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July 2017

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Searching for the Competition

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June was a tough month for Google with the European Commission handing it a record £2.4bn slap on the wrist for being in breach of antitrust rules. In prioritising its own shopping listings above competitors’, it had all but destroyed any level of competition, creating an uncompetitive advantage for itself. Needless to say, it has appealed the decision. In reality, there are a number of reasons why it may feel hard done by.

Firstly, price comparison sites such as Kelkoo were only able to build their businesses off the back of being found in search engines. Without it, Kelkoo wouldn’t be in existence. They optimised long tail search queries by having lots of product specific pages, utilising links aggregation. This was simple traffic arbitrage and hardly the most sustainable of business models.

Secondly, Google’s essentially created a better product than its competitors, weeding out poor search results and content from their platform. Hopping between price comparison sites only to then visit reputable retailers direct due to poor results is a thing of the past thanks to Google.

It’s therefore understandable why Google feels hard done by for merely doing what any good service provider should aspire to do – perfecting its product and futureproofing its business. If your business is entirely reliant on one source of traffic, then failing shouldn’t come as a surprise.

Finally, we can’t forget Amazon. If there were to be any changes to Google’s model that resulted in the rebirth of comparison sites, the immediate beneficiary would likely be Amazon. The number of users going directly to Amazon to begin their product search is increasing – in the last 12 months alone, more than 55% of US shoppers began their product search on Amazon. Their dominance as a marketplace means that many retailers have little choice but to have a presence. This gives Amazon access to an unprecedented amount of rich, quality, data given from consumers using the site to access other brands. Their strategy as a result, could be seen as more anti-competitive than Google’s.

The evolution of Amazon’s aims points sharply towards voice assistants such as Alexa, where users are provided with a single search result for their commercial needs, the ultimate Trojan Horse into consumers’ homes. With the comparison element effectively removed altogether, the cheapest, most relevant product is what will set sellers apart. Amazon is in a prime position (excuse the pun) to exploit this opportunity by developing these basic products and household necessities itself.

It will be interesting to see how Google responds to its record fine beyond its appeal. One must conclude that, if the knives are out for Google, they must soon be out for Amazon too. This rough-and-tumble is no doubt set to be one of the biggest rumbling stories over the next few years.

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CAan Fake News Give Traditional News Outlets an Online Advantage?

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This month News Media Alliance called on Facebook and Google to be held accountable for their role in the proliferation of fake news, and squeezing publishers’ revenue to boot. This bold non-profit alliance represents nearly 2,000 news outlets and their multiplatform businesses in North America,  calling themselves the ‘Voice for News Media’.

Due to antitrust laws, publishers currently represented through News Media Alliance – including the likes of Condé Nast, Hearst and the Washington Post – are unable to collectively negotiate with the big players, which publishers are fighting against due to the empowerment it gives Google and Facebook.

It’s not without justification. News outlets are concerned about Facebook and Google’s dominance, especially when it comes to discovery and distribution. eMarketer has forecasted the behemoths will account for 60% of online ad revenue in the US this year. Changing consumer behaviour is increasingly forcing publishers to be more reliant on these platforms, leaving them scrapping over the remaining shrapnel of traffic and revenue.

The irony and unfairness is clear – social analytics company noted that the ten most engaging pages on Facebook are all news titles. So, news outlets are driving dwell time and engagement with Facebook’s newsfeed, but not reaping a fair slice of the pie.

It’ll clearly take more than a handful of publishers leaving the platform for users to follow suit. News Media Alliance must negotiate as representatives of the wider news outlet group. Otherwise Facebook will feel no need to pander to the requests of publishers, and especially when there are plenty socially-native pages more than happy to hoover up that cheap traffic.

But there’s perhaps a silver lining – Google and Facebook are struggling to manage this with the proliferation of sites driving online traffic through clickbait headlines to tap into the opportunities of the fake news phenomenon.
This has forced Facebook and Google into a corner: Google is seeking out the help of users themselves to report inappropriate or incorrect content; whereas Facebook has hired fact checkers and is trialling technology to stop the distribution of unchecked sources. Combatting fake news, a directive traditional publishers pride themselves on, may be the solution to a fairer negotiation between news titles and the technology duopoly.

