The7stars’ latest white paper, The Experience Economy Rebound, details the road to recovery for the travel, hospitality and leisure sectors; industries which were placed on life support in 2020 as restaurants closed their doors and events were cancelled, rescheduled, and cancelled again. The past year has told a tale of two halves when it comes to financial stability. While millions were placed on furlough and faced uncertain job prospects, others built up savings. According to ONS data, between April and June 2020, households saved an average of 29.1% of their income – smashing the record set three decades ago.
However, personal finances are not the only factor likely to impact the rebound of the experience economy. Even as the vaccine rollout progresses, many remain reluctant to indulge in experiences until they are assured of their safety. Following the government’s announcement of the roadmap for de-escalating lockdown, Lightbox Pulse research found the emergence of three distinct groups, each of which will be crucial to an economic rebound in 2021.
The most lucrative of these groups is the Experience Enthusiasts, comprising 28% of the population. This group is desperate for a big summer and is willing to splash savings to achieve that. Experience Enthusiasts worry less about coronavirus and are comfortable with visiting virtually every location as soon as they reopen, including airports; making it a matter of when, not if, they book their next holiday. With this group so willing to engage in experiences, the time for brands to convert their enthusiasm into sales is now.
Around half (49%) of Brits are Pragmatic Participators. While they are cautiously optimistic of a return to normality, members remain to be convinced. Their summer will initially revolve around domestic trips – though they could be swayed if vaccine passports become the norm. Negotiating with this group will undoubtedly prove challenging for brands; however, they are there for the taking. By boosting confidence through cancellation guarantees and flexible rebooking, this group’s long-term potential can be unlocked.
The Social Sceptics will be the toughest for brands to convert. Social Sceptics are unconvinced of the safety of travel and are nervous about booking until they are assured their plans will go ahead. This group is keeping it local in 2021 through smaller, family-oriented experiences. This does not mean, however, that brands should simply ignore them: rather, through targeted messaging in trusted sources, they will be persuaded to eventually return to the experience economy. And with many in this group potentially saving up disposable income two years running, the onus is on brands to be at the forefront of their future plans.
Come the end of 2021, the ‘winners’ of the experience economy will be those brands that not only recognise the varying financial challenges facing the nation, but also react to the nuances in how each of these groups is willing to participate in travel and experiences.
The doors of non-essential retail opened again on the 12th April and, with them, crowds of UK consumers queuing up to get back into their favourite stores; an insight into consumer sentiment towards spending money again. With optimism and confidence returning due to the vaccine roll out, consumers are ready to start spending more, the switch in sentiment being immediate, like ‘a light being flicked (on)’.
After being bottled in for over a year, the new taste of freedom that comes with restrictions being lifted could see a spending surge in Q2; a euphoric post-lockdown impact on purchase intentions. Unlike previous recessions, many Brits strengthened their finances and managed to save during lockdown; amassing over £245bn, demonstrating a noteworthy potential for spending power and a likely significant bounce back in the UK post lockdown. A survey from Future illustrated that 45% of respondents had already started to plan their ‘splurge’ purchases, anticipating more than half will be spent as we enter fewer restrictions over April – June.
Britain’s ‘coiled spring’ economy was supported by Radiocentre’s research ‘bounce back and beyond’ where listeners were asked about their spend intentions once restrictions started to lift. Respondents illustrated their strong intent to increase spending across a variety of categories, most significantly against the entertainment and beauty industries. The inverse is also true with decreased spend anticipated against takeaways and online shopping, opting for real life moments and experiences instead. This trend is emerging within fast fashion with searches for online brands starting to soften since non-essential retail returned (Google Trends, 2021).
It’s interesting to note that consumers’ spending habits will likely shift compared with their pre-pandemic behaviours. A study from Bauer showed that consumers want their newfound ‘financial fire power to be a part of positive change’, particularly across sustainability and supporting local. We witnessed a huge increase in local shopping during the pandemic, and despite the return of the city highstreets, experts anticipate the focus on local to continue.
The next couple of months will be imperative for Britain’s returning economy, whilst some are cautious in the immediacy of the bounce back, if the overflowing stores and queues are anything to go by, we can expect a frivolous Q2 and beyond.
In the most rollercoaster period in recent football history, this month saw 12 “founder clubs” launch a European Super League only for it to collapse a mere 56 hours later. It showcased the power that fans still have over the sport they love, but also brings the question of ‘what would have happened’ to broadcasters and advertisers alike, who rely on the Champions League and Premier League for the vast majority of their reach.
Led by the owners of Real Madrid, Manchester United, Juventus, and Liverpool, the 12 founder clubs attempted to break away from the existing UEFA Champions League into a new ‘European Super League’, guaranteeing them a spot year-after-year, and an opportunity to own the commercialisation of the tournament. Fan backlash, 79% of whom opposed, alongside condemnation from Sky Sports, BT Sport, Amazon, and even Boris Johnson, ultimately led to its downfall – but this process showed us the potential fragility of the existing product of football that so many advertisers rely upon.
