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Warc - Marketers Toolkit 2023.pdf

The Marketer's Toolkit 2023 addresses the uncertain economic environment affecting global marketing, impacted by the war in Ukraine, inflation, and recession fears. A survey of over 1,700 marketers reveals a strong concern over economic challenges and emphasizes the importance of maintaining brand equity and adapting strategies amidst shifting consumer behaviors. The report identifies key trends such as the need for sustainable practices, managing disruption in supply chains, and navigating the changes in marketing dynamics due to a cost-of-living crisis.

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The Marketer’s Toolkit 2023 Your guide to focus, survive & thrive Global Trends Report © Copyright WARC 2022. All rights reserved.
The Marketer’s Toolkit 2023: Finding focus in uncertain times We began last year hoping to put the economic havoc of the pandemic behind us. Instead, within weeks the war in Ukraine turned the world on its head. The war has had a transformative impact on energy prices, inflation and the cost of living around the world. The IMF forecasts 2.7% global growth in 2023, down from 6% in 2021, and presents the weakest growth profile since 2001 (except for the global financial crisis and the acute phase of the COVID-19 pandemic). Meanwhile inflation is expected to improve, but still remain high, at 6.5%. The Marketer’s Toolkit survey of 1,700+ marketers worldwide found that 95% expected to be impacted by economic recession. While it will undoubtedly be the single greatest concern worldwide, there are several other issues marketers will also need to contend with. The war, climate change and rapidly deteriorating US-China trade relations threaten the regular supply of goods, driving major changes in industries that have built businesses on the basis of just-in-time availability. Media fragmentation and cultural divides are making it harder than ever to aggregate audiences and create messages that resonate broadly. Even the technology giants are finding revenues harder to come by. And of course, the climate emergency has only escalated in the intervening months between COPs. In this situation, WARC’s proprietary STEPIC framework is particularly useful, helping us start our theme selection process by collating a broad selection of macro-level drivers, before extensive research and analysis filter it down to the five most important areas of change that we address in the Global Trends Report. Uncertainty will rule in 2023, but marketers who are able to drive transformative change in consequential areas can benefit from emerging opportunities. The 2023 Marketer’s Toolkit is designed to help companies find and focus on these opportunities, and make the most of the coming year. The 12th edition of WARC’s annual Marketer’s Toolkit includes a series of reports aimed at helping marketers identify and focus on key areas of industry disruption, determine the most effective strategies, and benefit from arising opportunities. Aditya Kishore Director of Insight WARC 2 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report
Marketing leaders interviewed for this report Linda Lee CMO Campbell Soup/ Meats and Beverages Conny Braams Chief Digital and Commercial Officer Unilever Bhaskar Choudhuri CMO - APAC Lenovo Alon Lian Head of Advertising & Media Business TCL Jessica Spence President of Brands Beam Suntory Rebecca Dibb-Simkin CMO Octopus Energy Anubha Sahasrabuddhe CMO Lion Breweries Qaiser Bachani Global Head of Digital COE and Europe Consumer Experience Lead Mondelēz Vanessa Yeo Barger VP of Brand Love, Bonito Amy Imbriaco General Manager, Greater China Tumi Kauveri Khullaar VP Consumer Marketing & Sponsorships Mastercard APAC Antonia Wade Global CMO PwC Ye Danpeng CMO Robam 3 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report
In this report Contents 1 Marketing in a cost-of-living crisis Current macroeconomic factors are driving very high levels of price sensitivity. Marketers must find ways to maintain brand equity and increase market share in an increasingly difficult economic scenario. 5 Price vs. planet: A false dichotomy Marketers will need to balance sustainability initiatives with increased price sensitivity from consumers in this current economic environment. 4 The clash of demand, delivery and disruption War, climate change and inflation are all creating unprecedented disruption for global supply-chains. Consistent inventory and reliable delivery of products will emerge as an important differentiator in 2023. 2 A reckoning for Big Tech Shifts in demand, new competition and the blurring of product categories mean that gravity is finally starting to affect technology leaders, forcing new strategies from them in 2023. 3 The era of “bubble up” culture Technological and societal trends have split traditional segments into different ideological and interest-based communities. Increasingly, effective marketing will require marketers to target messaging based on these elements. The Global Trends Report is the first module in the Marketer’s Toolkit 2023, aimed at providing marketers with a set of planning and decision-making tools for the coming year. It identifies five trends that will disrupt existing global marketing practices, and offers insights to help turn these disruptive areas into opportunities for growth. Trend identification is based on our proprietary STEPIC methodology along with an in-depth review of the latest insights and industry information. The report further incorporates a global survey of 1,700+ marketing executives, and one-on- one interviews with leading marketers worldwide, as well as analysis and insight from WARC’s global team of experts. Note: Unless specified otherwise, all survey data in this report is from the 2023 Marketer’s Toolkit survey, an online survey of 1,700+ marketers worldwide, conducted in September 2022. 4 The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report © Copyright WARC 2022. All rights reserved.
The STEPIC methodology This report is part of the 12th annual Marketer’s Toolkit from WARC, aimed at providing insight and planning support for the main challenges facing marketers in the coming year. As in recent years, the report is based on the proprietary STEPIC methodology, developed alongside WARC’s sister brands within the Ascential group of companies. STEPIC covers six drivers of change for marketing: Society, Technology, Economy, Policy, Industry and Creativity. By reviewing the major macro drivers expected to impact our industry in 2022 across each of these six pillars, the WARC team has been able to gain insight into the major trends and disruptive forces for marketers, and help define the most effective strategies to manage and profit from these forces. Synthesis and analysis Final Report Final validation & review process Extensive research and data collation of key macroeconomic forces driving change Global expert analysis and trend selection Analysis and selection process; selecting most viable themes from research Evaluation of macro-trend impacts on marketers S C Creativity The drivers shaping creative output T Technology The drivers enabling new models, processes and possibilities E Economy The drivers of marketing investment P Policy The regulatory drivers affecting marketing activity I Industry The drivers dictating the competitive environment Society The drivers altering consumer behaviour and preferences Desk research, WARC internal data & case study review Global survey of 1,700+ marketers Interviews with marketing leaders worldwide 5 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report
Marketing in a cost-of-living crisis 1 2022 has been a year of two-pronged economic anxiety. First, inflation gripped the globe, and now, most major economies appear poised for a recession that isn’t expected to offer much pricing relief. This chapter looks at how marketers can navigate a treacherous time. The Marketer’s Toolkit 2023 © Copyright WARC 2022. All rights reserved.
