Revealing the Value of Social Commerce for Brands and Marketers A Groundbreaking Global Study Advances New Technology

How can retailers better understand and harness the power of social commerce to better track the consumer journey? A recent study by MAGNA, Reprise and SNAP offers great insights and some advice.

Social commerce refers to those online activities that facilitate transactions. According to Glen Conybeare, Global President, Reprise Commerce, a  “post-pandemic new normal” has fueled greater participation in social commerce, so much so that it can now account for as much as 20% of sales. He noted that, “Brands are realizing that a significant double digit percentage of their sales are likely to be through e-commerce channels. That makes their life more complicated because most brands are very adept at selling through physical retail that has been structured for many years to optimize sales.” This poses a challenge to some retailers who are still grappling with how to best structure their online offerings to maximize profitability.

For Kara Manatt, EVP Intelligence Solutions at MAGNA, the study addresses what retailers must do to meet the needs of consumers. “What do consumers really want and need and what is their experience like on social media? We wanted to tap into what is currently happening with consumers on social media and the technologies they are using,” she explained.

This global study of 8,000 respondents spanned four countries - U.S., UK, Germany and Saudi Arabia – and is the first of its kind for MAGNA. It revealed the following insights:

Social media is vitally important to consumers in making purchasing decisions. Manatt noted that she was surprised at, “how many people use social media to make purchases and use it as a tool to discover products. There's a really strong foundation of people using social media in that way across all the markets, especially Saudi Arabia.”

AR and VR are emerging as one of the important centerpieces in social commerce. For Conybeare, it enables consumers to better curate their purchases and reduce returns that increase costs to retailers. He explained that, “Consumers don't want twelve items and send ten back. It’s a hassle. They want to order something that works for them and not have to send anything back. AR and VR technology help with that.”

There is an enthusiasm for these new technologies. Manatt explained that, “People are really excited and leaning in to try new technologies. They use AR to try on clothes (for example). Brands need to make sure that we're meeting consumers where they are and taking advantage of those observations and behaviors that already exist.”

There is a great deal of disconnect in the current consumer journey to purchase. “It's about reducing the friction in the journey. We think is e-commerce is easy but actually from a consumer's point of view it's full of friction. It's a lot easier to walk into a physical store, try on a pair of jeans, buy the pair of jeans and it is unlikely to take those jeans back,” Conybeare explained.  Conversely, he noted, “When you buy a pair of jeans online, you’ll probably buy two. Maybe one fits. Maybe none fits. It’s the same with style. Technology reduces friction in the online consumer journey. That's why we've seen such a positive reaction to AR and VR in the study.”

Consumer appetite for new technology spans all age groups. “It's not a generational thing,” noted Manatt, “It's not just younger people who realize that doing things through social media is going to help alleviate some of that friction. It's all ages.”

Profitability drives retailer decisions and new technology helps. “e-commerce is not as profitable as physical retail for the vast majority of retailers,” Conybeare stated. Generous return policies eat into profitability. “If implementing AR or VR technology on your site means your returns go from 30% to 20%, that pays off very quickly. Increasingly, retailers are realizing that they can’t continue to offer amazing customer service with free returns free delivery for long because shareholders will not stand for it,” he added.

For brands and advertisers, the road to profitability lies in AR and VR. “This study shows the consumers really want it. If brands and marketers were thinking, ‘It's not going to move the needle. It's not required. We're selling our stuff today without it.’ That's true. But you have to ask yourself what are you potentially missing out on? Changing your onsite conversion rate from 3 to 3.5% is the equivalent of spending millions on media. It's huge. And it's just one way of reducing friction for online customers,” Conybeare replied.

All of this emphasis on social commerce begs the question – What happens to brick and mortar? “There's got to be a place for physical retail. We'd be in a very sad, lonely world if there weren't.  Physical retail just needs to reinvent itself and part of that is bringing back more entertainment to shopping that makes it fun,” he concluded.

