toolkit 2017 executive summary
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TOOLKIT 2017 EXECUTIVE SUMMARY
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Six questions for marketers in 2017
WHAT COULD AN AI-POWERED CHATBOT DO FOR YOUR BRAND?
Chatbots are expected to be the next step into artificial intelligence for brands, particularly in service sectors.
WHAT BRAND EXPERIENCES COULD YOU ENHANCE WITH VR OR AR?
Virtual and augmented reality introduce new ways to engage consumers, and dovetail well with brand experience work.
ARE YOU PRODUCING TOO MUCH SOCIAL VIDEO CONTENT?
Procter & Gamble has moved away from the “crap trap” of real-time social posts in favour of fewer, better videos.
ARE YOU MISSING OUT ON ‘DARK SOCIAL’ INSIGHTS?
The rise of chat apps means a lot of category-relevant information is being shared or discussed in closed channels.
DO YOU NEED A DIRECT-TO-CONSUMER RETAIL STRATEGY?
Brands in sectors such as food and FMCG are finding new routes to consumers, or are being disrupted by competitors with innovative business models.
DO YOU NEED TO REFOCUS MEDIA SPEND ON REACH?
There is an ‘intellectual battle’ raging in media between proponents of ‘reach’ and advocates of data-driven targeting. Several major brands are refocusing on reach.
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Executive Summary
Warc’s Toolkit 2017 report distils current thinking around six key marketing trends. The report, produced in association with Deloitte Digital, brings together the best of Warc’s content over the past year – the latest ideas, research and examples. The result is a guide to current thinking in each area, and the implications for marketers.
The full report is available to Warc subscribers. This summary pulls out the major takeaways from each chapter. This year’s trends are dominated by tech. Emerging technologies, including artificial intelligence and virtual reality, having been discussed for several years, are now being applied in marketing contexts. Meanwhile, social and mobile strategies evolve apace as the platforms develop and consumer behaviour shifts.
Yet it is also true that digital strategies are being reassessed. Several major brands have stepped back from close targeting of online consumers in favour of reach. Following a review of its social content strategy, Procter & Gamble moved away from
fast-turnaround, ‘real-time’ posts with a focus on fewer, better videos. And the issues discussed 12 months ago in our Toolkit 2016 report, including ad blocking, ad fraud and viewability, remain current. There is plenty to consider going into 2017.
TECH: THE MARKETING APPLICATIONS OF AIArtificial intelligence (AI) is predicted to have a major impact on the marketing industry – in a recent survey more than half of global CMOs said they expected the impact of AI on marketing and communications to be greater than the impact of social media.
In 2017, the key areas where AI will begin to deliver marketing opportunities are insight generation, chatbots, personal assistants and optimisation of media buying. Chatbots will be particularly important for service brands, while data-rich clients are already applying machine learning to media buying.
Many clients with data expertise have already begun applying AI in a number of ways. UK insurance company Aviva, for example, has been using machine
learning for attribution and media optimisation. Another financial services company, ING, has used ‘deep learning’ to power its ‘Next Rembrandt’ creative concept.
Longer-term, the rise of intelligent personal assistants raises questions about the role of marketing communications within the path to purchase.
BRAND EXPERIENCE: THE EMERGING ROLES OF VR AND ARAs the advertising marketplace becomes more cluttered and some consumers opt out of receiving marketing messages, brand experiences that cut through are increasingly valuable. Two technologies
that hogged the headlines in 2016 – virtual reality (VR) and augmented reality (AR) – offer new ways to deliver those experiences.
After years of promise, VR is becoming a viable mainstream marketing tool, with global communications brands such as Facebook, Google and Samsung investing in VR platforms and headsets. The focus of VR activity is on experiences and emotional engagement.
AR, meanwhile, is not a new technology, but the big driver of usage in 2016 was Pokémon GO. There are a number of emerging opportunities in AR, and some of the best examples to date have been around product trial and utility.
There is a growing number of examples of both technologies being applied successfully. The Pepsi Max campaign ‘Unbelievable’ used AR installations as stunts that reflected the campaign theme. The Lockheed Martin ‘Field Trip to Mars’, which fitted a school bus with screens, showed how VR technology could be used away from the headset.