Ongoing pandemic-related supply chain difficulties, and the war in Ukraine, have combined to bring on an era of stagflation, where probable recession has combined with inflation. Even as consumers spend less, certain factors causing prices to rise are proving implacable. According to data from the OECD, the Consumer Confidence Index is down throughout the US, the UK, Europe and China, with major regional variations. A survey from Rival Spark found that most consumers in the UK (51%) expect their personal economic situation to decline in the near term; in the US, almost half (46%) expect the opposite. The particulars aside, this challenging economic cycle is resulting in predictable consumer behaviours globally, amongst them more desire to purchase store brands. A European McKinsey study showed that 62% of consumers have done this, or plan to, and the German discount grocer Aldi, a relative newcomer to the US market, has reported double digit year-on-year US growth. A more enjoyable coping mechanism is the so-called “lipstick effect”, wherein consumers indulge in small luxuries when Big Ticket items become unaffordable. Some marketers are falling into predictable, If discouraging, patterns as well, with 36% of respondents to WARC’s Marketers Toolkit survey saying they plan to cut marketing spend, even though evidence from prior economic downturns suggests they should maintain spending levels. Complicating the current situation further is that marketers also have to figure out how to manage price, a new skillset for many. 7 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis
How important are each of the following societal topics and consumer concerns in terms of their impact on your 2023 marketing strategy? The 2023 Marketer’s Toolkit survey asked respondents two pointed questions about how rising inflation is affecting their plans for 2023, and both showed addressing it as the number one priority. In the chart at the right, 95% said “the impact of recession” was affecting their planning, with 63% calling that impact “significant”. The cost-of-living crisis was also cited as “the biggest cause for concern” amongst respondents, ranking number one for 37%. Still, there are regional differences. Other survey data shows the impacts are being felt slightly more strongly globally than they are in North America, where media and audience fragmentation is worrying more marketers. The need to address inflation rises Significant impact Some impact No impact The impact of economic recession Environment: conscious consumption, sustainability and climate change Data: privacy, consumer's control over their data, ethical internet Brand safety issues (i.e. avoiding disinformation and hate speech) Diversity, inclusivity and social justice Low-attention economy Wellness: mental health, self-care, burnout & stress Escalating geopolitical tensions Viruses, communicable diseases & hygiene related concerns 0% 25% 50% 75% 100% 33% 27% 20% 19% 18% 19% 14% 11% 5% 44% 47% 50% 51% 49% 44% 47% 49% 32% 23% 26% 29% 30% 33% 37% 39% 40% 63% The Marketer’s Toolkit 2023 8 1 – Marketing in a cost-of-living crisis © Copyright WARC 2022. All rights reserved.
How marketers are responding Data from the Toolkit survey shows marketers are deploying many strategies to manage the economic situation, including a plan to “adjust spend between brand and performance marketing” on the part of 43%. As we’ve seen during prior economic slowdowns, there is also a healthy – or unhealthy – percentage (36%) who plan on reducing marketing spend. But here’s where it gets interesting. More Toolkit respondents than last year are predicting an increase in budget in both areas. On the brand side, 31% say they are increasing spend, as compared to 23% last year. On the performance side, the split is 46%/41%. One potential explanation is that more marketers are finally taking the advice to double down on brand spending during a downturn. Another is that there is clear recognition amongst respondents that the lines between brand and performance are getting murky, with 62% saying they see convergence between the two on digital commerce platforms. When it comes to performance marketing, things are directionally clear, with 39% saying they are going to move budget to digital channels and 35% saying they plan on shifting to “value-focused offers and promotions”. Do you expect the balance of your investment in brand vs. performance to change over the next year? (By survey year) Increased investment in brand Increased investment in performance No change 0% 25% 50% 75% 100% 2019 2020 2021 2022 24% 36% 20% 28% 46% 41% 50% 32% 31% 23% 30% 40% 9 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis
The rush to cut advertising spend is understandable, especially in organisations where marketing isn’t viewed as an investment – as is the focus on price promotions to support sales. However, evidence supports going in the opposite direction on both. During downturns, marketers who continue to invest in brand advertising and are prudent about price promotions: • Often weather increases in pricing better because they’ve built brand equity. • Come out stronger, often because they focus on gaining excess share of voice (ESOV). • Enhance connections with customers by also focusing on the tone of their messaging. First, let’s look at pricing; it’s not something marketers are accustomed to because prices have been static for years. Les Binet recently urged brands to use econometrics to get a handle on price elasticity, studying growth prospects and price pressures in their sector. While it’s important to optimise around price, promotion and ad budgets, he noted brand advertising is the underpinning, supporting prices and margins. The “force multiplier” of creativity is also crucial. Focusing on brand protects against price elasticity. And this can be done in many ways, via ESOV, innovation, and getting the tone of messaging right. According to an analysis of the Advertising Council of Australia’s (ACA) Effectiveness Database, ESOV has large business effects across all budgets, building mental availability when other brands go dark. But don’t let performance do the heavy lifting when building ESOV. British e-commerce clothing brand Asos is finding this out the hard way; its over- investment in performance (+80%) and failure to invest in long-term brand awareness has caught it in the “spiral of doom” where continual discounting erodes gross margins over time. Does investment during downturns really work? Analytic Partners data from the last recession shows what happens when advertising Is considered an investment: brands that boosted their ad investment increased incremental sales by 17%; those that cut back saw an 18% contraction. The case for continuing investment 10 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis
The tone of messaging is also a key consideration when marketing in a cost-of-living crisis. First and foremost, brands need to convey sensitivity and transparency – don’t resort to euphemisms when relaying bad news. Especially when having to raise prices, brands need to communicate their value, aside from price, and also realise that consumers may have enhanced expectations in areas such as customer experience. Another technique is to rely on humour, especially for brands which commonly rely on it. In fact, following this advice might be a competitive advantage; humour has been declining in use since 2009, according to research from Kantar, despite its effectiveness in building emotional engagement. It is used most often in TV (37%) and YouTube (30%), but is less popular in print, outdoor and website ads. System1’s analysis of 2021 Super Bowl ads demonstrates humour’s impact. Despite racial strife, polarisation and ongoing worry in the US about the pandemic, nine of the top 10 ads favoured by consumers employed humour. Notably, the only top ad that wasn’t humorous – from the employment site Indeed.com – displayed empathy, another way that marketers can effectively use tone. Marketing in a cost-of-living crisis is about expanding deep customer connections through savvy use of media and messaging. The evidence shows brands which embrace this will emerge from the crisis stronger than those that don’t. A few words about messaging 11 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis
The recession is real. That’s something that’s led to a new effort on our end around value, marketing and messaging. At a time like this, it’s important to not cut back on our marketing … [and] lean in, not just to market; it’s to lean into how we can help our consumers. We are seeing a much sharper downturn in consumer confidence across Western Europe than we are in the US. You have to be constantly pushing to understand what people are experiencing. As we saw through the pandemic, people were very choiceful about where they spent their money. In these inflationary times, where you are fighting for every other … dollar that a consumer spends, consumers will always prefer brands that have strong equity. There might be a small dip or small growth, but the preference will always be to go for the known brand and brands that have been consistent in the past. Linda Lee CMO Campbell Soup/Meats and Beverages Jessica Spence President of Brands Beam Suntory Qaiser Bachani Global Head of Digital COE and Europe Consumer Experience Lead Mondelēz The CMO view The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis © Copyright WARC 2022. All rights reserved. 12
Explore the Case Study Case Study Advertiser: Procter Gamble Market: Global At its 2022 annual meeting, CPG giant Procter Gamble stressed that it is managing the cost- of-living crisis by focusing on product value and superiority. CEO Jon Moeller said that means to, “double down on the integrated set of strategies that have been delivering very strong results.” This includes: • A portfolio of daily use products and categories where performance drives brand choice; • Having what it calls “irresistible superiority” across product, package, brand communication, retail execution and value. Takeaways • There are many ways, other than price, to communicate value; these can range from product benefits to how a product addresses concerns such as the environment. • Giving consumers’ options across price tiers helps them address their economic issues without resorting to price promotions. • Think of every place a brand appears as a media channel, so that messaging isn’t limited only to traditional advertising channels. Results On its most recent earnings call, PG said: • Organic sales grew (7%) in all product categories; PG has maintained global aggregate market share. • Mid-tier brands in the Fabric Care category have grown as consumers trade down, but stay within PG’s portfolio. • Growth in private label purchasing has had little effect on PG’s ability to hold or maintain share. Part of the strategy entails promoting products across price tiers – the Tide laundry brand has price points for the US market ranging from 50 cents per load to about 20 cents. But the company is also driving value messaging, aside from price. Dishwashing brand Dawn, for instance, promises to clean up to 2,000 more dishes than a leading competitor. Strong, value-based messaging extends across copy, packaging, and the virtual and physical shelf. PG demonstrates value across pricing tiers The Marketer’s Toolkit 2023 13 1 – Marketing in a cost-of-living crisis © Copyright WARC 2022. All rights reserved.
