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Commerce Uncovers: Sustainability Sells

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It’s been impossible to miss the unprecedented rise of ecommerce in 2020 as global lockdowns sent people shopping online. It was the strongest growth for more than a decade. As a result, these increased online sales has meant more packaging and waste during a time when practices which exploit the planet need a critical overhaul. 

As a population however, a noticeable increase in people looking for climate friendly brands and solutions is seen, with 73% of UK consumers wanting to be more sustainable in 2021. With social causes and environmental impacts becoming more apparent and impactful, consumers are re-thinking where they buy and willing to spend with companies that align with their green values. For some, the cheaper cost is no longer the most important factor. 

Today’s shoppers are looking for brands that get it right and “walk the talk”, and nearly half are willing to pay a premium for brands that support recycling, sustainability and are environmentally responsible.   

Companies now need to look at how to align their values with sustainability. After receiving customers complaints, clothing brand Patagonia committed to replacing their plastic packaging with sustainable options, and documented their investigation and change process online. 

Elsewhere, global brands like L’Occitane are working towards a goal of using 100% recycled plastic in their bottles by 2025, whilst smaller independents like Serious Tissues are changing the world from the bathroom by selling UK made 100% recycled toilet rolls with no plastic packaging. 

Sustainability in ecommerce is moving from its status of being niche to essential. As consumers become more environmentally aware and take their money to ethical companies that are making the necessary positive changes, it’s time for more brands to make the better choice and show their sustainable credentials.  

Sources 

Allure – https://www.allure.com/story/garnier-one-green-step-report-2021  

IBM – https://www.ibm.com/downloads/cas/EXK4XKX8  

Internet Retailing – https://internetretailing.net/sustainability/sustainability/uk-consumers-are-becoming-more-socially-and-environmentally-responsible–and-are-calling-out-brands-that-make-meaningless-climate-pledges-21022  

Internet Retailing – https://internetretailing.net/industry/industry/ecommerce-grew-by-46-in-2020—its-strongest-growth-for-more-than-a-decade–but-overall-retail-sales-fell-by-a-record-19-ons-22603  

Patagonia – https://www.patagonia.com/stories/patagonias-plastic-packaging-a-study-on-the-challenges-of-garment-delivery/story-17927.html  

Serious Tissues – https://serioustissues.com/  

 

 

Commerce Uncovers: The Range

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This month The Range became the latest online retailer to launch their own marketplace allowing other brands the opportunity to sell to their customers. Approved sellers will receive exclusivity rights to avoid competing with other sellers on the platform but will also have to deliver items to customers directly and manage returns process.  

We often hear about the rapid increase in DTC retail however the stats show that marketplace shopping is still miles ahead. In the UK 57% of shoppers now buy from marketplaces, compared to the 13% who order directly from retailer websites. This was accelerated further by the pandemic when between March and June of 2020, the average online shopper made 11 purchases from online marketplaces but just 3 from an online retailer* 

Whilst marketplaces like The Range are nothing new (*cough cough* Amazon) their existence gave many brands a lifeline during lockdowns as traditional retail outlets closed, but at what cost? Fees vary massively for brands looking to sell on marketplaces, The Range reportedly charge between 7-20%. When you factor in the cost of delivery, returns and fulfilment this doesn’t leave much profit margin for sellers. 

Sellers also need to be careful with their choice of marketplace. Whilst onboarding as many as possible might seem like a logical step, these marketplaces have different audiences in the same way as media does, so they need to make the right choice. This way they can fully optimise their marketplace homepage to be an extension of their brand.  

For those retailers such as The Range who have pivoted towards marketplaces, there is an opportunity for a huge additional revenue streamNot only can it provide a bigger pull to new and current customers to get more items in one place, but there is also advertising revenue to be made. Take ASOS as an example, they started selling media space within their listings to drive users to their most “strategic brands” but with job vacancies for programmatic execs it’s clearly something worth investing in.     