“We eventually concluded that, as the world was getting louder and more complex, we were simply just adding to the noise”Marc Pritchard, Procter & Gamble
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Executive Summary
CONTENT: HOW VIDEO IS TRANSFORMING SOCIALSocial video is experiencing massive growth as a content marketing format, and this growth is expected to continue in 2017. Video is in some ways transforming social media marketing, turning social platforms into broadcast media.
Brands are finding success with approaches that prioritise quality over quantity, consider the
emotional and social motivations for content engagement and recognise the three-second window a video might have to grab a viewer’s attention. A growing number of brands are experimenting with live video, and this format tends to work best for content that is exclusive or newsworthy, or content such as Q&A sessions that require live audience involvement.
There is no shortage of examples of social video campaigns; brands such as Tesco and Dunkin’ Donuts have succeeded by recognising both the limitations and opportunities of social video viewing.
A major challenge for 2017 will be video measurement, particularly after the announcement that Facebook had been significantly overestimating average viewing times.
SOCIAL: THE RISE OF ‘DARK SOCIAL’ AND MESSAGING APPSThe time spent using social media is increasing, but the platforms used are increasingly closed or private to marketers, rather than open or transparent.
The rise of chat or mobile-focused messenger apps such as WhatsApp, Facebook Messenger, Line and WeChat (particularly in Asia) is fuelling the rise of ‘dark social’.
Effectively, this refers to social conversations that are private and ‘invisible’ to the outside world – and hence there is less potential for marketers to monitor, advertise or buy their way into conversations with potential customers.
The rise of ‘dark social’ has two major implications for marketers. First, there may be an impact on social listening techniques, and the quality of information available from monitoring ‘open’ social platforms. Second, there is expected to be a move away from ‘real-time’ social strategies toward conversation-based approaches.
Brands are still experimenting with ‘dark social’ platforms as marketing channels – for example, AXE in Ecuador has used the conversational aspect of WhatsApp to good effect. MTV India, meanwhile, has sought to use ‘dark social’ as a research tool.
Image caption to go here
Social video: Tesco’s sales rose after its ‘Toy Testers’ films appeared on Facebook
55%of global CMOs expect AI to have a greater impact on marketing and communications than social media
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Executive Summary
E-COMMERCE: THE DIRECT-TO-CONSUMER OPPORTUNITYBrands in sectors such as FMCG and food are increasingly looking at direct-to-consumer (DTC) opportunities. These cut out or minimise the retailer ‘middlemen’, allowing brands that previously had no direct relationship with their customers to develop one.
Low-cost start-ups have disrupted established business models with customer-centric, online businesses. Innovative apps, subscription services and engaging branded social platforms have encouraged impulse purchases and trials with seamless transactions and personalised experiences.
The challenge for established brands is responding to these new models – and Unilever’s billion-dollar purchase of Dollar Shave Club shows they are taking them very seriously indeed.
The coming year is likely to be an area of considerable experimentation. An example is IZZE, a PepsiCo-owned drink, which has tried out ‘Like2Buy’ buttons on Instagram and was
an early adopter of Amazon Dash buttons in its quest to win over ‘hipster millennials’.
ROI: EFFECTIVENESS IN THE DIGITAL AGEThe decision by Procter & Gamble to cut back on targeted advertising on Facebook exposed what one commentator has described as an ‘intellectual battle’ over how to market most effectively. The big-picture issue is close targeting (particularly via digital channels) versus mass
reach – and a number of FMCG brands have concluded that a renewed focus on reach will drive sales growth.
A related issue is the right balance of short-term and long-term strategies. Fresh research this year has suggested that brands are overinvesting in short-term ‘activation’ media, undermining the impact of creativity and harming long-term effectiveness.
Media owners – both in traditional and digital media – are engaged in a race to prove how effective their channels are in driving business outcomes, and how best to combine channels. With budgets under ongoing pressure, more studies along these lines can be expected in 2017.