Takeaways The combination of inflation and a probable recession makes this an atypical downturn. This also means the long-standing advice to marketers to maintain spending on brand advertising, and keep building share of voice, is even more important; Consumers in an inflationary environment may be even more likely to seek out less expensive brands. Pricing can no longer be the ‘forgotten P’ since price increases are a central concern for consumers. To get a handle on an individual brand’s price elasticity, marketers should use econometrics, assessing the impact marketing investment has on price. Strong brands, which focus more on brand advertising than price promotions, have less price elasticity, and can also weather price increases better. For all the focus on investment, don’t forget how important the tone of messaging is in building connections with your customers. One underutilised technique is humour, which, if used well, can be a competitive advantage, even during tumultuous times. A Kantar study of humour’s effectiveness found that humorous ads are more expressive, involving and distinct. 1 2 3 14 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 1 – Marketing in a cost-of-living crisis
A Reckoning for Big Tech 2 Big Tech’s tectonic plates are shifting at a quicker pace than at any time since the launch of the iPhone in 2007. This is heightening competition between Alphabet, Amazon, Apple, Meta and Microsoft, and reshaping marketers’ relationships with digital platforms. The Marketer’s Toolkit 2023 © Copyright WARC 2022. All rights reserved.
Until recently, technology’s biggest beasts had been able to enjoy rapid growth by targeting distinct market segments, whether e-commerce (Amazon), hardware (Apple) or business services (Microsoft). Even digital advertising was neatly divided between social (Meta’s Facebook and Instagram), search and video (Alphabet’s Google and YouTube). This cosy arrangement is at an end, however. Big Tech stocks have lost billions of dollars in value in 2022. As firms seek growth in a post-pandemic landscape, the likelihood of territorial encroachment increases. The digital ad market has been upended by Apple’s App Tracking Transparency (ATT) privacy policy, which has made it harder for apps like Snapchat to target users and measure the success of campaigns. As well as costing platforms billions of dollars in lost revenues, ATT has also reinvigorated Apple’s own aspirations in the ad business, and reinforced the strengths of data-rich media owners like Amazon. Alphabet and Meta are still expected to earn a combined $324.3bn in ad revenue in 2022, according to WARC Media forecasts. However, their ‘duopoly’ dominance of the digital ad sector is being seriously challenged for the first time. The seemingly unstoppable rise of TikTok, alongside the arrival of new ad players like Netflix, suggests brands will have more choice in how they allocate digital marketing budgets. And while initial reactions to Elon Musk’s Twitter acquisition are far from positive, his deep pockets might eventually turn it into a stronger competitor. All the while, Big Tech finds itself under a growing weight of regulatory restrictions, with the European Union’s upcoming Digital Markets Act threatening ‘gatekeeper’ platforms with huge fines over any perceived anti- competitive behaviour. 16 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
Brand confidence in Facebook ebbs away Facebook remains the biggest social platform in the world, with nearly three billion monthly active users. Yet its star is beginning to wane – even within parent company Meta. In 2021, Facebook was overtaken by Instagram as a driver of ad sales for the first time. Plans to reinvent Facebook as hub for e-commerce have seen mixed results; the platform recently announced it would close its live shopping feature. WARC Media forecasts Facebook’s annual global revenue will decline from $54.9bn in 2021 to $46.1bn in 2023. This scepticism is borne out by the Toolkit 2023 survey results. Nearly a third (30%) of respondents plan to decrease investment in Facebook, with only 23% planning to boost spend with the platform – the first occasion we have seen net-negative investment intention towards Facebook in six years. Moreover, advertisers appear concerned by Facebook’s reputation in the wake of numerous data privacy and brand safety scandals. Around half of those surveyed by WARC identified Facebook as the worst-performing platform for both corporate conduct and transparency, as well as consumer privacy standards and the ethical use of data. Interestingly, less than 5% said the same for Instagram – suggesting the Facebook brand remains a lightning rod for negativity around the broader Meta business. How do you expect investment in Facebook to change next year? (By survey year) Original survey question asked ‘How do you expect investment in the following digital platforms to change in 2023’, which has been adapted above to reflect focus on Facebook investment only. 0% 25% 50% 75% 100% 2017 2018 2019 2020 2021 2022 30% 18% 13% 21% 22% 8% 47% 45% 39% 42% 43% 38% 23% 37% 47% 37% 34% 54% Increase Stay the same Decrease 17 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
Which of the following emerging technologies do you expect to be most important to you next year? Big Tech companies wishing to retain a close relationship with marketers would do well to prioritise artificial intelligence (AI) capabilities. For a third consecutive year, survey respondents have named AI as the most important emerging technology for their brands. Web3 innovation may also prove key: hype around the metaverse is clearly evident from the 29% who view that technology as most significant to their plans, up from only 10% a year ago. Interest in blockchain tech and NFTs has also grown, while connected TV and augmented reality continue to rise up the agenda for brands. AI tech a top priority for advertisers 2022 2021 2020 Arti cial intelligence Live video/livestreaming The Metaverse Connected TV Enhanced payment technologies 5G Augmented reality Virtual reality Internet of things Chatbots/messenger apps Blockchain Non-Fungible Tokens (NFTS) Wearables Facial recognition 0% 15% 30% 45% 5% 6% 0% 0% 28% 21% 8% 12% 24% 0% 17% 0% 0% 38% 5% 7% 7% 6% 21% 14% 11% 14% 17% 21% 21% 10% 30% 36% 6% 9% 11% 12% 15% 15% 15% 18% 20% 22% 24% 29% 30% 42% 18 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
This year’s Toolkit survey finds advertisers reappraising long-held assumptions about the Big Tech landscape. 1. Brands have more choice in the tech space Two years ago, nearly one-in-five (19%) advertisers claimed that Google and Facebook’s digital media ‘duopoly’ was one of their biggest concerns when drawing up marketing plans. Those worries have subsided: only 11% of respondents now cite the duopoly as a major headache. The majority of advertisers (62%) agree that a range of changing market dynamics are forcing strategic shifts from the tech giants – from Netflix’s move into the ad space, to Meta’s growing focus on augmented reality and metaverse innovation. This enforced competition will likely mean Big Tech firms working harder to attract brand dollars, which can only be good news for marketers. 2. Regulation is giving brands more control Data privacy remains a top-three societal concern for advertisers, with 39% saying it will have a significant impact on their 2023 marketing strategy. Regulators are similarly preoccupied. Europe’s Digital Markets Act (DMA), which comes into force in 2023, arrives hot on the heels of further restrictive guidelines from authorities in China and India, even if the prospect of antitrust measures in the US appears to have diminished. The DMA targets large-scale platform businesses which provide a ‘gateway’ between businesses and consumers (i.e. Amazon, Meta, Alphabet and Microsoft). Firms must adhere to complex rules on data transparency, and brands have greater autonomy to set their own prices. 3. TikTok is reshaping the digital landscape TikTok has shaken the Big Tech status quo and brands are responding in kind: 76% of those surveyed plan to increase investment with the mobile video app in 2023. Alphabet recently admitted younger users prefer discovery via TikTok videos, rather than written searches on Google. Both YouTube (Shorts) and Instagram (Reels) are betting heavily on TikTok- lookalike products, though in watch time TikTok remains the undisputed leader of short-form video. Nonetheless, the pivot to full-screen, vertical video content across Big Tech will have an impact on how brands plan social and video campaigns in 2023. Shifting attitudes towards Big Tech 19 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