 

*Source: E-Commerce News  

 

 

Commerce Uncovers: The rise of buy now pay later

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It is recently reported that John Lewis is about to launch its own buy now pay later (BNPL) product as they respond to consumers thirst for more convenient and easier ways to pay. With talk of M&S following suit, BNPL schemes have been the fastest-growing online payment method in the UK last year and are predicted to account for 10 per cent of UK e-commerce spending by 2024.

The agreements, provided by firms such as Klarna and Clearpay, are a flexible payment method that allows customers to make a purchase when they may not have the funds at that time. They can then pay for their goods flexibly – and interest-free – either within a 14-day window, 30-day window or in instalments.

Klarna recently has raised $1billion (£720million) of new funds amid rapid growth. The Swedish firm reported to be valued at $31billion making it the most valuable fintech firm in Europe.

Greater regulation is not far behind, but that will only bring further consumer confidence in the payment mechanic.

Shopping cart abandonment is one of the biggest issues that online retailers still face, with a lack of payment options being one of the key drivers. The payments landscape however, is evolving at pace, responding to consumers’ drive for convenience and the ability to have more flexibility in their purchasing decisions.

Retailers need to think about what payment methods they want to integrate to give their customers the right choice.

What else we’ve uncovered:

You Tube is testing the ability to shop directly through videos, as it creates a shoppable platform.

Amazon quietly buys a competitor to Shopify as battle hots up.

Shopify to introduce Shop Pay to Facebook and Instagram to help businesses capitalise on social commerce

 

Sources

Econsultancy – https://econsultancy.com/stats-roundup-coronavirus-impact-on-marketing-advertising/

Internet retailing – https://internetretailing.net/mobile-theme/mobile-theme/almost-a-fifth-of-the-uks-population-have-used-buy-now-pay-later-as-they-shift-away-from-credit-cards-and-towards-mobile-22843

This is Money – https://www.thisismoney.co.uk/money/markets/article-9333191/John-Lewis-offers-online-buy-pay-later-scheme.html

 

 

 

Sustainable Now – the7stars Whitepaper

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Please download Sustainable Now – our whitepaper co-written between the7stars and Global, which helps brands understand how they can play a role in turning consumers' climate change goals into reality.

     

    IAB Gold Standard: Supporting digital growth with digital responsibility

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    UK digital ad spend fell 5% YoY between Jan -June 2020, a reflection of the impact that the global Covid-19 pandemic has had – however, digital consumption has surged in the wake of shifting behaviours, with video ad spend rising 5.7% in H1 2020. This drop-in ad spend is not representative of time spent online, which hit record levels as people turn to digital sources for news, social contact and entertainment. 

    Supporting the growth of ad spend continues to be paramount for those in digital media, but there are mounting concerns that, while spend increases, the quality of digital buying practice is being neglected. As such, the7stars has a keen focus in 2021 and beyond on maintaining operational excellence and supporting initiatives like IAB Gold Standard.

    IAB’s Gold Standard Certification aims to improve the digital advertising experience for all users, by combating ad fraud and safeguarding brands through safety protocols. With IAB reporting increased digital consumption, it is ever more important to minimise risk to brands and ensure quality is maintained. 

    Accordingly, the IAB has published its Gold Standard 2.0 for digital media planning, a series of best-practice initiatives that will keep digital growing in the years to come. Guidance ranges from supplier-side tech implementations to guides for creatives to ensuring brand safety. The steps include:  

    Reducing fraud through the ads.txt and app-ads.txt initiatives: Ads.txt is a mechanism on websites that allows the owners of content to declare who is allowed to sell inventory, with app-ads.txt the extension of this mechanism to support app inventory. It means that when we see ads for sale programmatically, we can be sure that the ad we are buying is legitimate, which in turn goes some way to stopping rogue traders profiting from counterfeit inventory.  

    Encouraging suppliers to implement Sellers.json and OpenRTB Supply Chain Object: The Sellers.json file will effectively enable SSPs and exchanges to list their authorised reseller partners, along with seller ID. The SupplyChainObject lets buyers view what sellers and resellers have been involved in during a bid request. This will build confidence for buyers and DSPs to use the open exchange having validated each reseller involved in the process.  

