September 2020

Once again, we find ourselves in an ever-evolving economic and cultural landscape. The role of advertising in creating demand has never been so important, but some adjustments will likely be required to account for a different shape of Q4 than we have seen previously.

Here are our seven rules for winning in Q4 2020.

1. Flex to local behaviours 

Unlike the national lockdown in spring, restrictions are likely to be unevenly distributed.  Local lockdowns such as those currently being imposed in the North East mean that flexibility in media planning will be vital. For any advertisers planning national campaigns, we need to build a winning strategy around flexibility to circumnavigate this.

2. Monitor market value

Our forecasts for Q4 currently indicate that the market remains in a state of recovery, with the importance of a strong Christmas trading period being hugely influential in keeping ad spend on a growth curve across all channels. As with all planning and buying, the audience being traded will have a significant impact on how cost-effective each channel will be.

3. Help people make more considered choices

The7stars Lightbox Pulse identified that while 28% of shoppers are worried about the cost of gifts, 1 in 10 are planning to gift to more people than usual over the festive period. It is also therefore likely that gifting choices may become more sentimental, after such an anxiety riven year in which people have re-evaluated the importance of friends and family.

4. Prepare for the homebound economy to accelerate

Online shopping is set to shift even more online, with around half of UK consumers saying they will do more shopping online than last year, as people become less motivated to browse in-store. It is important to note that the highest growth rates over the past few months came from multichannel retailers, not pure-play online retailers, many of them innovating with click and collect offers that made use of their physical footprint.

5. Adapt phasing for ’12 days of Christmas’

1 in 3 Brits said they will be hosting more celebrations at home than usual. ​1 in 10 say they plan to have multiple celebrations with different groups of friends/family​. This means that media phasing may need to adapt to reflect a flatter season with less of the extreme peaks we usually witness in the festive period and more of a ‘plateau’ across a sustained period.

6. Embrace empathy and humour

There is some evidence that over-earnest communication now more than ever lacks the ability to move people and risks being lost among other worthy pieces of communication.​ In fact, 3 in 4 consumers approve of brands providing funny or light-hearted content.​The more agile you can be and control the creative after launch the better.

7. Offer optimism 

20% of Brits also feel that brands can play a role in boosting morale over the festive period. Brands could also put a more positive spin on 2020, capturing all the things that people made happen or started new hobbies and experiences. Equally, it could be about looking forward, inspiring people to start making 2021 plans around festivals, sport and holidays.

At the start of the month Google announced that, from November, it will be passing on digital service taxes to advertisers by adding a 2% fee for ads served on Google.

Naturally, the decision has been met with frustration from advertisers, who will now have to decide if they absorb the extra cost or pass it onto their customers. Not an easy decision to make in the current environment.

But is this simply a case of “tech giants” abusing their dominance or is there something else at play here?

Firstly, if any business is to receive a new and increased cost to itself, what would be the standard course of action? They’d naturally find a way of absorbing that cost or avoiding it, if possible. And therein exposes two problems with this tax. One in that it is essentially not fit for purpose, and two in that it does nothing to address the bigger issue of market dominance.

Essentially, one way the digital services tax is not fit for purpose is that it doesn’t acknowledge how tech companies like Google generate the majority of  revenue from auction-based advertising, where the costs are determined algorithmically by the amount of advertiser competition.

Other than this, perhaps Google would have to find a way of paying for the tax through business cost reductions. So, naturally Google have taken the easiest decision and arguably the best one – even for advertisers. Because, eventually, the market will adjust to it. Advertisers have a decision to make themselves when the tax arrives. They either take on the increased cost and accept a slightly lower ROI on their advertising, or they reduce the price they’re willing to pay for that advertising in the first place. In an auction, if enough advertisers choose the latter then everyone should see a reduction in media costs and therefore still achieve the volume of ad delivery they have been used to for their budget.

In the short term it’s more expensive, but in the long-term equilibrium returns and everyone ends up paying what they’re willing to in order to generate the ROI they want.

And Google are quite transparent about it:

“Digital service taxes increase the cost of digital advertising,” said a Google spokeswoman to the Guardian. “Typically, these kinds of cost increases are borne by customers and like other companies affected by this tax, we will be adding a fee to our invoices, from November. We will continue to pay all the taxes due in the UK, and to encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.”