Despite economic headwinds, Big Tech’s restless pursuit of the next big revenue opportunity will remain undimmed. Each major tech player is determined to seize first-mover advantage in a nascent field, such as: Digital healthcare Digital health and wearable technology ownership grew markedly during the pandemic, and is likely to be a key battleground in 2023. This trend didn’t go unnoticed by Big Tech, which collectively spent $3.6bn on health- related MA activity in 2021, centred on data and devices. Investment stepped up this year: Amazon acquired primary care tech provider One Medical in a $3.9bn deal, while TikTok-owner ByteDance revealed its own $1.5bn acquisition of hospital company Amcare. Metaverse For all the hype, Meta’s vision of the metaverse remains unfulfilled. The company hopes its new Quest Pro VR headset will encourage users to work in virtual environments, while brands can use Meta’s Avatar Store to sell digital goods. However, rivals may be stealing a march. Apple will release of its own mixed-reality headset in 2023, with augmented reality glasses expected to arrive by 2025. A resurgent Microsoft, meanwhile, already buoyed by its acquisition of gaming company Activision Blizzard, is looking at the space through a B2B lens, and plans to build its own ‘industrial metaverse’. Commerce Yes, some heat has come out of the digital commerce sector. Instagram’s scaling back of shopping features reveals that social commerce has not taken off at the expected speed. However, despite evidence that Western consumers reject the notion of Chinese-style ‘super-apps’, companies have not yet given up on their plans to integrate content and commerce. TikTok is reportedly planning to operate its own US warehouses, to further capitalise on the #TikTokmademebuyit trend for video content influencing purchase behaviour. What’s next for Big Tech in 2023 20 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
The CMO view Marketers need to cut through the hype and return to the fundamentals of marketing. What can we do that would appeal to consumers, not because it’s a shiny new toy but it makes their lives simpler, helps them connect to their passions… Behind the scenes, we’re working to ensure we play a part in making this evolving arena representative, inclusive and safe for everyone who uses it. Robust governance around issues such as data privacy, safety, equity, diversity and inclusion, sustainability and ethics needs to be established, and we’re using our scale and global profile to help set future-fit foundations for our business and beyond. It’s about making sure that whatever experience you’re trying to create is absolutely spot on, and also has been bought and optimised at the right cost level so that it brings that ROI that you’re looking for. That’s how we tend to approach all these conversations with our partners. Kauveri Khullaar VP Consumer Marketing Sponsorships Mastercard APAC Conny Braams Chief Digital and Commercial Officer Unilever Qaiser Bachani Global Head of Digital COE and Europe Consumer Experience Lead Mondelēz The Marketer’s Toolkit 2023 21 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
Explore the Case Study In November 2021, beauty business Lush opted to remove itself from Facebook, Instagram, Snapchat and TikTok in protest at user and brand safety concerns. Lush likened the environment provided by social platforms to a “dark and dangerous alleyway”, and unbecoming of a company whose purpose is to help people “relax and pay attention to their wellbeing”. The ‘Anti-Social Media Policy’ stipulates Lush will not invest in any platform that allows “harassment, harm and manipulation”, nor digital media owners that use visitor data in “unpublished ways”. The company’s CEO said he would be prepared to lose out on £10m in sales as a result of the move. This isn’t the first time Lush has boycotted social platforms – it did so, briefly, in 2019 as well – but on this occasion the abstinence has been maintained. Instead, Lush has focused on growing its YouTube following, using Pinterest to share inspirational content, and invested in re-engaging customers through physical events. Takeaways • Context matters. Purpose-driven brands may find their marketing message compromised by the quality of media environment in which they advertise. • Advertisers can select the Big Tech platforms that they believe most closely aligns with their goals and brand values. • Abstaining from investment with major platforms can generate valuable PR exposure. Results • Lush arrived at the pre-Christmas trading period with a surplus cash amount of £26.7m, reflecting improved liquidity. • In-person retail is a priority: Lush invested £7.6m in new store openings and refits across the UK and Europe. • Lush has attempted to maintain reach through innovations such as a new podcast and new wellness app called Bathe. Case Study Client: Lush Market: Global Lush: Anti-Social Media Policy 22 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
Takeaways Big Tech companies are seeking new sources of revenue, in some cases bringing them into direct competition for the first time. Growth is slowing in Big Tech’s core sectors, including digital advertising and e-commerce. This is encouraging those companies to invest vast sums to win share of emerging sectors, from digital healthcare to the metaverse. Alphabet and Meta’s digital advertising ‘duopoly’ is being seriously challenged for the first time. Apple’s ATT policy has weakened the ability of app-based platforms such as Instagram and Snapchat to track users and measure campaign performance. This creates opportunities for firms like Amazon and Apple, which possess greater end-to-end visibility of the purchase journey. Brands have an opportunity to reset their relationships with Big Tech. For years, many advertisers have felt dependent on the reach and targeting capabilities offered by Facebook and Google. The rise of TikTok and Amazon as media owners, plus newcomers like Netflix joining the advertising space, may enable marketers to reevaluate and recalibrate media plans to better suit their brands’ needs. 1 2 3 23 The Marketer’s Toolkit 2023 2 – A reckoning for Big Tech © Copyright WARC 2022. All rights reserved.
The era of “bubble up” culture 3 Culture formation is increasingly a “bubble up” phenomenon that is shaped by communities and creators across a decentralised media ecosystem. Against this backdrop, marketers face profound questions around how to consistently build relevance, audiences and engagementat a meaningful scale. The Marketer’s Toolkit 2023 © Copyright WARC 2022. All rights reserved.