This article first appeared in www.MediaVillage.com

Artwork by Charlene Weisler

Let’s Work Together as an Industry. Jack Myers Reports On the Future of Media

For 35 years, Jack Myers has presented an annual media industry financial assessment report called The Myers Report Industry Update  that is culled from data and conversations with national and local media, agency and marketing executives from across the spectrum. In previous years, the report was shared only with MediaVillage member companies. But this year, the study was released to the public via a fascinating webinar this week that reached over 1,000 global participants. 

Like many small companies, Myers’ MediaVillage has been greatly impacted by COVID-19. His young team, he explained, “really stepped up. And that is a core message for all of us during this time. To step up, to lead and to show what we can do as individuals, as teams, as organizations and as an industry.” For Myers, looking at where the industry is going requires us to, “look at the realities as we move forward into the next stage of growth, renewal and recovery for the media, advertising, marketing and entertainment community.”

Advertising and Media Community COVID-19 Renewal Fund

To that end, Myers has launched a series of Leadership Conversations that will serve, he explained, “as a navigational intelligence tool and resources to lead through this turbulent time that will lead to renewal and growth.” Another aspect of these conversations is to better understand the challenges of COVID-19 on a range of non-profit organizations in the media business. “They are struggling now,” he explained, “so I’ve made a commitment and MediaVillage has made a commitment to support thirty of those organizations in partnership with the Advancing Diversity Council of forty industry leaders.”

His Advertising and Media Community COVID-19 Renewal Fund is seeking donations which will be used to support those thirty organizations that are, he noted, “leading the charge for not only supporting diversity in our community, supporting non-profits that are helping families, helping small companies, helping local restaurants and restaurant workers.” Donations can be texted to GIVE 8604064919 or at https://www.mediavillage.com

Benchmarking Economic Projections

Forecasting future revenue potential for any industry while a global pandemic cripples the economy is not an easy feat. The last major pandemic was a century ago at a time of different medical capabilities, media platforms and public sensibilities. So a direct one-to-one comparison may not be ideal. However, what happened in the years following 1919 could be used as a rough benchmark. Myers pointed out that the negative economic impact of the 1919 pandemic was felt for three years, rebounding during the Roaring 20’s (a time of Prohibition, the Great Depression and the rise of autocracy.) Taking into account the realities and facts of today, he projected a modest decline in the advertising sector by 2021 with certain areas of the business faring better or worse than the industry as a whole.

Myers Economic Projections for 2020 and Beyond

Advertising spend sectors cratered in April and May with the advancement of the pandemic. Myers, in his Industry Update report released this week, still projects declines (although much lower) in 2021 due to a slow start to sports and less political advertising in a non-election year. Myers’ first post-COVID economic update on April 15, 2020 saw Total 2020 Marketing Investments decline -16.6%, and by May, -22.6%. Total 2020 Advertising, which saw a +6.2% gain in January, fell hard in April (-20.0%) and May (-22.6%). By 2021, Total Marketing Investments and Total Ad Spend should pace at -4.7% and -3.8% respectively in anticipation of a second pandemic wave in September or October.  

Notably, the beneficiary of a new post-COVID normal looks to be Legacy/Linear advertising which was pacing as flat in January 2020 (-0.3%), fell hard in April (-29.0%) and May (-32.0%) but is projected to gain +11.4% in 2021. Digital, which was pacing at +13.1% in January, declined -9.3% and -12.1% so far during the pandemic and is estimated to post a +3.1% by 2021. Notably, the two worst performing categories, Out-Of-Home (-52.6% in May) and Digital Place Based Media/Cinema (-65.0% in May), depend on consumers venturing out into larger venues and will understandably take longer to recover.

Moving From Share to Growth

Myers warned that, as an industry, we are headed in a self-defeating downward spiral.  He noted that, for, “Total Marketing Investments above and below the line, advertising plus shopper marketing plus promotion that includes event, PR all below the line, we’ve lost as an industry $100billion in the last ten years. We are below where we were in 2000, at the 1990 level.”