There are interesting examples on both sides of the debate. A global campaign refresh from Snickers used a long-term, reach-based strategy and succeeded, and a digital campaign from The Economist provides an example of a successful online targeting strategy (albeit a highly creative one).DTC: Millennial-focused drinks brand IZZE has launched an Amazon Dash button
$1bnPrice paid by Unilever to purchase Dollar Shave Club
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Viewpoint: Focus on the customer to make the most of technology
This year marks our fifth collaboration with Warc on the annual Toolkit report, examining forthcoming challenges faced by marketers.
This year’s Toolkit features commentary on emerging technologies such as artificial intelligence (AI), virtual reality (VR) and augmented reality (AR). Recurring themes include measuring marketing effectiveness (the mantra of ‘optimise, improve, repeat’) and the automation and personalisation of marketing (so-called ‘hands-free marketing’). These remain important for our clients, as the pressure to improve marketing performance continues.
Marketers don’t always get this right. Some fall into the trap of overpersonalising or overautomating, implementing technology for technology’s sake. The customer must be at the forefront of marketing strategies to enable the right balance to be achieved.
Despite not being two long-running trends, we explore the Internet of Things and direct-to-consumer marketing. The
connected home presents an opportunity for brands to interact directly with consumers. However, there are still hurdles to turning tactical solutions into longer-term marketing and PR strategies.
Disruptive digital technologies, such as VR and AR, are being used to define, develop and rapidly deploy new experiences to improve the customer journey. Despite a limited adoption of some of these technologies, they should be seen as new opportunities to interact with customers and understand more about their behaviours and preferences.
Video remains a popular format, and this year we look at how social and live video present new challenges. The reason customers are engaging in this type of content should be considered and used to drive the social video strategy.
In last year’s report, we discussed the rise of ad blocking, and the challenge this created for organisations to reach customers. In a similar vein, this year’s report looks at the trend of ‘dark social’. The emergence of chat functionality on smartphones has
gone beyond the simple sharing of messages and pictures, and has become a complete ecosystem for consumers, combining various areas of mobile functionality within one secure messaging tool. This has the potential to provide a wealth of data touchpoints for organisations to tap into – but this creates a further challenge for marketers as many of these touchpoints are contained within private networks.
At a time when businesses are talking about ‘digital transformation’, marketers are ideally placed to engage with customers in new ways across emerging touchpoints in a more informed manner. We look forward to hearing your views as you embrace the opportunities in the year ahead.
JASON WARNESDigital Marketing Partner, Deloitte Digital
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CHAPTER SUMMARIES
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The marketing applications of AI
THE IMMEDIATE OPPORTUNITIES INCLUDE ADVANCED DATA ANALYSIS
CHATBOTS WILL BECOME KEY TOUCHPOINTS FOR SERVICE BRANDS
MACHINE LEARNING IS BEING APPLIED TO AUTOMATED TRADING
Data mining and analysis that is normally done manually, may be done faster, quicker and better using AI. This can span business and consumer data, with AI potentially providing more informed outcomes – for example, by analysing unstructured data such as consumer conversations. Developing a prototype AI application for data analysis has a low external cost, but the technology is still emerging and can be complicated to understand, meaning brands require the expertise of a technical architect and a developer to build a solution that is fit for purpose.
Chatbots are pieces of software that are designed to automate customer-to-company conversations. They use machine learning to help determine what the consumer’s question is, source a relevant answer and form a reply. It is an evolving piece of software that learns and improves the longer it is used. Chatbots are increasingly common within messaging apps, where they are able to handle a ‘conversation’ between a consumer and a brand. Industries with high volumes of interactions, or the need to interact with customers on a 24-hour basis, will be the first adopters of this form of AI.
Machine learning is already used within certain areas of programmatic media trading, and this is expected to be a major growth area. For example, machine learning might help optimise campaigns based on what is working, or adapt campaign creative based on new information. Marketers will experiment with more types of first- and third-party data, such as their own sales feeds as well as external sources such as weather patterns.