    LEAN Principles from the Coalition for Better Advertising: LEAN is an acronym used to represent best practice in terms of digital ad specs: Light file sizes and strict controls on data; Encrypted; Ad Choices logo; and Non-intrusive. Together, this adds up to a better user experience: ads load faster, users know why the ad has been served to them and ads are non-invasive.  

    Never use the 15 bad ads: There are 15 ad formats (formerly 12 with the addition of 3 new short-form video formats) that shouldn’t be on any media plan – these include pop-ups and auto-play sound-on video.  

    Working with TAG (Trustworthy Accountability Group): This is a series of principles to follow that will secure a safer environment for online advertising placements by certifying vendors and content.  

    All in all, these steps work towards making digital ads safer for brands to buy and better for the users they are being served to. Essentially, the key messages are around due diligence – being sure of the ads you are buying – and perspective – considering whether, as a user, you would be happy if you were served this ad in this manner. 

    International Women’s Day

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    Monday 8th March saw people from all over the world come together to celebrate International Women’s Day. A day in which we can all reflect and show support towards the inspirational women in our lives and in wider culture.

    Despite March being a difficult month for British women – the tragic murder of Sarah Everard highlighted the chilling reality of gender inequality all women face daily – brands still used IWD as an opportunity to celebrate some of the more positive sides to womanhood. For example, John Lewis supported The Prince’s Trust’s #ChangeAGirlsLife campaign, by donating £5 to ‘Women Supporting Women’ when every AND /OR item was sold. Further, beauty and fragrance brand, Jo Malone, released a limited edition of their iconic ‘Peony and Blush Suede’ perfume, also choosing to donate some of their attributed profits to one of their partner charities. 

    Whilst admirable, given the nature of the categories they operate in (beauty and fashion), this isn’t new, and is instead somewhat expected. Brands who have pushed the boundaries within categories that are less obviously female focussed are more likely to cut through and drive real change, particularly when the topic of gender and gendered behaviours are becoming increasingly problematised in emerging culture (see our whitepaper, Beyond Binary, for more info.) 

    For instance, to celebrate International Women’s Day, EasyJet launched Virtual Pilot School – a programme to encourage more women to become pilots. It offers virtual introductory sessions with female pilots across homes and schools, to empower young females towards a career that is still heavily under-represented by women. Lego, who (much like the rest of the toy category) has previously come under fire for their outdated gendered stereotypes, launched Future Builders. Lego fans can re-create their famous 1981 ad, with their own faces, and label themselves as future innovators, creators or pioneers. Both brands are engaging with the topic of gender within a context where we still too often see an archaic view of gender – so their roles in addressing these issues are more important now than ever. 

    Whilst brands’ contributions to International Women’s Day are welcome and applauded across the board, brands within categories who are still guilty of not addressing gender imbalances in culture have never had a more critical role to play in shaping a more inclusive culture: one that’s reflective of the world all genders want to be seen in.

    The Future of TV Trading

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    The basic trading mechanism for TV trading hasn’t changed since the 1990s. It’s time for a makeover. 

    In 2020, we saw an increase in opportunities to access broadcast content outside of the traditional linear trading mechanism. We’ve seen huge developments in ITV’s long-awaited Planet V, an increase in inventory and targeting options with Adsmart, and developments in using clients’ first party data to enhance targeting on BVOD through Infosum. There are now many ways to access broadcast content via digital trading mechanisms, offering better targeting, attribution modeling and more flexibility to advertisers. 

    Since the rise of digital advertising, ‘the death of TV’ has long been in discussion. But surprisingly the UK linear TV revenue has remained relatively stable. In fact, revenue fell a mere 10% in 2020 vs 2019, despite the global pandemic. Although we had a rocky start to the year, TV revenues rebounded in H2 as the market grew in confidence and as stations offered more flexibility to the market by dropping their 2-month AB deadlines. (A perk we’ve always had at the7stars, but a huge change for the rest of the market.) Understandably, brands needed mass reach around high-quality video content to regain awareness after a difficult H1. This meant that they naturally returned to linear TV. And while it’s hard to say that increased flexibility resulted in the strong revenue numbers in Q3 and Q4, we can assume that it certainly had an impact. So much so, Channel 4 and Sky agreed to drop their 2-month AB deadlines down to 1 month. 