He attributes this to increased competition in the space where more media companies are all competing for the same media pie. Certainly there has been growth in certain sectors such as shopper marketing money moving into Facebook, Google and other commerce based solutions. But, he stated, “this is a false growth. The reality is that there are 60,000+ media sellers, companies, organizations, brands who are competing for advertising dollars… all focusing on taking share.” He added that, “as an industry we are in a share game. We need to move from a share game to a growth game for the whole industry. Compete while raising the tide.” And it is all the more important to do so as we move through COVID-19. He concluded that, “It’s really important to think, act and look to our stakeholders as one community, standing together focused on serving their needs.”

Annual Sales Organization Industry Leadership Honors

Myers shared the results of the latest Annual Leadership Honors for those companies who have demonstrated excellence in sales service, innovation, research and effectiveness. He noted that the study recognizes, “forty companies in the advertising industry across nine performance metrics in ten industry categories… surveying 700 advertiser and agency executives on their perceptions of eighty media companies,” in television, digital, audio and out-of-home in nine categories. And he offered a spoiler alert: The top performing media sales organizations for 2020 based on field research from February 1-March 15, 2020, which he posited was, “the perfect pre-COVID snapshot,” went to Hulu and Pandora.

This year’s study offered some tantalizing insights into the future of media. Past years have seen the dominance of legacy media outlets. This year, the top performers were for the most part digital properties that are comparatively new to the media space.  Also, in some areas, the parameters of success this year were generally lower than in past studies.  

Best In Class and On-The-Rise Honors

This year’s study offered an overall best in class honor as well as an on-the-rise honor for those companies that performed well among industry executives with less than 7 years in the business. The chart below is a quick recap but certain aspects of the study are worth mentioning here.

One of the interesting aspects of this year’s study, aside from the relative dearth of legacy media companies making top grades, are the declining median scores. On a scale of 1 to 100, the general median score has been 65, “and we rarely saw media scores below 50,” Myers stated. But this year saw no category at the historical 65-as-passing median and some categories such as Innovation, Proactive Impact, Advanced Technology and Trade Communication, woefully low. More needs to be done industry-wide to bolster the efforts in these areas for advertisers and brands.

                                                    Median score    Best in Industry                         On-the-Rise      

Trust and Reliability                   61.3                   Spectrum Reach/Pandora        Vudu/Sinclair

Client Support and Services       59.1                   Hulu/Xandr                              NYI/Vudu/Tiktok

Communicating Value                58.6                   Hulu/Pandora                    SiriusXM/Vudu/Roundel

Client Satisfaction                      57.1                   Pandora/Hulu                            Vudu/Cumulus

Data and Measurement               53.5                   Google/Pandora                      Samsung Ads/Twitter

Innovation                                   47.5                   Xandr/Hulu                              Roku/Viacom/Tiktok

Proactive Impact                         47.8                   Pandora/Xandr                          Intersection/Vevo

Advanced Technology                 45.6                  Verizon Media/Samba TV            Dish Media

Trade Communications               35.4                   Google/Hulu                             Twitch/Crackle Plus

Finally, the Best in Media category across the nine performance metrics were:

Advanced TV                     Hulu/Xandr/Effectv

Audio                                    Pandora

Broadcast TV                      NBCU

Cable TV                              Viacom Ad Sales

Commerce                          YouTube/Amazon

Major Digital                      Google/Verizon Media

Local Media                        Spectrum Reach

Out-Of-Home                    Intersection/Outfront

Conclusion

The major takeaway from this report as well as the full economic picture in the webinar encompasses several themes. “What can you do as an individual company, as a business category and as the whole media and advertising industry learn that we begin acting on during this period, as we move towards recovery and renewal,” Myers stated and added optimistically, “Then, as we move in 2021, 2022 and beyond into true growth periods, hoping that we hit a boom cycle as the Roaring 20s reflected, beginning in 2023.”