If a closer relationship – something Facebook continues to declare it’s committed to – can diminish the ease of fake news proliferation, then news outlets will regain their foothold on readership through multiple platforms, futureproofing Facebook and Google’s relationship with their users. A win-win for all.

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Media in Focus: A Summary

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For the last 18 years, the IPA Databank has been measuring effectiveness of campaigns. Les Binet and Peter Field’s latest report, ‘Media in Focus’, has just been released. It’s a real corker this time. They’ve admirably been painstakingly scouring the amassed 497 case studies to revisit media’s founding principles and the impact of digital marketing. Key among its findings was that short-termism still remains a serious issue in our industry.

Most worryingly, actual campaign effectiveness has declined as a result. Marketers since the global financial crisis have been pulling back from brand activity in favour of channels that provide immediate ROI and hard weekly numbers.
As an industry, we’ve focused budget on bottom-of-the-funnel communications and direct response channels, neglecting longer-term brand activity. And it’s not just Binet and Field saying this, with May’s well-received Enders Analysis/Magnetic study corroborating.

This wasn’t the only interesting finding:

  • Activation/direct response’s share of campaign spend increased from 39% in 2000 to 49% in 2016, exceeding optimum levels
  • Advertisers are advised to re-address the 60:40 (Brand:Activation media spend) balance recommendation that still applies
  • Focusing on ROMI encourages budget reductions through the pursuit of short-term sales
  • You have to spend to grow your brand – SOV = SOM still stands

Interestingly, Binet and Field have revised their recommendations concerning media channel effectiveness. Whereas TV-only was considered in 2013 the most effective medium to build your brand, it’s now ‘video’ as a whole. This nuanced re-categorisation only strengthens previous suggestions that TV and online video work harder when used together.

In terms of brand growth, broadcast channels come out on top, while TV and OOH are the hero channels for delivering mass reach. Paid search and email, meanwhile, are the most effective activation channels.

The industry suffering from short-termism reveals another important insight – this approach is affecting long-term brand health and business success. What the research tells us is that we need to rebalance our focus of brand and activation campaigns.

The digital and data evolution is largely to blame for this, as marketers are able to demonstrate immediate results. Consequently budgets have shifted from traditional channels in favour of digital and DR channels.

Undeniably, digital channels can be efficient and are effective both in terms of accountability and targeting capabilities. However, we shouldn’t forget the channels that help us reach the masses and build those all-important emotional connections with brands.

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Is Your Advertising Worthy of Trust?

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69% of UK adults claim to distrust advertising – at least according to new research by Ipsos Mori for Trinity Mirror Solutions. In addition, 43% say they trust advertising less than they used to, and 42% say they do not trust the brands themselves.

A lack of trust isn’t limited to the UK or even the advertising industry; the 2017 Edelman Trust Barometer revealed the largest-ever drop in trust across the institutions of government, business, media and NGOs. Trust in media (43%) fell precipitously and is at all-time lows in 17 countries.

Traditional media – TV (42%) and Newspapers (13%) – still win when it comes to ‘places you are most likely to find advertising you can trust’. Perhaps the most worrying research finding is that advertising is not considered to be part of popular culture as it has been in the past, with 48% of adults agreeing that they do not talk about adverts as much as they used to.

When the trust in advertising isn’t there, brands get talked about for all the wrong reasons – most infamously the recent Kendall Jenner-Pepsi error of judgement.

Worse, however, is when advertising attempts to detract from a brand’s bad behaviour rather than using it as a platform to demonstrate its trustworthy behavior. In the wake of  VW’s emissions scandal, they released ads with the line ‘it’s more than just a car. It’s keeping your promises’ – a cover-up campaign described by Mark Ritson as ‘sheer contempt’, and lacking any real credibility (VW’s Reputation score on brand index has recovered from negative to positive but remains less than half its score pre-scandal).