Read the full chapter
ING’s ‘Next Rembrandt’ project used AI to generate a new painting from data
Insurer Aviva employed AI to improve its digital channel budget allocations
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How brands can use virtual and augmented reality
VR ADDS AN EXTRA DIMENSION TO BRAND TIE-UPS WITH INFLUENCERS
VR IS A VEHICLE FOR STORYTELLING AND HIGH-END EXPERIENCES
MANY BRANDS HAVE RECONSIDERED AR IN THE WAKE OF POKÉMON GO
Absolut Vodka has leveraged virtual reality to engage with consumers as well as test and explore new business models. In June 2016, the brand unveiled a mobile app that used VR to drive its mission of ‘delivering unique nightlife experiences’. Developed by Absolut Labs, this free game asked consumers to help deadmau5 – a Canadian electronic-music star – make a fictional trip from his garage to a concert.
Two factors have driven VR into the mainstream in the past: from early 2016, a number of devices arrived on the market; and, secondly, the prevalence of smartphones puts a high-power display into the hands of a large number of the global population. As the technology develops, forward-thinking brands are providing customers with immersive experiences that deliver sensory overload and block out all distractions from TV, websites and apps. For the time being, the focus of these efforts is on a relatively small number of consumers; it is a complement, rather than a replacement, for reach-based campaigns using tried-and-tested media.
The phenomenal success of Pokémon GO was heralded as a tipping point for AR. Launched in July 2016, Pokémon GO’s downloads reached 50 million installations during its launch month. Looking ahead, marketers face two opportunities around AR. First, piggyback on AR properties that are popular with their audience, such as Pokémon GO. There are likely to be a number of ways to do this as more games and applications based on AR or mixed reality emerge. Second, formulate bespoke, branded experiences. Fashion and beauty firms, for example, can let people digitally ‘try on’ clothes and cosmetics.
On bus shelters, AR delivered the ‘impossible made real’ for Pepsi Max
Lockheed Martin converted a school bus using VR for its Field Trip to Mars
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How video is transforming social
LIVE VIDEO IS AN UNTAPPED OPPORTUNITY FOR EXCLUSIVE OR INTERACTIVE CONTENT
BRANDS ARE ADVISED TO MAKE FEWER, BETTER POSTS
ON MOBILE, THE 30-SECOND AD IS BECOMING THE 3-SECOND AD
Live video remains an emerging format, but a wide range of brands are experimenting with it. The early signs are that sharing and comment rates on live video are higher than for standard video. The main decision is considering which opportunities are right for live video. The guiding principles appear to be whether the video will be exclusive or newsworthy enough to attract a live audience, or whether it requires a level of interaction with viewers.
Some brands that have been experimenting with social video have concluded that quality (high production values) is preferable to quantity (multiple different videos). Procter & Gamble reviewed its social content executions and concluded much of it was “crap”. The result of the review has been a shift away from ‘real-time’ posting towards craft and creativity.
Brands may have only three-to-five seconds to grab a mobile social media user’s attention – they should work ‘with the skip’ and grab attention in a very small space of time. Advertisers should remember that online video is often watched with the sound turned off, so content should make sense to the viewer without sound, and possibly include captions or an enticement to people to turn on the sound.
Take-up of the Dunkin’ Donuts app rose after its tie-up with wingsuit athlete Ellen Brennan
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The rise of ‘dark social’ and chat apps
BRANDS MAY BE MISSING OUT ON ‘DARK SOCIAL’ INSIGHTS
CHAT APPS ARE MOVING SOCIAL MARKETING TOWARD CONVERSATIONS
CHINA’S WECHAT SHOWS HOW CHAT MIGHT EVOLVE
‘Dark social’ may provide a better reflection of a consumer’s true feelings than comments posted on public platforms, where a consumer may be presenting a particular persona or image. This means it is becomingly increasingly challenging for brands to build a holistic understanding around key buzz topics in the category they operate in, as well as picking up direct buzz around respective brands, products and campaigns.
Audiences on messaging apps will be far less accepting of any interruption to their conversations than those on social platforms. Brands may need to place a greater emphasis on consumers that come to them – chatbots are becoming more than CRM platforms; they are increasingly able to answer consumer questions at all stages of the customer journey. Designing for conversational experiences will require a completely new approach to branding, combining complex data management, AI and a brand’s ‘tone of voice’ (for more on this see the Toolkit 2017 chapter on Artificial Intelligence).