Three Views About the Global Advertising Market. An ARF Virtual Town Hall

For those of us in the media industry, these days of coronavirus uncertainties in personal health and finances also include concerns about the future of the media business, specifically the impact of the pandemic on advertising revenue. The ARF has been offering Virtual Town Halls on the subject with the most recent one on Global Advertising held on March 26. What are the long term impacts and best practices that we can adopt to plan for the future? 

Hosted by ARF President and CEO, Scott McDonald this Town Hall polled three industry experts on the subject – Laura Martin, Entertainment and Media Analyst, Needham & Co, Brian Wieser, Global President Business Intelligence, GroupM and Christian Polman, Chief Strategy Officer, Ebiquity.

A Look at the Market by Laura Martin

Challenges in Predicting - For Laura Martin, past predictions of the market were not prescient. Back in December 2019, both Zenith and WPP were predicting global ad spend increases of over 4% year to year. But by April, she anticipates that huge losses will result in the GDP cratering as unemployment claims skyrocket. “Economies are shutting down,” she stated and noted that it is not easy for professional forecasters look ahead with any certainty regarding GDP. Challenges abound. First they must be able to predict when the infection rate will peak in every country. Then, after peaking, they need to see how long it will take for consumer demand to return. Following that, they would need to know what percentage of small businesses will fail before consumer demand returns. “Because small businesses are a large part of overall advertising,” she explained.

But the U.S. is in Better Shape than Other Countries - Martin uses the stock market as a predictive indicator and currently, with its huge declines and high volatility, “the market is telling you (to expect) a negative $6 trillion forecast. But how much of that decline is (consumer) sentiment and how much of it is actual fundamental deterioration?” But there is cause for some optimism, even if only relative to other countries. The U.S. stock market represents 44% of the market capitalization of the world, 20% of all listed companies and has more highly valued companies on average. This means that the U.S. is better prepared to become more dominant over time compared to the rest of the world, “because the rest of world businesses are all a third the size.” So while we may be worried about small businesses in the U.S., “the rest of the world is actually in worse shape.” Another factor in our favor is that the U.S. is more productive than most other economies. But now may not be the time to buy, she warned. We don’t know how long it will take for the virus to dissipate and consumer sentiment is currently “anti-exuberance,” meaning depressed and cautious.

Uneven Impact on Global Advertising – Martin used the Travel category as an example of how the global advertising market could be negatively impacted. Travel and Hospitality, which has effectively shut down, was projected to edge out CPG in 2020 as the fifth largest digital advertising category representing 8.6% of ad spend. Because half of all Travel spending is on digital media, Martin posited that the impact from Travel advertising shutting down is three times worse on digital than it is on offline media. Further, Google Search represents 70% of Travel digital ad spend. The takeaway is that,” when travel silos turn off, different media is affected in different ways.” In addition, she noted that because 50-70% of TV inventory is bought in the prior May and is contractually obligated, TV is in better shape than digital (which is bought in scatter and by auction and can be cancelled immediately) to withstand market volatility.

A Cause for Optimism by Brian Wieser

Optimism with a Caveat - Brian Wieser is seeing some hope for optimism in the virus trends. He has been monitoring China where the latest reports show a slowing of the spread. “China has turned a corner,” he explained, it is, “a baseline to think about how this plays out in different countries.” But, he noted, there are three different kinds of countries and each type needs to be taken into account when projecting the impact on global ad spending. For Wieser, countries divide into, “those who were hit with the crisis and immediately took appropriate aggressive steps to address the matter, among those Japan, Singapore and South Korea. There are those countries that messed up for a month and then took aggressive steps and China is probably the best example. And then there are countries that messed up for a month. Messed up for another month and are hopefully taking the right steps. Italy is pretty clearly in that category. It remains to be seen how exactly different countries will follow.”