The formation and diffusion of culture is undergoing a shift which is eroding the idea of brands reaching the “mainstream”. As noted by Oliver Feldwick from ThePartnership, popular culture was traditionally “trickle down”, and shaped by the few media gatekeepers with scaled audiences. Today, however, a combination of touchpoint proliferation, audience fragmentation and splintering attention means culture is increasingly “bubble-up”. Consequently, everything from social movements to the latest fads now emerge from disparate communities – whether based around influencers, passions or hobbies – that function entirely independently. Top creators on TikTok, for instance, may be famous amongst the content-sharing app’s users while having minimal recognition elsewhere. Gen Z is the vanguard for this balkanisation, spending 95 minutes a day on TikTok, more than streaming platforms like Netflix and Disney+ combined, upending how entertainment content is made, discovered and enjoyed. One result: platforms like TikTok, Instagram and YouTube are competing fiercely to be the go-to destination for creators, now a 50 million-strong community with rising heft amongst advertisers. TV, by contrast, is suffering a disconnect between high ad prices and shrinking audiences – especially younger viewers. Live sports prove TV can still achieve scale, but even here digital players like Amazon are encroaching. A return to weekly episodic scheduling is one way TV networks may reassert their community-accumulation power. As with these media owners, brands must now answer tough questions around connecting with creators and communities, building scale, and mixing granular appeals with relevance to casual buyers and audiences. 25 The Marketer’s Toolkit 2023 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
Fragmenting audiences, shifting budgets Marketers are not convinced the age of mainstream reach is finished – or, at least, not yet. Proof comes from WARC’s 2022 Marketer’s Toolkit poll: when asked if ‘The era of mass marketing is over’, a 48% plurality of interviewees rejected this proposition. The data, though, indicated there is a broader awareness that the rules of engagement are changing. While inflation/cost-of-living were the biggest source of concern for 2023, mentioned by 37% of the panel, media and audience fragmentation was close behind on 34%. The survey also demonstrated how this concern is now influencing budgets. When asked about spending for next year, two-thirds of respondents expect investment in targeting interest-based communities to rise. Sixty-three percent said the same for gaming – a space where community is deeply embedded – as did 52% for their outlay on influencers and other social media content. Shifts in audience usage (67%) and audience fragmentation (47%) were cited as the main reasons for decreasing investment in certain digital properties – with creator- led platforms like TikTok, Twitch and YouTube amongst the main beneficiaries of this shift, while legacy social hubs like Facebook and Twitter saw more brands plan to cut back than raise their outlay. How do you expect investment in the following digital platforms to change in 2023? Increase Stay the same Decrease TikTok YouTube Google Twitch Linkedln Instagram Amazon WhatsApp Spotify Facebook Twitter Snapchat Bing (Microsoft) 0% 25% 50% 75% 100% 35% 37% 28% 30% 11% 12% 9% 11% 9% 11% 4% 6% 4% 54% 44% 53% 47% 52% 50% 47% 43% 45% 40% 43% 37% 20% 11% 19% 19% 23% 37% 37% 44% 46% 46% 50% 53% 57% 76% 26 The Marketer’s Toolkit 2023 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
1. Tapping into community- first culture To understand the power of community- first culture, marketers can look to MrBeast, aka Jimmy Donaldson, an online star with over 100 million YouTube subscribers. While MrBeast’s brand is rooted in stunt and giveaway videos, it is diversifying – such as with a hamburger line available for delivery across much of the US, and which saw fans swamp a recent brick-and-mortar restaurant launch. It has been licensed in several Asian markets, too. This example shows fan communities: • Are in-built audiences for new products, even those distant from a brand’s core competency; • Enable monetisation based not on mass appeals and advertising, but on propulsion towards the mainstream by a movement; • Span the online and offline worlds. 2. Brands and journeys evolve To tap into such effects, marketers may want to: • Perceive a brand as a plural entity with different meanings for distinct audiences, but shared relevance for all of them; • Draw bedrock insights from fans and extend them to broader audiences, as with McDonald’s Famous Orders; • Reassess customer journeys, as some buyers may purchase based on community recommendations (#TikTokmademebuyit) and “discover” a brand afterwards. 3. Diversifying research methods Each community has an internal culture, so quantitative research alone will not suffice: • Qualitative research could be set for a resurgence, as it is a powerful way to identify communal patterns, cues and values. • Analysing community hierarchies can determine which members drive virality. • Given consumers usually belong to several “taste clusters”, tracing interconnections between groups will yield benefits. 4. Media plans need a rethink Media strategies – from audience identification and planning to cross-media measurement – will need a rethink: • “Tribe-based” approaches can be test-and-learn and coupled with mass or one-to-one communications. • Contextual targeting can be used to develop awareness and credibility with communities using ads before pursuing deeper engagement. • As social media properties battle for leading creators, brands must track changing audience dynamics. • Having found appropriate niches, reach can be augmented with “lookalike” communities. Four implications of bubble-up culture 27 The Marketer’s Toolkit 2023 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
The CMO view Now, we are able to aggregate or cluster through profiling around values or passion points. But whether you can identify three or 30 relevant tribes, what has to be unchanging is your brand’s core values. Afew years ago, the number of people involved to purchase decisions for our services would be around four or five. Now it’s up to 14 or 15 people … That means that they’re all coming into it with a very different perspective of what the value is that they’re looking for out of the conversation. It is no longer like a few years ago when the global market had a unified rhythm, a unified language, a unified tonality, and so on. Now, with a wave of your arm, you will be greeted with a thousand responses. Anubha Sahasrabuddhe CMO Lion Breweries Antonia Wade Global CMO PwC Alon Lian Head of Advertising Media Business TCL The Marketer’s Toolkit 2023 28 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
29 Explore the Case Study McDonald’s, the quick-service chain, had long been a US cultural icon. But the brand was losing relevance with younger, diverse consumers, and wanted to find a meaningful way to re-engage them. In doing so, McDonald’s turned to its fans for inspiration. And the resultant insight highlighted a core truth about its enthusiasts which also resonated with a much broader audience: namely, that every customer – from high-profile celebrities to busy working families – has a favourite order from its menu. This idea was translated into a repeatable platform which asked well-known McDonald’s fans – like music stars Travis Scott, BTS and Saweetie – to reveal their favourite orders, and then gave customers the opportunity to buy these meals in- store. A celebrity focus enabled the brand to engage its own audience while tapping into the fanbases of its big-name ambassadors, too. Takeaways • Fans can be a vital source of understanding about the deepest points of connection between consumers and a brand. • Partnerships can give marketers immediate access to two communities: a brand’s own enthusiasts and a celebrity’s fans. • One-off campaigns can undoubtedly make an impression, but replicable programs can build fanbases of their own. Results • McDonald’s econometric modeling attributed $283 million in sales to the Famous Orders platform between 2019 and 2021. • In the same period, its sales were 40% higher while its return on marketing investment was up 42%. • Its market share amongst young consumers outpaced the same metric amongst all adults, with diverse consumers being an “engine for growth”. Case Study Agency: Wieden + Kennedy New York Market: McDonald’s Market: US McDonald’s: Famous Orders The Marketer’s Toolkit 2023 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
Takeaways Mass culture has become a contested idea at a time when communities, “tribes” and fandoms are increasingly the source of culture formation and dissemination. For marketers, this means that traditional notions of “mainstream” appeal could be due for a rethink. For Gen Z in particular, this is an increasingly foreign – and, indeed, unwelcome – lens for thinking about their cultural lives. Taking part in “bubble up” culture will require that brands find authentic ways of engaging with numerous different communities while remaining true to a clear, overarching proposition. This, clearly, is no easy task. Looking to the example of McDonald’s, with its Famous Orders platform, can assist marketers in understanding how to locate connection points between their biggest fans and a wider audience. Creators are the lifeblood of this new digital ecosystem, and especially popular with members of Gen Z. For marketers and media owners, these influencers are a route to cultural relevance. The communities which follow creators are often large, engaged and open to their favourite online stars pursuing brand tie-ups. Authentic partnerships can thus yield significant benefits for all parties. 1 2 3 30 The Marketer’s Toolkit 2023 3 – The era of “bubble up” culture © Copyright WARC 2022. All rights reserved.
