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4 The Future

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On the evening of Tuesday 14 September, the consultation period on the future of Channel 4 came to an end. A consultation designed to test the government’s belief “that a new ownership model for Channel 4 would be the best means of ensuring its future success.”

Channel 4 is currently publicly owned but commercially funded. Which means the taxpayer doesn’t fund it, but it’s not required to turn a profit or focus on shareholder dividends in the way private companies are. So, profits are re-invested into programming, allowing the creation of content other channels might view as risky or unprofitable. This in turn allows Channel 4 to deliver against its public service remit of serving diverse and under-represented communities, along with supporting independent British programme makers.

A central concern to those against privatisation is that this element of Channel 4’s offering may be lost. Ampere Analysis found that Channel 4 uses 200 different UK based production companies, 140 of them reliant on Channel 4 for more than half of their TV production work. Each one of these companies brings a new perspective and develops talent which benefits the entire industry. A private owner tasked with maximising profits is likely to reduce the breadth of production companies and the level of risk taking within programming.

Proponents of privatisation argue that new investors with deeper pockets could mean bigger budget programming being brought to British screens. Shortly before losing his job, the culture secretary Oliver Dowden said this meant Channel 4 would be in a better position to take on the streaming giants and to bring in more event programming such as Emma Raducanu’s US Open final. Which perhaps overlooks the fact that Channel 4 were able to do just that under their current model, despite making no return on the ad-free feed from Amazon.

Any change in ownership for Channel 4 as an advertising environment could mean bigger shows, more event programming, and could well pull in larger viewing numbers, providing new opportunities to drive cost effective reach. But the danger is that Channel 4 starts to look a bit more like other channels, which might mean the relatively unique TV audience it currently attracts is diluted. Another consideration for media opportunities is that ITV is currently being mooted as a potential buyer for Channel 4. This reduction in TV sales houses, and the market dominance granted to the new entity, has already been highlighted by ISBA as a concern for advertisers.

Santa Is Back From Furlough, But Xmas 2021 Will Still Be Different 

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Whichever way you spent it, it’s safe to say Christmas in 2020 was a lot different to previous years. With the nation having spent most of the year apart from friends and family, and with coronavirus cases on the rise again, an initial plan to relax lockdown restrictions over the festive period was drastically scaled back – and, for those living in tier four areas, scrapped entirely.

It was little surprise, then, that last year’s Christmas didn’t feel the same. There were no office parties; no long lines for Boxing Day sales. Far from the usual festive feast, food sales declined by 3.4% in the month to December. A staggering eight million Brits spent Christmas Day alone.

After the trauma of last year, one question on most brands’ minds: is Christmas back in 2021?

By delving into a wealth of research and proprietary learning, the7stars has sought to answer that question in our Christmas Trends 2021 whitepaper. The team have identified three over-arching themes which are set to define this year’s festivities, for a Christmas like no other:

Anticipation: After celebrating from a distance last year, consumers are hoping to make the most of this Christmas, with plenty of family reunions and splurging of lockdown savings to celebrate.

Meaning: Over lockdown, Brits found themselves craving closeness and felt more in touch with their sentimental side. This is likely to continue, with a focus on personalised gifts and the relationships that matter most this Christmas.

Impact: The pandemic led many to reappraise what’s important in life, with environmental and social ramifications more apparent than ever before. This year’s festivities are likely to play out in the same context, with Brits dreaming of a greener, cleaner and fairer Christmas in 2021.

Of course, there remain some things which will never change. Christmas crackers will still be pulled; carrots will continue to be crunched. But the impact of lockdown will likely still be felt.

One year on from ditching their usual shopping habits, online orders are poised to rule the roost again this year, with half of Brits intending to shop online at the same levels as during lockdown. However, shoppers could face difficulties getting their presents delivered in time, should global supply chain issues – exacerbated by the UK’s HGV driver shortage – continue into Christmas.

And while those who built up savings over lockdown expressed a willingness to splurge, families with lower disposable income may opt for a smaller, more considered Christmas again this year.

Gen Z, in particular, dream of a Green Christmas, with 56% intending to celebrate in an eco-friendly way, compared to 1 in 4 of those aged 55+. By shifting towards more plant-based and sustainable materials, this group are looking for innovative products to define their experience.