Small Businesses Have Severe Risks - However, Wieser believes that small businesses are the most immediately impacted and often “have the fewest resources to see them through a crisis such as this one with a limited ability to tap into the financial systems” for help. Unfortunately, “a lot of the support we’ve seen to date has not been focused on those companies and this is where the most severe risks are. Small businesses are being hit first and fast.” Lessons from the past financial crisis are not always the same lessons for today. Countries with a solid safety net provide some relief for small businesses but this not ubiquitous worldwide.

Supply Chain Considerations – Because China is getting back to business, Wieser is less concerned about and lost output that could disrupt the supply  chain, which at the time of the initial outbreak, seemed inevitable. But, “the bigger threat is that other countries around the world don’t take the right actions and then become the risk for China if demand doesn’t reemerge. The bigger point is that we can actually make this worse.” Specific public policies and actions by citizens and by individual countries will drive much of the outcome which at this point is an unknown.

What Should Brands Do? – In this time of uncertainty, brands should focus on ways to stay relevant and be helpful to consumers. Some companies are pivoting in ways that change their business in socially positive ways. Take, for example, “companies with alcohol products are finding ways to convert their production lines to hand sanitizer manufacturing. Anyone with a capacity to produce heavy metal based hardware can produce ventilators,” he explained. “But even brands that have nothing to do with the physical needs of emergency professionals  are finding ways to be helpful,” by altering their creative messaging such as C  O  C  A  C  O   L   A to encourage social distancing.

A Pragmatic View By Christian Polman

No Surprise - Any pandemic outbreak shouldn’t come as a surprise because, Polman asserted, if you go into the archives, policy health experts have been talking about this for a long time. A perfect storm has been created, he suggested, by Poor Planetary Health which risks the spread of infection, an Interconnected Global Supply Chain that is unsustainable, particularly the food supply chain, the rise of Nationalism and Unilateralism, “coming into mainstream politics which divides populations at a time when we need cooperation” and the Low Levels of Trust in Institutions, “which is getting worse and worse, at a time when trusted information is critical to inform the public and to guide policy making.”  

Long Term and Short Term – Polman believes that a long term need is finding a sustainable food chain, “and one that needs to be affordable.” In the short term, pressing needs include, “having a vaccine, a preventative treatment as well as long term testing.” He noted that, “consumer confidence is key here.” But this will be problematic as the latest studies show that confidence is in free fall. Yet the long term trend for GDP growth and ad expenditures, “is yo yo’d over a long period of time and quite consistently over the economic cycles. The rule of thumb is to expect a downturn every ten years. We were due one but I don’t think anyone foresaw how this one would be happening.”  But, he added, we always bounce back so those who can afford it should start to plan for the recovery.

Success Factors – The reasons for this economic downturn are different from previous ones. Brand Relevance has never mattered as much as now. Take for example hand sanitizers which are, according to Polman, counter-cyclical. But, “Media is a more normal example,” he stated. “Media consumption has been going up dramatically as it typically does in a down cycle as a function of more people who are unemployed. In this case, people unemployed and people stuck at home.” Agility is another success factor where making decisions fast is a big differentiator. Risk Taking is another; “It’s not just making decisions quickly but being able to take risks to take advantage of any opportunities,” he added. Long Term Orientation, “matters a lot. The companies that are long term oriented are the ones that are going to win.” And, “Consumer Trust has never mattered more. It will be critical,” he added.  He advised that brands, depending on the category, should maintain their market share of voice, “which you can do even with a lower budget…  It could take three years for brands to see the full impact of their investment. That’s why it’s such a key long term game.”

In a parting word of advice, Polman offered the following, “Every one of us has a role to play when it comes to leading and driving corporations. A lasting message from all of this is in any crisis, the rate of change will accelerate.” I wonder, can we handle any greater rate of change?