The clash of demand, delivery and disruption 4 Severe political, economic and environmental drivers are affecting brands’ access to a range of raw materials, foodstuffs, gas and oil, amongst other critical items. Minimising and effectively managing disruptions in supply chains will offer brands a significant advantage in 2023. The Marketer’s Toolkit 2023 © Copyright WARC 2022. All rights reserved.
Interruptions to the supply of energy and commodities from Ukraine coupled with sanctions on Russia are the primary cause of today’s supply chain disruptions. But there are several other factors that are contributing to this perfect storm, including: Climate change: Droughts, rising temperatures and devastating hurricanes are affecting agricultural productivity. Low water levels in rivers used for transport, and water shortages for manufacturing plants, are also affecting industry. And in many cases, these also constrain rebuilding after a natural disaster. Sanctions and trade wars: Geopolitical tensions and sanctions are driving alternate sourcing strategies as an erupting economic cold war drives shortages of crucial raw materials. This is costing brands like Ford, who spent $1 billion in Q3 to adapt their supply chain. COVID hangover: As trading has ramped up following the end of lockdowns, there is a shortage of critical staff such as port workers and truck drivers. Some countries, notably China, have continued to roll out lockdowns, which also has a major impact. Inflation: The war and supply shortages are contributing to rampant inflation around the world, which is resulting in increased wage demands from labour. Consequently, several key workers in the delivery chain are striking in many parts of the world. Managing customer expectations while minimising supply disruptions will become a key criterion for marketing success in the coming year. 32 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
Supply squeeze has big impact on small players Marketers recognise the looming threat, but levels of concern vary. Amongst respondents to the 2023 Toolkit survey, more than 60% anticipate non-trivial supply chain disruptions, but just 26% expect they will be significant or severe. This rises to one in three amongst European respondents. That is understandable – supply chain challenges will vary by region and sector. Automotive, food and energy sectors are expected to be worst hit, while commodities, consumer goods and chemicals should be least affected. Brands with scale, resources and negotiating muscle may grab scarce items while smaller players lose out, in a new variation on double jeopardy. 28% of marketers in our survey thought that small and medium businesses would be worst affected by supply chain challenges. And 52% of marketers surveyed felt challenger brands would be the hardest hit by supply chain challenges, as they struggle to become profitable. Typically smaller than established competitors, these brands also face what strategist JP Castlin calls their “Maguire moment” – mounting pressure to deliver profits, as they mature from the start-up stage. Those dependent on low-cost countries like China could be particularly vulnerable. Do you anticipate supply chain issues causing any disruption to the supply and delivery of your/your clients’ products/services over the next year? No supply chain issues expected Minor supply chain issues with very rare disruptions to supplies Occasional disruptions from time to time with limited impact on customers leading to regular disruption in the supply and delivery of our goods Severe supply chain issues, which threaten the survival of our business 0% 10% 20% 30% 40% 2% 24% 35% 21% 22% Significant supply chain issues, 33 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
In the past 24 months, has your organisation relocated any of their operations from one country to one or more others (e.g., near-shoring or re-shoring?) Source: EY, AMM Supply chain survey, Q1 2022 Businesses of all sorts are trying to identify ways to minimise disruption. Key measures include: • Move resources closer to home, within the same country/region. • Enable visibility into lower level suppliers. Many brands that thought they had diversified their sources are finding all their vendors are dependent on the same supplier for their raw materials. • Create additional capacity outside China, while still maintaining a presence there. The goal is to have sourcing options that are independent of China. • Drop just-in-time delivery and maintain larger inventories. But this strategy comes with overstocking risks, as seen by Walmart, Target, Nike etc. Finding solutions Yes, but not planning additional relocation(s) in the next 24 months Yes, and planning additional relocation(s) in the next 24 months No, but planning additional relocation(s) in the next 24 months No, and not planning additional relocation(s) in the next 24 months 0% 10% 20% 30% 40% 34% 13% 31% 22% 34 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
Supply chain performance has been improving, but an IPSOS survey found 28% of US consumers still cite a lack of products at stores, restaurants, hotels, travel services etc. and 27% cited longer delivery times for online shopping. Similarly, marketers recognise the value of consistent inventory, with 59% agreeing that “reliable inventory and regular delivery will become a key brand asset in 2023.” This rises to 63% amongst NA and EU respondents. While major decisions on supplier locations are not likely to reside within the marketing realm, marketers can help brands navigate this uncertain time. There are powerful measures that sit within a marketer’s remit that can have an important impact on demand for their products. Marketers can help smooth supply issues Proactively explain inventory issues: During COVID, a Convey US shopper survey found that most understood brands’ supply chain challenges and were willing to give them latitude. Reaching out to regular customers, and letting them know what items are missing (and why) is better than trying to hide inventory gaps. Reward programs can also be tweaked to help mitigate customer frustration, as they will look for brands to make up for missing items and delivery delays. Communicate and engage: Actively create systems that suggest similar items to customers unable to find preferred products. Similarly, shift media activity (e.g. search and social) from low inventory items to those that are available. Where other options don’t work, keep in touch with the customers, using digital and social channels to engage with them until the item is available and make sure they are the first to know when it is via alarms/ notifications. Dig into the data: Marketers have access to data as well as expertise in parsing it. They can map and project demand, as well as identify early surges for specific products, adding crucial insight for procurement teams. Consistent delivery critical for both marketers and consumers 35 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
Design for omnichannel: The shift to omnichannel strategy will also help introduce more flexibility, as brands will be able to source across channels to satisfy demand. Brands have found that integrating on-and- offline inventory can help drive sales. Promote overstocked items: Marketing initiatives can also be focused on sell-through of overstocked items, helping mitigate the risk of keeping larger inventories. They can also encourage businesses to manage expenses more efficiently, i.e. by producing more in the summer when energy prices are lower and stocking up for winter, when they are higher. Joint scenario planning: Cross-functional teams from sourcing/procurement and marketing can strategise together, and put plans in place for unpredictable events and global crises. Marius Bartsch, Head of Customer Engagement, Digitas UK argues, “The supply chain officer and the CMO should have each other on speed dial.” Meanwhile McKinsey research found brands that used scenario planning in 2021 were twice as likely to have avoided supply chain challenges in 2022. Spread-out promotions: Rather than trying to create large spikes in sales during Black Friday, Christmas etc. stretch out that marketing activity over a longer period, easing buyer surges and taking pressure off supply lines. Don’t forget the last mile: Brands tend to track products till they reach last mile carrier, but it’s more important than ever that experience is also high quality. Brands need visibility and predictability in last mile delivery to improve customer experience, and drive more communication and engagement with the brand. Adding a product delivery and sourcing perspective to the marketing function simply by working more closely with supply chain teams can help improve both inventory management and the customer experience, despite the significant challenges faced by the industry in the coming year. 36 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