Samsung treated the exploding battery in their Galaxy Note 7 as a minor irritation, returning with ads around the Oscars that effectively promised that phones would no longer have the habit of catching fire; “Quality is our priority”.Warren Buffett said “it takes 20 years to build a reputation and five minutes to ruin it” – but when a brand has highly appealing products and a reputation for quality, they really can get away with more.

Finding the right truths to tell depends on the audience you’re talking to. Lidl took any consumer misgivings about food provenance head-on with its Lidlsurprises campaign. For Irn Bru’s launch of its sugar free Xtra drink, they chose to tell untruths in their ad ‘Unbelievable Stuff’ to connect with their audience: “Before Irn Bru Xtra I used to be dead”.

Making advertising more trustworthy requires brands to be more empathetic to what customers want, getting closer to providing a worthwhile interruption in their lives and making the interaction as credible as possible. In today’s post-truth fake news world, anything that feels false is either called out for what it is or dismissed quickly.  If your brand lacks credibility in a particular area,  form alliances and build a network to accelerate credibility. Trust can be borrowed – as long as it feels like a genuine partnership.

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Millennials Revolt!

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We’ve all heard about Millennials: they live with their parents and can’t save up for a house; they spend their income on avocado on toast, buy overpriced coffee, and couldn’t live without social media.
Targeting ‘Millennials’ allowed advertisers to tap into a lifestyle-orientated, experience-driven generation, while also steering clear of consumers jaded by decades of push-message advertising and financially crippled by the last recession.

“Millennials are the future!” we cried. Alas, they’re not keen on this label; three quarters of under-30s do not feel the term ‘Millennials’ represents them. According to research published in The Telegraph, more than a third say they don’t even know what it means.

Undeniably, Gen Z should not be targeted in the same way.

They may have grown up with similar socio-political and economic changes, and their ideologies might align in the broadest of terms, but there remains a “generation gap”. This is particular prevalent in communication and use of technology – 80% of Fortune 500 Execs claim that communication across generations is the most challenging issue in the workplace.

Generation can impact our attitude to money, career aspirations and personal life. However there is  no proof that it affects our purchase journey or decision making behaviour.

Perhaps life-stage is more relevant than generation or age. With this comes the assumption that a 25 year old with children will lead a life more similar to a 45 year old parent, than another of the same age but with no ties. But even this approach is archaic at best.

If media is fragmenting at the speed of light, technology is disrupting almost every category, and start-up culture is putting a new spin on the markets we all thought we knew. So why shouldn’t we be just as savvy and forward-thinking with our audience work?

Marketers would be better placed to group consumers by mindset – by their shared values, motivations and category behaviours, ahead of birth year. As Mark Ritson points out: “brains don’t change in a decade. We’re still driven by the same goals as our ancestors.”

Ambiguous audience groups such as ‘Families’ and ‘Women’ – or indeed ‘Millennials’ –  should be dissected before planning communications, using attitudinal segmentations to better explain and identify key groups, rather than relying on demographics alone. After all, if you are selling overpriced coffee, you’re better off going after a group of coffee-loving, city-living young professionals than just anyone between the ages of 18-35.

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Love Island: The Perfect Partner for TV’s Younger Audiences

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We’ll admit it, we’ve fallen hard. Over the past seven weeks, the7stars has been powerless to escape the bronzed charms of ITV2’s Love Island, with mornings spent catching up on the night before and our graft occasionally interrupted by excited talk of the evening ahead.

We’re not the only ones. Love Island has been incredibly successful in bringing viewers, and particularly younger viewers, to ITV, with an average audience of 2.5m each night (1.1m live, 2.8m peak) – up a staggering 73% from last year. In fact, the reality dating show, which launched in 2015, has increased the number of 16-34s watching ITV by 86% year-on-year.

This all comes against the wider context that live TV viewing among younger audiences has, on paper, dropped 11% over the last three years. The medium still accounts for a not too muggy at all 56.4% (Thinkbox) of video viewing by 16-24s, but their viewing habits are fragmented across YouTube (15.6%), Facebook (2.5%) and other digital platforms, making them a hard audience to engage.