    Despite this change, it’s looking increasingly likely that we’ll see a decline in linear TV revenue as opportunities in BVOD and Adsmart improve. We may even see SVOD providers turn to advertising models in order to maintain revenue streams. So, what’s next for linear TV and how can it evolve to ensure there’s still a place for linear on a media plan? 

    • Flexibility is key: continue to reduce AB deadlines by improving camgen/autogen technology at the sales houses
    • Move away from TV pricing being traded as a discount off an ITV station price, this is stifling the planning process and taking focus away from clients’ core KPIs
    • Trading in volume rather than share will improve transparency in the market and allow for more competitive pricing
    • A form of measurement that can report on Broadcast media as a whole: advancement in products such as CFlight – will result in better planning and overall media effectiveness

    Altering how TV is currently traded will also have positive effects on the way TV is currently audited. It will take the focus away from a bottom-line discount on an ITV price and basic quality parameters such as PIBs. Instead, it will move towards an auditing process that looks at the effectiveness of a media plan in reaching specific audiences and the business effects for clients. 

    To summarise, it’s clear that linear TV will be around for a long time. Just as Netflix and Amazon Prime have kept the broadcasters on their toes when it comes to content, broadcasters must now ensure linear TV is accessible and relevant to advertisers in an increasingly digital world, through the way that it’s traded. 

    Gen Z: Capturing The Spenders of Tomorrow

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    Making up nearly 16 million of the UK population in 2021, Gen Z are fast rising as a leading market segment with immense buying power potential. Growing up against the backdrop of the 2008 recession and entering adulthood amid an unprecedented pandemic, this generation’s life aspirations and attitudes vary greatly from the cohorts that precede it. Brands need to understand their tendencies and behaviours now in order to connect with them in the future.

    When it comes to their finances, they have been dubbed as a generation of “unexpected savers” by CNBC. It seems that the world Gen Z have grown up in has shaped their frugal financial habits. Since the start of the economic downturn, Gen Z have seen and encountered financial struggles making them savings- oriented with 74% preferring brands that offer discounts. Research from Vice, Insider and Adobe can only confirm Gen Zs pragmatic spending habits. 

    This has only been fueled by the rise of online banking such as Monzo and Starling, making managing finances easier and more accessible. Surprisingly, Gen Z also spend less than any other generation that precedes them and do less online shopping than millennials, despite being the first digitally native cohort with access to the likes of buy now pay later schemes such as Klarna. In fact, only 49% did online shopping more than once a month compared to 74% of millennials. 

    Whilst they are financially savvy and were in a secure place pre-2020, COVID has been one of the most defining world events for this generation. The pandemic drove significant instability for many Gen Zs who were starting university, careers and establishing their way in the world, only for their plans to grind to a halt, with many moving back home to their parents and losing their jobs within a dire employment market. 

    This has certainly been reflected in their motivations and future life aspirations, where we see a strong desire for stability and security for this career-oriented generation. But it hasn’t limited the size of their goals, 59% identify ‘success’ as buying a home – a feat that has become more challenging over the years as banks demand higher deposits and house prices increase. This is consolidated in Gen Z’s 10-year plans, with 56% claiming the same, outvoting plans for having children (33%), getting married (34%) and relocating (23%). 

    With Gen Z’s population having exceeded the population of millennials and baby boomers in 2019, and now accounting for 32% of the global population, their presence can already be felt strongly in the market, despite the oldest of Gen Z being only 24 years old. As Gen Z look to navigate their way out of the pandemic and plan for the future, brands need to focus on providing stability, products and services’ that provide practicality to their everyday life.