While some Christmas rituals will return, not everything will go back to the way it was. Brits still crave a holly, jolly Christmas, sure – but one that leaves a lasting, positive impact on their world. 

The Contribution Of Context To Digital Advertising

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Once upon a time, adverts had a pretty good idea of the company they might keep. An ad for a watch might sit in the business section of the newspaper. The car advert was placed on a roadside billboard.

But digital changed things. It allowed us to place ads according not only to the content they would sit alongside, but also to who was reading that content. Being able to track behaviour online meant knowing a lot more about the people landing on any given page at any given time. So, ads could be placed against people rather than places. The big advantage of this being that ads could then be bought against the right person, but on lower cost websites and sections of sites.

There has always been great debate about how effective this approach is. It was often cited that products advertised in higher priced media contexts were themselves perceived as being of higher value. This debate has now entered a new phase as Google plans to phase out 3rd party cookies by the end of the year – a move likely to inhibit some forms (and providers) of behavioural targeting.

The release this month of a study looking at the importance of context could hardly be more perfect. Integral Ad Science analysed the impact content surrounding a banner ad has on the effectiveness of the advert itself. Participants were asked to browse pre-selected articles on eight different sites. They were shown one article and one ad per site. Four ads were shown alongside unmatched content, the other four across content which matched either the article theme or message.

Results showed that 73% of people found an ad more appealing when it was related to the content of an article. They also found a 25% uplift in memorability when an ad matched the theme of the content it sat alongside.

Diving a little deeper into the numbers, the study uncovered that adverts which contain a great deal of information benefit most from sitting alongside content that matches on an endemic level (meaning the ad solves a problem the article creates – e.g. an ad for a film on a film listings page). Whereas ads that appeal on a more emotive level see greater benefits from sitting alongside content sharing the same theme.

It’s another piece of evidence to suggest that context, where your ad is sitting and what appears beside it, all impact performance. Moreover, it will serve as a guide for how to navigate targeting choices when online behavioural tracking becomes more limited.

AV’s September Surprise

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After 18 months of uncertainty and upset across the advertising marketplace, we still managed to be surprised by the never-seen-before inflation levels that September brought to AV.

Understandably, advertisers have emerged from the slumps of 2020 to thankfully spend again and revive the marketing industry. Year-on-year figures have looked buoyant throughout recent months but in September, the huge revenue hikes sent everything off balance.

All three big players in AV saw excessive inflation, ITV and Sky with circa 20% year-on-year and C4 at circa 40% year-on-year which, having caught the industry off guard meant the need for the implementation of diverse solutions.

There are many reasons behind the unprecedented inflation, but three factors were key. The first being the relaxing of Advance Booking Deadlines across the industry, something which the7stars has always benefited from, but with large network agencies permitted this short-term perk, late money had entered the market at no penalty, skewing forecasted revenue figures.

Secondly, the number of brands advertising on TV was significantly higher than in 2019. Many advertisers had held back on spending until post lockdown, as well as choosing to avoid months when the Olympics and the Euros were on air, aiming to benefit from the more regular TV schedule (with programming such as Bake Off), and ultimately hoping for pricing to stabilise. Unfortunately, conversely, the additional market revenue together with impacts falling year on year, as more people are back at work and going on holiday, resulted in price inflation.

Thirdly, one of the main drivers behind the excessive Channel 4 inflation was the result of over-investment on ITV for Euros coverage and the return of the summer series of Love Island UK.

To alleviate these market pressures on campaigns, we identified solutions through our ability to be highly agile and flexible in the market; moving marketing spends into more lucrative environments, within sales houses for example, from linear into BVOD where pricing fluctuations do not occur and moving budgets from AV into other media channels where pricing is not impact and revenue adjusted.

Looking forward to Q4, we will no doubt see a bountiful period for advertising and may need to think fast with solutions for continuing year-on-year inflation, but we should view this in a positive light as brands have the overdue revival they have so desperately needed, after such punishing times.

Linear TV channels have an optimistic Autumn/Winter ahead with Channel 4 in particular showcasing an exciting programming slate, so we are anticipating favourable viewing figures which can hopefully stabilise any future revenue spikes.

With AV consumption and advertiser spending surely levelling out from here on in, we should see a more balanced 2022 with market changes based on trends from 2019.