Basically, don’t hate the player…

Perhaps this is insincere and Google know international tax reform is a pipe dream. Perhaps passing the Digital Service Tax directly to advertisers is more a statement than a necessity. Regardless, the impact to advertisers may be limited in due course once the auction prices adjust. So maybe it’s actually the best decision for everyone.

This month the7stars joined forces with sixteen of the UK’s biggest independent media agencies to launch an ad campaign that promotes the £1.8bn (Nielsen) indie sector, as the destination of choice for progressive brands.

The ‘Land of independents’ launched on the 14th Sept with a national outdoor, print and digital campaign created by Creature. The growth of the independent sector has been a rapid – almost five times faster than the rest of the market – which is something worth celebrating and why we all united to form this campaign.

The collaboration aims to highlight how crucial the independent sector will be in the UK’s economic recovery, and its contribution to growth within the advertising world. Over the past three years, the independent sector has grown ahead of the market and this campaign is aimed at supporting future positive momentum.

The collaborative effort came about after a series of meetings which began in April and continued through lock-down.

“This crisis is demanding that we reframe ad messaging in new and unexpected ways. Independent media agencies are agile enough to do exactly that,” our very own Jenny Biggam explained. “We are typically built upon open, non-hierarchical structures to foster bold ideas and strategic clarity. It’s a formula for fast, impactful results.”

Dan Cullen-Shute, co-founder and chief executive of Creature, added: “There has been a genuine sense of excitement and collaboration of people who believe in what they’re doing and it’s been amazing to be a part of… In that first meeting it felt like we walked into a different land – we left adland, an introspective make-sure-no-one-copies-your-answers territory, into a brighter, braver place.”

The independent sector is built on the values of collaboration, entrepreneurialism, flexibility and service. And long may it continue.

As more people become accustomed to the one-way systems and sanitisation procedures in the dining and retail sectors, the easily observed reduction in consumer visits to stores and restaurants is starting to plateau and hopefully this means a return for one of the channels that was heavily impacted over lockdown – OOH – however, the game has inevitably and certainly changed.

Covid has accelerated the evolution of brand-to-consumer and even B2B interactions and relationships – we only need to look at the increase in use of apps like Zoom and Teams to appreciate this trend. Innovations in the OOH space have also been fast tracked due to Covid  – and we expect to see this include the adoption of DOOH tech. [3]

OOH is famed for effectiveness through high reach but the pandemic has led to its large scale audiences decreasing in certain demographics [3]. Key areas for OOH such as airports and the London Underground are still experiencing a dramatic decrease in footfall[2]. This means that OOH will likely have to become a more targeted and outcome-based channel to justify its use. Luckily there has been ample investment into digital screens and infrastructure over the last decade.

Bitposter and Clearchannel’s partnership with traditional OOH key-players has meant that many paper and paste locations have been digitalised, whilst Global’s purchase and integration of Exterion and Primesite (linking DAX with their digital outdoor sites) has meant data-led buying has become a reality. This also goes beyond media buying and into execution, with Ocean Outdoor releasing mid-air haptic interaction, to replace their touchscreen equipment [4].

Whilst innovation development has been fast tracked, the dynamic of clients that they were designed to serve has shifted.

The ad spend market has shifted in line with the change in consumers priorities. Essential goods, tech, and the high-frequency Public Health England campaigns have recently ramped up media spend [5], whilst industries like the restaurant sector have seen dramatic cuts. Ironically, OOH was a key channel for PHE in communicating key messages and provided a smart, empathetic and trustworthy platform [3].

So, what’s next for the restaurant sector? American super-chain McDonalds have bucked the trend, as even though they reduced their budgets by 100% during lockdown, they are now keen to use their ‘war chest’ of advertising budget for Q3 and Q4 [6].

As for the restaurant sector as a whole, total media spend was down dramatically for May and June YoY (-91% and -86% respectively), and OOH is no exception. Whilst we are seeing an improvement in August spend and expect to see more buoyant results in Q4 overall, it will be interesting to see how brands use OOH in Q4 – particularly for Christmas which is typically a strong period for OOH [1].

1] https://www.marketingweek.com/consumer-spending-retail-footfall-christmas-5-interesting-stats-to-start-your-week/

In previous years we’ve looked to September as a time of optimism and a moment to reset after the highs of summer. This year, the backdrop of recession and returning to work and school after many months of life at home means advertisers need to think a little differently about what this period holds for their audience.