Nobody expected such attention to the supply chain and logistics and suddenly it has become this sexy thing to fix. For us, we’ve worked really closely with our partners to make sure that we mitigate those disruptions and also try to make it more accessible from a pricing perspective. The war in Ukraine, the continuing COVID-19 pandemic, rising inflation, an energy crisis, supply chain disruption and the pressing needs to address climate change combine to produce some of the most difficult sets of global circumstances that business leaders have seen in their careers. If you look at Lenovo’s journey, one of the key success factors of our growth in the PC industry and the smartphone industry has been our ability to harness supply chain at scale. We do have access to multiple production facilities and fairly fast supply chains, which has allowed us to alleviate these headwinds to a significant extent. Vanessa Yeo Barger VP of Brand Love, Bonito Antonia Wade Global CMO PwC Bhaskar Choudhuri CMO - APAC Lenovo The CMO view The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved. 37
At the start of the COVID lockdowns, brands were scurrying to rework their supply chains while consumers were panic buying and stockpiling. Grape-Nuts cereal, manufactured at just one facility using a proprietary recipe and production process, was severely affected. Unable to find Grape-Nuts on shelves, customers took to complaining on social media. The brand had to respond but had no visibility on when broad availability would be restored. They chose to be transparent, explaining their challenges and promising to return as soon as they could. They also launched a PR, social media and email campaign, proactively pushing their message. In addition, the brand used social media to engage with customers, offered fans love letters and gifts during a Valentine’s Day promotion, and offered giveaways and coupons. It also reimbursed fans who had spent up to $110 per box on the black market once supplies resumed. Takeaways • Brands should pro-actively address supply challenges. This will work better than silence, or an overly defensive communication strategy. Let customers know what the challenges are and work to communicate timelines and likely delivery dates. • Brands should stay engaged with customers via social and other platforms during delivery delays, offering unique or user-generated content, fan groups, promotions and giveaways. This will help keep customers engaged and loyal. Results • The campaign generated 2,496 placements and over 4 billion impressions as well as 1,200 broadcast stories, providing broad reach for the brand. • It resulted in a 20% increase in brand passion, and a 5.6% increase in sales – despite being unavailable for months. • The Grape-Nuts Secret Super Fans Facebook group grew to more than 1,200 highly engaged fanatics, offering possibilities for sustained engagement. Explore the Case Study Case Study Client: Post Consumer Brands (Grape-Nuts cereal) Advertiser: Carmichael Lynch Relate Market: USA Grape-nuts: Proactive Customer Engagement The Marketer’s Toolkit 2023 38 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
Supply chain excellence will drive market advantage. Consistent availability and rapid delivery sustained by a powerful, dynamic supply chain has been a driver of corporate value in recent years. As supply is disrupted, the brands able to maintain a lead here will have an advantage. Smaller brands with fewer resources could lose out as a result. Marketers can help manage supply chain disruptions. Proactively addressing the challenges created by supply disruptions and driving effective customer communication will help blunt the impact of inventory limitations and delivery delays. Engaging with the customer through social media could result in a genuine advantage at the end of the sales cycle. Data analysis and planning are critical elements for both marketing and supply. Marketers are skilled at developing strategy using data, and planning for multiple scenarios. These are exactly the skills required for sourcing and procurement strategies today. Joint teams, set up to utilise each other’s knowledge, can help brands improve visibility and flexibility over the next year. 1 2 3 Takeaways 39 The Marketer’s Toolkit 2023 4 – The clash of demand, delivery and disruption © Copyright WARC 2022. All rights reserved.
The Marketer’s Toolkit 2023 Price vs. planet: A false dichotomy 5 The threat of climate change is frequently placed in opposition to the short-term urgency of driving sales in a financial crisis. The current moment of economic stress, however, is actually an opportunity to bring affordable, eco-friendly products into the mainstream. The Marketer’s Toolkit 2023 © Copyright WARC 2022. All rights reserved.
At first glance, a tension exists between marketers’ financial needs in uncertain times and their long- term environmental commitments. The logic behind this argument runs as follows: economic volatility – whether because of rising inflation, energy prices or interest rates, or supply-chain roadblocks and COVID-19 aftershocks – will cause many shoppers to ruthlessly prioritise affordability. Such a trend, in turn, has two assumed consequences: one, that eco-friendly goods are generally high-end options, and therefore vulnerable to trading down; and, two, businesses facing revenue pressure will cut green initiatives which cannot deliver instant returns. Research firm Kantar, for example, discovered that 45% of consumers think acting in a sustainable manner is now harder due to monetary or social constraints. For business leaders, intelligence provider Gartner revealed that sustainability only lagged mergers and acquisitions amongst the spaces where investment could fall if industry conditions tighten. As brand custodians and growth architects, marketers should resist the impulse to dilute environmental ambitions, and instead focus on baking eco-friendly values into their affordable products. This would help green options become the default, rather than demanding people change habits, or spend more, to protect the planet. This approach best serves the large number of consumers who want purchases to be good for the environment and their wallets. And success in these endeavors can thus facilitate brand differentiation and deeper relationships. On the flipside, inaction or ecological regression could exert high trust and reputational costs on companies seen as prioritising the planet strictly when it is convenient. 41 The Marketer’s Toolkit 2023 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
Sustainability commitment is strong, but not perfect Over 70% of marketers anticipate their environmental plans will remain unchanged, or only subjected to minor alteration, despite the varied fiscal challenges now taking root across the globe. WARC’s industry survey found that 37% of represented companies expect to continue with their sustainability objectives, while 35% foresee “some small compromises”. The totals for clients and agencies on these metrics were almost identical; a coherence hinting at a shared commitment to planetary protection amidst the current monetary pressures. However, for 28% of firms – a more modest, but not inconsiderable, number – the outlook is less optimistic: • 17% are “keen to pursue sustainability What will trigger changes to your sustainability initiatives in 2023? (Client-side only) goals” but could make “significant cuts” in the face of economic worries; • 10% will prioritise financial indicators, only considering ecological initiatives that do not have a negative fiduciary impact; • 1% will cancel their entire sustainability agenda. Amongst WARC’s client-side panel, evolving customer preferences, rising sustainability costs, falling sales of premium goods and a deliberate “pivot to price” were earmarked as the triggers for prospective movements in environmental strategies. But marketers paring back such ambitions must be aware of the reputational risks if they are seen as only looking beyond the bottom line when it suits them, and of lapsing into “greenwashing” in their communications. 0% 15% 30% 45% 60% 4% 14% 19% 21% 37% 57% Evidence that customers are more focused on price than environmental issues Increases in costs for eco-friendly products or practices Poor sales performance, driving aggressive cost cutting in premium products (eco-friendly or otherwise) A proactive decision to pivot to price now, as the writing is already on the wall Declining sales for eco-friendly products Other 42 The Marketer’s Toolkit 2023 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