The Battle For Our Screen Time

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At the end of July, Scarlett Johansson began the process of suing Disney after her superhero film Black Widow was released on streaming services at the same time as its cinema release.

Although it set a box office record for a film released during the current pandemic, grossing $218m in its first weekend, receipts then fell sharply and Johansson argued this was because people were able to watch it on Disney+, therefore depriving her of potential earnings and breaking contractual promises which had been made to her.

While Disney defended itself and claimed it had not violated Johansson’s contract, the saga is just the latest example of how powerful streaming services have become, and how traditional film outlets may have more than COVID-19 keeping them up at night.

The streaming industry was one which benefited hugely from the pandemic, with millions of people being forced to stay in their homes. Netflix reported that in Q2 2020, at the height of the first wave of the pandemic, it gained 10 million new subscribers in just three months. Similarly, Disney+ launched in the UK in March 2020, perfectly in time to swallow up droves of viewers in search of new content.

Signs that streaming platforms could garner significant returns on films bypassing theatrical were already there. In spring 2019, a whole year before the pandemic, Murder Mystery, a Netflix original starring Adam Sandler and Jennifer Aniston, was viewed in over 30 million Netflix accounts in its first three days of release – a phenomenal figure by any stretch but even more so if converted into equivalent box office numbers.The enforced closure of cinemas during lockdown gave the major studios a golden opportunity to experiment with straight to streaming themselves, which Disney did with Mulan (Liu Yifei) and Soul (Jamie Foxx & Tina Fey), and then with the simultaneous release on streaming and theatrical (“Day and Date”) of Black Widow itself. If Day & Date can be made to work for the studios, this would seriously weaken the leverage cinema chains leverage over their share of the box-office.

However, there are clear signs that Day & Date is not necessarily working for the studios resulting in a weaker overall return – there is no incremental revenue from the streaming views – whilst the earlier appearance on TV screens is also ushering in an increase in piracy. The financial model has definitely changed but theatrical releases and cinema itself look set to still be with us for the foreseeable future.

Podcast Measurement Is Gaining Traction

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Despite the impact of the pandemic on media consumption, podcasts have been somewhat ‘pandemic-proof’. Following an initial dip in podcast consumption in early 2020 – reflective of a shake-up of consumers’ regular routines, where they no longer needed to fill the silence of their daily commutes – loyal listeners soon found the time in their new routines to re-engage.

Whilst radio still tops the ranks for most popular audio source, there are 14.6m podcast listeners in the UK and growing, with 25% considering themselves ‘regular’ listeners. And with the majority having only listened for 1-2 years, that tally is only set to grow – to an estimated 16.8m by 2024.

Self-reported surveys show podcasts to be a highly effective media channel. In one such Nielsen study, 62% of listeners correctly recalled a podcast ad, with the same proportion considering the product as a result. Thus, podcasts attract an audience which is highly engaged, attentive and curious – all while maintaining a relatively low cost of entry both for publishers and advertisers.

In the UK and globally, podcast audiences skew male, 16-44, and with an above-average income. They are highly engaged and loyal to their favourite podcasters, but also diverse in their consumption, with 40% admitting they consume more podcasts than they did when they first started listening. Podcasts are also successful in driving time spent, with the average listener completing 80% of an episode – substantially higher than YouTube’s 50% viewer completion rate.

Taking this into consideration, podcasts appear to be a no-brainer for brands. However, until recently, the ability to target specific and often complex audiences has been a difficult task.

Whilst we know that podcasts garner a loyal following, gaining a more granular audience understanding with effective channel measurement has proven complicated. Recognising this challenge, leaders in the digital audio market have long searched for ways to make buying and measurement more seamless. Tech giants Apple and Spotify are pioneers in this space, looking to create a programmatic inventory that would enable the buying of audiences in aggregate.

In a bid to become the world’s largest audio platform, Spotify are investing heavily. By leveraging data and analytics in order to grow the monetisation of their ad ecosystem, Spotify have recently acquired Gimlet Media, Anchor and – critically – Megaphone. Through a partnership with Nielsen, Megaphone has unprecedented access to that golden nugget of audience data. This will allow Megaphone and, in turn, Spotify to use Nielsen data to target podcast audiences.