Love Island has been able to buck the trend not just through its connection with younger viewers but, in particular, through its digital presence. A third of all viewing came from the ITV Hub, the broadcaster’s on-demand service that now counts 75% of all the UK’s 16-24s among its registered users. The show also demonstrated how to successfully capitalise on the 87% of 16-34s who use a mobile device while watching TV (IAB.com): Twitter lit up with 2.5m tweets during the show’s 9-10PM slot, and the app (downloaded 1.48m times) was in constant use, driven by prompts in all ad breaks and the use of voting mechanics.

In a huge win for headline sponsor Superdrug, mobile searches for fake tan and sun cream jumped 12%, and the retailer saw a whopping 900% increase in searches for its brand. The halo effect also profited related brands with no commercial ties to the show: Boots saw a 300% uplift in searches and Ray-Ban and Match.com both reported increases of 35% (Captify). Even streams of Blazin’ Squad songs went up 2,500%.

The success of such sponsorship deals underlines the importance of matching the right brand with the right show, and of the potential benefits that can be reaped from well-planned product placement and brand integration – something we have seen first-hand through our hosting of Ministry of Sound parties in the villa for the last two years, which each time have helped to drive number one album sales.

So, while our Love Island love affair might be over for another year, the challenge for ITV’s incoming CEO Carolyn McCall is to ensure this summer romance continues to build into a beautiful relationship – for both its valuable audience and valued advertising partners.

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Is Women’s (Mis)representation in Ads a Surprise?

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Upon investigating some of the key insights industry experts took away from this year’s Cannes Lions International Festival of Creativity, it was a remark from Madeline Di Nonno, Chief Executive of the Geena Davis Institute on Gender and Media (GDI) that has stirred debate. She expressed her surprise after finding out that women are still misrepresented in adverts.

A study conducted by GDI and J. Walter Thompson (JWT) revealed that men are shown in broadcast ads around four times as often as women, and men are also found to speak more than seven times more than women. What’s more, according to their analyses, 25% of adverts feature men only, whilst 5% of adverts feature just women.
These figures indisputably reveal the gender inequality challenges we face on a daily basis. Wendy Clark, CEO and president of DDB, believes we must ‘stay restless’ on these challenges; but are we also quick to ignore the progress we have made?

Whilst these figures may appear unexpected to many, and Di Nonno’s surprise may be justified, maybe we need to look beyond the numbers. We only have to think about Dove’s ‘Real Beauty’ and Always’ ‘#LikeAGirl’ campaigns to be reminded that women’s representation in advertising has come a long way in a fairly short time.
Both are examples of campaigns celebrating women for who they are, and recognising what women can achieve, regardless of gender stereotypes. Admittedly, it only takes one ‘Beach Body Ready’ campaign to undermine this hard work. But all things considered, while women’s representation in advertising might seem lower than expected, there are some progressive pieces of work worth celebrating.

Thinking more holistically, these statistics don’t feel surprising. Women are still very much under-represented in an array of industries, including politics, science, business, and indeed the creative world. Diversity within the advertising industry is a source of much debate of late, and with men still dominating most senior positions within the creative world, it shouldn’t be a surprise that women are underrepresented in advertisements. A look at the facts suggests that the lack of female presence on our screens is reflective of the sad reality that many are trying to tackle within our industry, and beyond.

Indeed, just 27% of CEOs in creative/ media agencies are women. However, Di Nonno says she assumed women would get even more air-time than men in the advertising world, bearing in mind that women make 80% of household purchasing decisions (Forbes, 2016). Yet, given the nature of our society, and indeed our industry, this assumption may have been a little ambitious.

There is clearly an appetite for change. Minority groups, including female senior managers, must join forces to make this quest for progress more realistic. Clark believes that sharing plans and actions is a good starting point, in order to achieve fairer representation that will also start to ripple across other sectors.

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GDPR: Trouble Ahead or a Long Time Coming?