While consumers have grown increasingly eco-conscious over time, price is usually still a more important purchase driver – an attitude that solidified during COVID-19’s economic disruption. That does not mean shoppers are abandoning their principles; they may, for instance, opt for the cheapest sustainable option, not switching to products without these qualities. As such, marketers must not view this as an either/or proposition; people want to save money and safeguard the environment. The value–action gap Shoppers are often worried about climate change but confused about how to respond. Paying more for green products is one solution for navigating this “value–action gap”, but with household budgets under pressure, brands need to: • Find the sweet spot across value, convenience and sustainability; • Make it easy by treating green credentials as a “gift” instead of requiring behaviour change; • Embrace “eco-accidentalism” so this choice is the default; • Make consumers feel good about these purchases. A wide spectrum For some companies, an affordability/ sustainability mix is baked into the business model. Others will have to work harder in this regard. • The RealReal, an online luxury resale and consignment marketplace, intrinsically blends lower prices with a facility for consumers to sell on used items in a circular way. • IKEA provided tips on how customers can “upcycle” its furniture they already own rather than buying new goods. • Levi’s effectively used communications to indicate how the back-end processes leveraged in creating recyclable 501 jeans worked. Learn from other markets Brands should look to a variety of markets for guidance, too: • Indian carmaker Maruti Suzuki reframed its messaging around fuel efficiency in a category downturn – an appeal serving pocketbooks and the planet. • Cerveza Nuestra Siembra countered rising Ecuadorian beer prices by tapping local production to make a wallet-pleasing, but high-quality, brew. • Finish dishwasher detergent responded to a Turkish currency crisis by drawing attention to a scarce – and even more critical – resource: the usable water supply. Closing the “value–action gap” 43 The Marketer’s Toolkit 2023 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
The CMO view We don’t go and talk to our customers about sustainability because that just turns people off. We’re an energy company and people are interested in fair energy and exceptional customer service. An added bonus to that is that we are proving that green is a cheaper, better way. Maybe we were not the first in the market to use recycled materials. But we were never going to do two things: we will not sacrifice quality, and we will not pass that cost on to the consumer. Yes, these materials cost more, but it’s the right thing to do. Short-term fluctuations only cause short-term uncertainties, and there can be some tactical adjustments, but strategic determination cannot be shaken. Rebecca Dibb-Simkin CMO Octopus Energy Amy Imbriaco General Manager, Greater China Tumi Ye Danpeng CMO Robam The Marketer’s Toolkit 2023 44 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
Explore the Case Study Case Study Agency: Marcel Paris Advertiser: Carrefour Market: Global As a hypermarket pioneer, Carrefour has gained massive scale – and, with it, the kind of negative perceptions attached to every big corporation. While the firm had made significant efforts to augment its food quality, many consumers associated it with standardisation and commoditisation. Moreover, the brand knew cheap, low- quality food was limiting biodiversity, ecologically harmful, implicated in rising obesity and increasingly unprofitable. In response came “Act for Food”, a multi-year, multi-faceted campaign drawing on principles like removing controversial ingredients from Carrefour’s own-label products, encouraging sustainable farming, and boosting its vegetarian range. The campaign started with challenging European Union laws restricting biodiversity. Carrefour also deployed tailored initiatives in ten countries, including Argentina, France and Taiwan. It pursued activities, such as enhancing traceability via blockchain, at a global level and addressed local-market issues, like food price inflation in Brazil. Takeaways • Climate change is a global challenge; brand solutions must similarly be enduring, holistic and cover the needs of people and planet alike. • Universal principles can feed into targeted local programs to drive on-the-ground impact. • Even as it tackled deep systemic issues, Carrefour’s products were still perceived as accessible and affordable. Results • Clear improvement on key criteria – organic products choice, local product choice, private label quality and accessibility of healthy products – in its seven main markets. • Seventy-eight percent of customers globally agreed “Carrefour with Act for Food actively helps them to have a healthy and responsible diet, while remaining affordable”, while its Net Promoter Score climbed 21 points worldwide. Carrefour: Act for Good The Marketer’s Toolkit 2023 45 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
Economic progress and ecological protection are often viewed as opposing forces, especially in periods of financial distress. Questioning this assumption, however, opens up a slate of interesting possibilities for marketers. In the long term, blending what is right from a pricing angle with what is right for the planet can bring eco-friendly products to the mainstream and secure future mass market demand. Reducing any friction is an invaluable step to encouraging consumer adoption – and can simultaneously enhance the perceived value of a product amongst shoppers. Finding emotionally satisfying ways of serving buyers could assist brands in maintaining price elasticity in a period of fiscal difficulty, too. Marketers in some countries are more experienced at dealing with issues like currency devaluations, fluctuating household expenditure and looking beyond promotions as they try to engage target audiences in hard times. Learning from these nations may not always be directly transferable, but can be useful as inspiration to kickstart new modes of strategic thinking for positioning sustainable goods. 1 2 3 Takeaways 46 The Marketer’s Toolkit 2023 5 – Price vs. planet: A false dichotomy © Copyright WARC 2022. All rights reserved.
David Tiltman SVP Content WARC Aditya Kishore Insight Director WARC Lena Roland Head of Content WARC Strategy Cathy Taylor Commissioning Editor, US WARC Strategy Stephen Whiteside Managing Editor, Reporting WARC Anna Hamill Senior Editor, Brands WARC Paul Stringer Managing Editor, Research Advisory WARC Helena Robertson Research Executive WARC Stephanie Siew Research Executive WARC Sian Bateman Manager, Content Analysis WARC Contact us London 33 Kingsway London, WC2B 6UF United Kingdom e: enquiries@warc.com New York 55 W 46th St, 27th Floor New York, NY 10036 United States e: americas@warc.com Singapore WeWork 71 Robinson Rd Singapore 068895 e: asiapacific@warc.com Shanghai Unit 05-08, 31/F, Garden Square 968 West Beijing Road, Jing’an District Shanghai 200052, China e: nihaochina@warc.com Alex Brownsell Head of Content WARC Media 47 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report
The Marketer’s Toolkit The 2023 Marketer’s Toolkit comprises a series of reports designed to help marketers address major industry shifts as well as provide them with decision-making tools to help drive marketing effectiveness in 2023. It will help them adapt swiftly to the main areas of disruption anticipated in the industry. Additional modules of the Marketer’s Toolkit 2023 will be coming soon. China Marketer’s Toolkit Granular insight and analysis of the China market Future of Digital Commerce Insight into the development of the digital commerce channel for marketers Future of Media Developing trends in advertising spend coupled with insight into marketer attitudes 48 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report
At WARC, our purpose is to save the world from ineffective marketing by putting evidence at the heart of every marketing decision. We believe that effective marketing is based on facts and not opinions. Since 1985, we’ve brought confidence to marketing decisions through the most trusted research, case studies, best practice, data and inspiration. Today, we help 75,000+ marketers across 100+ countries. Our clients include the world’s leading brands, advertising and media agencies, media owners, research companies and universities – including the top- five largest agency groups and top- five largest advertisers in the world. Want to get access to WARC? Get a demo Ascential Intelligence Events is the proud home of world-class, established brands including WGSN, LIONS, WARC, and Money20/20. Whilst we serve multiple industries, including marketing, advertising and fintech, each brand’s reason for being is the same: we focus on the future, drive innovation and lead our customers towards new opportunities. We do this through our unique content, insights, data, benchmarking and forecasting tools through a variety of platforms, including digital subscriptions, consultancy and must-attend events. We value creativity, empowerment and execution and we make the world a better place by helping companies be more relevant, seamless and creative. With almost 1,000 employees across five continents, we combine local expertise with a global footprint for clients in over 100 countries. Ascential Intelligence Events is part of Ascential plc, which is headquartered in the UK and listed on the London Stock Exchange. Who we are 49 © Copyright WARC 2022. All rights reserved. The Marketer’s Toolkit 2023 Marketer’s Toolkit 2023 – The Global Trends Report