For the first time, podcast measurement can move away from monitoring downloads only, and towards a more platform-agnositc, real-time view of listener behaviour and interests. This offers not only a lucrative prospect for brands, but a more personalised and engaging experience for the listener. As they become easier to buy and measure and more embedded into consumer lives, podcasts are becoming one of the most effective media channels for agencies and brands alike.

To Advertise Or Not To Advertise

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Some brands are so universal that it raises the question of whether they even need to spend on advertising. Many people claim that they are not influenced by ads at all and, once brand loyalty is established, it’s a tricky task to get consumers to change their behaviour.

The difficulty in understanding the impact of turning advertising off is that few studies have been conducted; those in the industry are more focused on the effectiveness of their media. In the past, some studies have been conducted looking at pausing TV advertising, with findings suggesting a 50/50 chance of sales decline, but the majority of these focused on established brands.

The Ehrenberg-Bass Institute for Marketing Science has now released a report examining brand sales once advertising is halted. The study looked at the media spend and sales of 70 brands in the Australian consumer goods category over 20 years. Of these, 57 cut media for a year or longer. The initial results showed that stopping advertising for one year led to a 16% sales drop; two years saw a 25% drop and three years a 36% drop.

However, within these averages there is significant variation. Therefore, the study split the brands into small (<250k units), medium (250k-1m units) and large (1m+ units). Given that the larger brands will have greater mental and physical availability, we would expect them to be more resilient once advertising stopped. Indeed, the study found that big brands were fairly stable after a 2-year advertising pause. Medium and small brands both saw a more marked decline in sales.

The data also differed depending on the brand’s stability. Stable brands saw a substantial decline after 2 years with no advertising. Brands that were growing had very different results depending on their size. Big and medium brands continued to grow for 1-2 years, whereas small brands immediately stopped growing and then declined. Unsurprisingly, brands that were already declining dropped off at a faster rate once they stopped advertising.

The evidence shows us that while brands might be tempted to pull advertising, it’s highly likely to have a negative impact on their sales. Mental availability falls if the consumer isn’t exposed to the brand, making them more likely to be swayed by a competitor’s advertising. This is particularly important when we consider that most of any customer base is made up of light buyers. Without these customers, brand growth is impossible. Even large brands will be sacrificing sales growth if they pull their ads.

While some may consider advertising to be a nice “add on”, this study proves it to be an integral part of a brand’s success.

Greener, Faster, Smarter

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The road less travelled makes for a turbulent ride, so we are creatures of habit, comfortable in the status quo.

In times of crisis, however, humans are very adaptable. When COVID hit, we quickly got used to working from home, and our laptops became windows into our worlds. Of course, there were rogue children photobombing news reports and lawyers’ faces replaced with cat AR in courtrooms, but for the most part, we were okay.

So, when traditional shooting (particularly at scale) became a significant challenge, everyone looked at creative alternatives.

One solution was stock footage libraries. Before the pandemic, these libraries were littered with awkwardly hammy scenarios. Now, with the production world having to pivot and spend time navigating what was now needed to safeguard the health and safety of everyone attending film shoots, sites stepped in erupting with swathes of outstanding material. Thus, a new level of quality, previously inconceivable from stock footage, was born.

Taking full advantage of this, Supernova – the7stars’ in-house creative arm – fulfilled a brief for Penguin Random House in this way, advertising the new book by Lianne Moriarty, author of Little White Lies and Nine Perfect Strangers. By utilising the expanded stock footage libraries, we were able to create a trailer-style film in a quality once unimaginable – by thinking smart, acting fast.

When it became clear that stock wouldn’t cut it for all briefs, the production world pushed ahead with computer-generated imagery. Virtual sets and packshots were created, often using photo-realistic, real-time rendering through the Unreal Engine. A technology once limited to gaming was now being used to produce Lurpak ads; seen on a colossal scale when filming The Mandalorian; and combined with parallax techniques for dramatic effect.

When parts of the world opened up once more, the production community began attending shoots remotely, saving on unnecessary travel costs and, more importantly, on carbon emissions.

And with shoot production the most significant cause of carbon emissions in advertising, each of the above techniques – relatively new to adland – can help us to mitigate that carbon footprint.

The past few years have proven that we can discover new and better ways of working when challenged. Much like virtual meetings, many recent innovations are here to stay, meaning we can work greener, smarter and faster to produce results. As the media industry continues to evolve, such techniques show we can innovate to benefit our staff, clients and, above all, our planet.