Criticism from the lead broadcasters, Sky and BT, was partly born from a concern over their investment in the existing football pyramid. BT Sport secured the TV rights to the Champions League until 2024 in a £1.2bn tender. However, if 12 of the biggest and most marketable clubs in that tournament were to leave then that could have a major impact on where advertisers decide to place their TV budgets. Similarly, with Sky Sports, if the six English teams were expelled from the Premier League, where would that leave the value of the product they’d invested so much in? Industries such as Gambling who invest significant budgets to be front and centre in the big matches on these channels could have shifted large amounts of money easily into the commercialisation of the European Super League if it did indeed reach the global scale of viewership that the founding owners expected.
Advertisers are most likely breathing a sigh of relief this week too. The decision on whether to jump on board with the potential scale of the European Super League is one that some would simply have to do, but that would have come at even more of a premium. Plus, the toxicity of fans, particularly in the UK, would open up a real discussion over the value of global association with the tournament vs the risk of alienating existing customers within this country.
The uprising against the European Super League united fans, clubs, brands, and broadcasters in a way that hasn’t happened before. It remains to be seen whether the ESL comes back under a new guise in a few years’ time and whether the pull of a global platform of elite football clubs proves too tempting for brands and broadcasters alike. However, and most importantly, this month fans proved that whilst their support elevated football to the commercial powerhouse that it is, if you try and take the fundamental nature of competition out the game that they love, then they will stop you.
The United Nations describes climate change as the ‘defining issue of our time’, with an impact that is global in scope and unprecedented in scale. People in the UK now consider its importance to be second only to the pandemic. Yet, action has failed to keep pace with increased awareness. the7stars joined forces with Global to identify three key areas where brands can help bridge the intention-to-action gap.
Creating urgency. Sustainability is too broad an issue; we must break it down to make it accessible and relevant to consumers. Communication, channels, and content each contribute differently to engaging consumers with more digestible material.
Brands need to understand the exact commitments to sustainability within their own business in order to identify a clear role to play in creating urgency. Whilst brands must consider the consumer experience of their conversation, viewing it through the lens of sustainability.
Bringing it home. Climate change tends to slip down the national agenda in the event of other global crises. However, Covid has had the opposite effect and put climate change in front of people’s minds by highlighting the impact consumers are having on the world around us.
Thus, brands need to maintain this momentum, such as visible commitments across packaging, owned touchpoints and activities within paid advertising. Brands must also think through the lens of the consumer. Nearly half the day is driven by habit, so focus on micro-moments of routine to unlock new opportunities to shift behavioural change. Finally, with people giving more time and attention to their local area, they must harness the power of local for brand interaction in emotive community spaces.
Making it easy. Research suggested that the onus for environmental issues previously fell upon major groups like the government, however, 80% now agree that sustainability is everyone’s responsibility. Yet, for many consumers barriers still exist – the top three being lack of resources, education and not knowing how to start.
There’s an appetite to make change, but the scale of the challenge, the abundance of information and the multiplicity of choice have bewildered people into inertia. With sustainability an unexpected by-product of lockdown, it’s up to brands to simplify the challenge and reframe their message for good.
This month, OFCOM received a record 110,000 complaints about the wall-to-wall TV coverage of the death of Prince Phillip, Duke of Edinburgh – a colossal response to a seemingly short-term disruption. But the psychology of complaining is complex. Advertisers can learn a lot about the idiosyncrasies of consumer behaviour from observing the most complained about content.
Rewind back to October 2020 when 24,500 complaints were registered in response to Diversity’s Britain’s Got Talent performance for being too political in their depiction of the Black Lives Matter movement. Yet only 4% of complaints were from people who had actually watched the show. People had predominantly reacted to news coverage of the small pool of complaints, which had spiralled into a cycle of outrage.
It’s therefore no wonder that ‘callout culture’ makes brands fearful of pushing the boundaries in their advertising. After all, driving brand growth is challenging enough without getting embroiled in culture wars and attracting negative press.
But our industry also flourishes when we connect brands with issues that people care about. It’s not just about understanding their passions but also their grievances. Callout culture can actually be a force for good in advertising in a number of ways.
Understanding authentic pain points. When monitoring consumer sentiment, we know that there’s often a discrepancy between claimed behaviour and real-world action. Complaints can be one of the most effective ways to gauge emotional engagement with your brand so don’t ignore the complainers. You shouldn’t always take it personally; it’s human nature to misdirect our concerns in a bid to be heard. The issue might actually be a wider category problem that you can solve.
Accountability drives change. With the proliferation of social media platforms, it’s never been easier to complain. If you’re doing something wrong, you’ll know about it pretty quickly and that’s a good thing. Many brands have come back stronger from making faux pas while some even use volume of complaints as a positive sign that their content has hit a nerve. Channel 4’s Director of Programmes recently stated, “When there isn’t someone complaining about one of our shows, we should be worried.”
Advertising that matters. Amazing ideas can manifest in the face of controversy. The negative response to Sainsbury’s Christmas ad that featured an ethnically diverse cast prompted the nine major supermarkets to come together under the banner of #StandAgainstRacism – an unprecedented move by the category. Brands increasingly have a responsibility to portray a representative and equal society. Those that put their heads above the parapet are at more risk of criticism but also of having meaningful impact.
True progress is often the most complained about. In the wise words of Taylor Swift, ‘haters gonna hate’.
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 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.
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.