 This article first appeared in www.MediaVillage.com

Pursuing a Game-Changing Business Idea. Interview with Linda Sawyer

Linda Sawyer, a 27 year Deutsch veteran, including 10 years as CEO and most recently as Chairman, has made the dramatic, transformative announcement to leave the agency at the end of 2016 and start her own ecommerce company. 

According to the press release, Sawyer “has played an instrumental role in contributing to Deutsch’s rise as a top-tier agency and industry leader with revenue increasing more than ten-fold since joining in 1989” during her tenure.

For many of us, the idea of leaving a secure corporate job where we have attained great success is  anathema. So what prompted Sawyer to make this decision? I sat down with her and asked the following questions:

Charlene Weisler: Linda, why the move?

Linda Sawyer: I get asked that question a lot. I currently have a dream job and have been with the agency for a long time. I have been in the business for 33 years and at Deutsch for 27.  I became CEO in 2005. I became Chairman two-years ago and I implemented succession plans at that time. The agency is in a strong place so I felt that it was the right time for me to pursue a new challenge.   And I believe I have an idea that is a real game changer.

Charlene Weisler: What are your plans?

Linda Sawyer: I haven’t publically disclosed the nature of my new business but it is in ecommerce. I will be capitalizing on all of the things I learned throughout my career. This will be a business that I can craft and create, making all the right business decisions from inception. The advertising business has been great in preparing me for this next chapter.

Charlene Weisler: Why go into ecommerce?

Linda Sawyer: Ecommerce is part of every business experience to some degree and will provide convenience and ease to the consumer as a benefit. 

Charlene Weisler: Can you share some details of your new business?

Linda Sawyer: I want the element of surprise and excitement, so what I can share is that this category has a significant void that is ripe for a fresh and new solution. It is a category buster.

Charlene Weisler: What have you learned as a female executive that you can share with other female executives who are interested in advancing?

Linda Sawyer: There is some irony in my answer. My rise at Deutsch was performance based. I felt gender was a non-issue here. But when I was appointed CEO and became more involved with the industry, it was profoundly obvious to me that I was a minority. My advice is to give yourself permission to believe and expect that when you attain your goals, you will ascend and gender will be a non-issue.  Work for a company where the metrics to success are clear.  

Charlene Weisler: How has the agency world evolved since you first started?

Linda Sawyer: There have been two dramatic changes in our industry – the media itself in how we reach consumers and the technology we use to reach them. The fundamentals of developing big ideas and the creative we bring forth hasn’t changed. But it has been influenced and informed by how we need to engage with them. Today’s consumer is driving the relationship and is changing the way the dialogue happens.

Charlene Weisler: What is the state of creativity at the agencies?

Linda Sawyer: The competitive framework is vastly changing. Media agencies are now competing with creative agencies and also compete with companies like Google with in house capabilities. Agencies need to differentiate what makes them stand out. They need new resources, capabilities, and partners to help them evolve. They need to be ahead of the curve.

Charlene Weisler: How do you see the agency world changing in the next three to five years?

Linda Sawyer: I continue to see the need for new types of thinking in media, marketing and the role of technology. Media and technology need to be further embedded in the creative process and move away from the traditional agency model. This shift will influence the type of people that will work at agencies – they may not be from a traditional agency background.

Charlene Weisler: What advice would you give to a college student who is considering a career in media?

Linda Sawyer: Follow your passions, things that you love doing and areas where you have a curiosity. Look at the bigger context of pop culture and be interested in the world at large. Develop a bigger perspective and make yourself stand out.

Charlene Weisler: Do you have any advice for those in the middle of their careers?

Linda Sawyer: I was always very thoughtful about my career and viewed it as a portfolio of experiences. It is important to step outside of your regular work duties and see what will inform your next steps. My career consists of building blocks that were very purposeful. Think through your career path. You may not know exactly where you will wind up but you need to be challenged to continually develop new skills.

This article first appeared in www.MediaBlizBloggers.com