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We are less than a year away; by 25th May 2018, organisations will have to comply with the General Data Protection Regulation (GDPR), the EU’s new legal framework on data protection.

However, according to a survey by the Direct Marketing Association, one in four (26%) of marketers believe their businesses are currently unprepared for its arrival, and only 68% are confident they will be compliant by the deadline. With the possibility for fines to reach up to 4% of a company’s global revenue, it is becoming an increasing concern for businesses. There is a real need to get up to speed with the new regulations quickly.

The GDPR rules prevent brands from using any personal data unless they have explicit permission to do so. No more of those lengthy and convoluted forms that users skip through and sign off on without reading; instead the responsibility is on brands to make it clear to the user what they are agreeing to.

Collecting users’ data is a major part of many marketing campaigns – including relying on that information to determine strategy, direct retargeting, and build look-a-like audiences. Given that the definition of ‘personal data’ now includes a user’s IP address and cookies, the typical ways user databases have been built now need to be re-examined and potentially overhauled.

Marketers will need to take any risk to privacy very seriously; it will require them to reconnect with their CRM databases to ensure that any data they collect, or already have, is compliant.

The big ones to look out for in terms of privacy in CRM data collection are names, addresses, ID numbers, and location data. Advertisers spend a lot of time trying to link online behaviour to individuals via user IDs/cookies; this has now been made much more difficult, but not impossible.

A clear change to the media supply chain is needed, clearly stating whose responsibility it is to obtain consent – typically the first party publisher who will outline how the data will be used. Although it might make brands have to work harder, and potentially re-develop targeting strategies in the short run, a new approach to data collection was needed and the new rules put consumers first and trust back in the system.

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What We Learnt at Cannes

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Let’s talk Cannes, and what people are now describing as ‘Silicon Valley by South of France’. We kept our notebooks on hand throughout the week to record the latest industry developments, and here are a few of our key takeaways:

1. The clean-up of the supply chain is happening quickly
Ad fraud is top of the agenda, thanks to client pressure. So online buying platforms have put the time into de-duping bid requests and networks are more at risk, with buying platforms and publishers cutting them away. The supply chains are quickly decreasing, meaning publishers make more share of the CPM and buyers get the transparency they deserve; win-win.

2. Transparency is here and talking about viewability is ‘so 2015’
We are seeing transparent programmatic platforms become more commonplace across agencies. But the debate now is whether we need to go deeper? This issue is about more than just reporting on where a brand’s dollars were spent. We still need better transparency in supply exchange deals, and on supply selection coming into a buying platform (why should we select not to buy non-viewable inventory – you wouldn’t have to ask JCDecaux to hold off a buy on one of their screens if it was facing a wall, would you?). Clients also need transparency on when agencies should hold back on spending the budget (if an IO is signed off at £30k, you’ll struggle to find a company that doesn’t spend the full amount – was this the right thing given we can report in real-time through the campaign flight?).

3. Have we reach peak Cannes ad tech?
It’s now very hard to find a technology company that doesn’t tell you that their proprietary AI is changing the shape of the industry. The ad-tech dominance of Cannes seemed to reach a peak this year, leading many to wonder whether this is really the right venue for so much discussion on this topic. Everyone appreciates the greater marketing efficiency ad-tech delivers but we definitely picked up a craving for a return to focusing on the art, rather than the science, of marketing.

4. Leaving the party?
Publicis announced that it plans to stop entering Cannes and other award events, initially just for a year, declaring that it has become frustrated with the awards becoming an end in themselves rather than a result of strong work. The agency, under new CEO Arthur Sadoun, is building its own AI platform to manage the work of its global creative teams and wants to unite its people around this rather than external measures of creativity.
Cannes Lions still has a vital role in bringing people together and inspiring ad companies to produce fantastic work, but we should take note of Publicis’ concerns and make sure that schmoozing isn’t prioritised over genuine innovation.

You’ll notice that there is one big theme that underpins all four of these trends – developing technology and how we manage it and work with it. Plus ça change, as our hosts might say…