
• A cereal brand with a product placement in the CBS series Mom saw a 53% lift in sales among audiences who saw both a TV commercial and a product placement – more than 3x higher than the 13.5% lift from a TV commercial alone.
• An auto brand that advertised on ABC didn’t see any increase in website visits through TV commercials alone, but saw an 8% lift in website visits when audiences saw both ad and product integration. 

Why it matters

Apart from the greater effectiveness of combining ad and product placement, there are two other factors to consider. One is that product placement and media are frequently handled by different teams – there is scope for them to work more closely together. The second is that planning for such an outcome needs to be stepped up as such opportunities will only increase when Netflix and Disney+ deliver ad-supported offerings to run alongside their subscription products. 

A flexible future?

The world of product placement is a complicated one involving all sorts of potential trade-offs for content producers in terms of scripts and financing. Those could conceivably become a bit simpler – or at least different – if Amazon’s experiment with a beta version of “virtual product placement” proves successful. 

*Methodology: BEN and TV measurement and analytics firm 605 compared results from cereal, snack, and automotive brands that ran ads on CBS, The CW, and ABC, and which also had product placement in the CBS comedy Mom, the CW drama Riverdale, or the ABC late-night series Jimmy Kimmel Live, respectively. The study compared four audiences: viewers who saw at least two seconds of a brand’s linear ad; viewers who saw the brand’s product integration but no ad; viewers who saw both a linear ad and the same brand’s product integration; and viewers who saw neither ads nor product integrations. BEN also tracked products those audiences purchased within two weeks of the integration airing, using shopping data from Catalina; it also tracked audience visits to brand websites using data from LiveRamp.

Sourced from Marketing Brew, New York Times

Fossil focuses its marketing spend

Fossil, the timepiece and accessories company, will focus marketing expenditure on its most profitable businesses, and aim to drive an immediate return on investment (ROI), as it responds to the varied challenges of inflation and COVID-19 in its different trading regions.

Inflation impacts demand

• Greg McKelvey, Fossil’s evp/chief commercial officer, told investors on an earnings call that various “headwinds” were observable in its various geographies.
• In the Americas, data suggests the “overall market is down”, potentially due to unfavourable comparisons with last year, when US stimulus payments encouraged consumer spending.
• Sunil Doshi, Fossil’s chief financial officer, further noted that the Americans and Europe are facing a surge in the cost of living.
• “Consumer spending in discretionary categories, particularly ours, will experience some pressure due to sustained higher levels of inflation and some normalization of spending,” he said.

The on-going challenges of COVID-19

• In mainland China, there is still “COVID-related disruption” and Fossil will be “watching the market closely as it opens up a bit,” continued McKelvey.
• Markets in Asian countries that often benefit from Chinese tourism could also see knock-on challenges from this situation. Taken together with mainland China, these nations contribute around 50% of Fossil’s sales mix in the region.
• In India, “sequentially the revenues are very strong and we're pleased with the progress that we are seeing from consumer demand in the country,” Doshi said.

The strategic response

• First among four main strategic moves by Fossil in response to this environment is to “plan conservatively and execute aggressively,” McKelvey told investors. “While we are realistic about the headwinds we face in the market, all three regions are well-positioned with both quality and quantity of inventory and will aggressively take advantage of upside opportunity.”
• Secondly, Fossil will focus “on distorting and investing in our most profitable businesses, with increased sales effort, opened by allocation and marketing spend.”
• Thirdly, innovation will still be vital, albeit with an emphasis on “a much tighter assortment for 2023 that will align with our focus brands and category strategies.”
• Fourthly, “from a marketing perspective, given the current environment, we’re focusing on shifting our mix to more immediate ROI [and] conversion-driving digital marketing activations,” said McKelvey. Overall marketing spend should largely remain steady, and the company will “remain agile and ready to increase spend as we see improving trends in the macro [environment] and consumer purchasing behaviours,” he added.
  

Sourced from Seeking Alpha

Apple plots major ad business expansion

First hardware, then services, now Apple is looking to advertising across parts of its ecosystem beyond search advertising on the app store – in so doing, the effort raises complicated questions about the effects that Apple’s App Tracking Transparency has had on advertising-based companies ahead of ramping up its own advertising capability.

Why it matters

In the name of privacy, Apple introduced its ATT features (which effectively gave users the option to allow or not allow apps to track their behaviour across apps) in iOS 14.5, in mid 2021, when it was enforced system-wide.

Early indications suggested take up of the feature was high, given that tracker blocking was as simple as hitting a 'Do Not Allow' button when you first download an app. Soon after, the impact on its own business pointed to a lucrative new area for Apple, while the fortunes of digital ad businesses – especially Meta – began to dip. Many of those firms blamed the ATT changes for their struggles.

Now, according to reporting from Bloomberg, Apple is looking to grow the $4bn it already makes annually into a business bringing in tens of billions of dollars.

Whether it’s inconsistent or not, the bigger question surrounds whether this is a problematic advantage that it has exerted over both large rivals like Meta but also on smaller developers that relied on advertising to Apple users. As this business grows, expect more and more serious scrutiny.

The proposals

As Bloomberg’s report notes, Apple already advertises on

• The App Store (a kind of sponsored search advertising)
• Through display advertising on News and Stocks
• With TV style advertising during its Major League Baseball streaming.

Based on reports of exploration within the firm, a future direction for Apple’s ad business could come in the form of Google-Maps style sponsored map listings, or sponsored listings on other storefront style apps like books or podcasts, Bloomberg speculates.

If the fortunes of Amazon are anything to go by, advertising is anything but dead, especially with a global cohort of relatively affluent, loyal iOS users for whom some non-invasive advertising won’t make a huge difference but has the potential to make Apple huge amounts of money and bolster its non-hardware revenues.

There are still some issues, however. Apple, for instance, won’t be asking its users in each individual app if they are willing to be tracked (it argues that they aren’t being tracked across apps) even though there is a central setting to turn off personalised advertising.

So it does appear that there are differing rules for different players, which could become a problem in future.

Sourced from Bloomberg, WARC

Consumers have the answer to rising prices ... and brands won’t like it

Consumers struggling to make ends meet take an uncomplicated view of what brands need to do to tackle price rises: cut marketing spend, cut executive pay, cut profits.

That’s according to consumer insights platform Zappi , which surveyed 1,500 adults in the UK as part of a wider global study. 

Key findings

• Two thirds (67%) of consumers expect brands to cut C-suite pay to keep prices down.
• Three quarters (75%) want brands to take accountability for soaring prices amidst the cost of living crisis by reducing their profits

• More than four in five (85%) believe brands should also cut down on marketing spend.

Why it matters

Consumer sentiment chimes with a recent UK government proposal to reward businesses for cutting adspend as a way to minimise price increases. While marketing theory and the marketing industry at large can see the holes in such a scheme, that doesn’t mean it won’t happen – and if it does, it potentially sets up consumers against those brands which continue to advertise. 

Throw in money-saving expert Martin Lewis’s warnings of civil unrest in reaction to rising energy prices and it’s not a huge step (with the caveat that the views highlighted in Zappi’s research were prompted) to think that everyday brands could be caught up in a serious backlash against impossible costs of living this winter. Marketers need to be gaming the worst-possible scenarios.

Sourced from Zappi, Marketing Week, Guardian, LinkedIn