2020 has seen uncertainty reflected in a delayed interest in “back to school shopping” with Google search trends rising two weeks later (from the 3rd week in July) vs the last 5 years (typically beginning to rise from early July)1. As the government’s campaign for a safe return to schools gets underway, here are three ways we’ve seen advertisers shift their approaches to Back To School marketing in line with the new reality:

Continued growth of online: Back to school shopping is no exception to the significant growth in online shopping. According to research over 90% of parents with kids and university students will shop online for back-to-school2. For retailers in particular we have seen an increase in “buy online” messaging, with Sainsbury’s and Tesco both reflecting the wider shift to online grocery shopping within their creative copy.

A focus on hygiene: Sanitiser, masks and cleaning supplies have made their way to the top of the list of essentials2, displacing historical focus on items like technology. As a result, new brands are finding ways to be a part of the back to school moment. Dettol’s recent campaign focuses on laundry detergent as parent’s get ready for the school uniform laundry routine while Boots have recently launched a radio campaign focusing on children’s vitamins.

The importance of empathy in uncertain times: Back to School represents a significant milestone for everyone in the context of lockdown easing, and with this reassurance is key. Research in the US has show that advertisers treading the line between positivity and empathy are seeing their ads resonate stronger with consumers3. This sits at the heart of Very’s back to school campaign, which focuses on “back to school joy for everyone” – acknowledging the positives in a distinctive way that helps cut through an increasingly competitive moment4.

For many marketers, seasonal milestones like Back to School involve tried and tested methods and well-established consumer behaviours. But as we move through these milestones in the context of the pandemic, challenging what we know about consumers and their behaviours is key to maximising opportunities new and old.

1https://trends.google.com/trends/explore?date=today%205-y&geo=GB&gprop=youtube&q=%22back%20to%20school%22

2https://blog.rakutenadvertising.com/en-uk/insights/infographic-back-to-school-shopping/

3https://www.marketingdive.com/news/retailers-back-to-school-ads-resonate-by-empathizing-with-uncertainty-stu/583443/;

4https://www.youtube.com/playlist?list=PLfGCjZWWx9n3HkCnu3ElVA_gog4HisSjj

Minority ethnic groups account for 8.1 million people in the UK: that’s 13% of the UK population and is continuing to grow. Yet no matter how sophisticated its techniques, consumer research is somehow failing to break through and extract insights from one of Britain’s fastest-growing and most influential demographics.

The same oversight applies to other minority groups, such as those who identify as LGBTQ+ (2.2% of the UK population). These are all significant consumer groups. So how can brands move from “we think” to “we know” – the golden mantle of all robust market research – if these voices aren’t included as an integral and assumed part of that knowledge?

In short, they can’t and we run the risk of creating generalisations about groups, who can be vastly different. But this lower level of representation is in part driven by a number of practical barriers; reaching robust sample sizes in these groups is expensive. As an example, to send a questionnaire to someone who is LGBTQ+ would be £8-£10 compared to someone who is a main shopper, which would be £1.25-£2. In addition, to translate a questionnaire to Polish (the second most spoken language in the UK) would cost £350-£390. Equally the repercussions of mishandling sensitive data such as ethnicity, religious, sexual orientation due to GDPR paired with a fear of offending has in some instances created an avoidance of ensuring these groups are represented in research.

But when we are conducting nationally representative research, we shouldn’t be hindered by these practical barriers and a definition that doesn’t reflect modern society. Currently within the UK the definition of nationally representative research requires quotas on: age, gender, social grade and region meaning that ethnicity and sexual orientation are not included with the definition. If these aren’t included then research cannot claim to be nationally representative if it’s not based on an effort to reach all sections of society. Worse still, by failing to do this it runs the risk of making clumsy and misleading generalisations.

At the7stars we believe that the research we conduct should reflect the views of all voices in society, therefore one of the first steps we have taken is to come together with five other founding partners to create Voices4All, a movement committed to improving diversity and inclusion standards within research services.

We have signed the open letter that calls for action to make ethnicity and sexual orientation (in addition to age, gender, region and social grade) quotas a minimum requirement for all NatRep research samples. As such, moving forward all new proprietary nationally representative research from the7stars will include ethnicity and sexual orientation within our quotas alongside age, gender, social grade and region.

We invite you all to sign up to join us in raising diversity and inclusion standards across the Market Research and Marketing Industries, https://www.voices4all.co.uk/. Ensuring that all voices are heard.