Tencent-owned WeChat is setting the bar for what messaging and social networking will look like into the future. It has developed from a chat app into a mobile lifestyle hub, providing, for example, an e-commerce platform, ticket-booking for restaurants, and cab-hailing. Crucially, it has payment services included, allowing it not just to connect people but also connect people to business. As a result, Western brands can learn from how brands in Asia-Pacific have used instant messaging services to connect with consumers.
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MTV India used in ‘dark social’ to research its fans’ hidden characters
AXE used WhatsApp to take is message to millennial men in Ecuador
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How brands are going direct-to-consumer
SUBSCRIPTION SERVICES ENABLE BRANDS TO ACQUIRE CONSUMER DATA
MOBILE IS CENTRAL TO THE DIRECT-TO-CONSUMER EXPERIENCE
BRANDS ARE TRIALLNG PURCHASE BUTTONS BUT CONSUMERS HAVE CONCERNS
The success of innovative subscription brands, particularly among younger age groups, has disrupted some industries and has challenged established business models. Dollar Shave Club, a US-based online brand, attracted male millennials with high-quality razors, which it sent directly to subscribers’ homes for a monthly fee. In 2016, Unilever purchased Dollar Shave Club for $1bn, giving the FMCG business a 5% share of the US market. It also gained access to a new stream of customer data – a key benefit of DTC strategies over traditional retail.
Mobile is key to DTC opportunities because it reduces the number of steps between browsing and buying. Apps including Uber and Airbnb have been at the forefront of integrated commerce, a trend that many in the payments industry refer to as the ‘Uberisation of payments’. In the case of Uber, the mobile app turns many would-be cash or card transactions into automatic digital payments. Apps such as these have introduced many first-time mobile payment users to the concept of mobile-enabled commerce.
Connected ‘buttons’ that can order an item directly are growing in popularity – Amazon’s Dash service is perhaps the best known. A study by a digital agency found that more than half of UK consumers (54%) would like to use smart shopping technology to order household supplies as well as food and drink, while a third (34%) would use it for beauty, healthcare and personal hygiene products.
IZZE has used a a buy button via Amazon Dash to reach its target audience
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Effectiveness in the digital age
MAJOR FMCG ADVERTISERS ARE PULLING BACK FROM GRANULAR TARGETING
SHORT-TERMISM WEAKENS LINKS BETWEEN CREATIVITY AND EFFECTIVENESS
SOCIAL SITES ARE STARTING TO FOCUS ON BUSINESS OUTCOMES
Snickers enlisted Mr Bean to increase brand fame and drive sales globally
The Economist increased its reader base via sophisticated digital targeting
Procter & Gamble’s Chief Brand Officer, Marc Pritchard, hit the headlines in August when he questioned the value of close targeting of audiences on Facebook. The comments appeared to cast doubt on one of the key selling points of digital platforms – the ability to target more closely and on more criteria than in more established channels. Pritchard revealed that brands such as detergent Tide are increasing media reach by 10% to 20% in the US by shifting to more broadly appealing TV shows and higher-reach digital platforms. P&G is also looking for continuity of spend so it can build awareness all year round rather than in bursts.
Research by Peter Field based on data from the IPA, a UK ad agency association, and The Gunn Report, a ranking of creative advertising, found that short-termism and pressure on budgets is weakening creative effectiveness. The shift of budget into digital media, where short-term metrics are common, has exacerbated this shift. In short, the impact of highly creative work has halved since 2011 as a result of these forces.
Facebook has openly criticised some of the measures marketers are using on the social media site (and, by extension, other social platforms). It is focusing on research that links advertising exposure on Facebook to sales increases. For example, the Facebook Marketing Science team is now telling marketers not to focus on ‘shiny’ metrics, and has shown that click-through rates on ads have no relation to increases in sales.
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KEY CONTACTS
JASON WARNES Digital Marketing PartnerJason leads the UK digital marketing team that sits within Deloitte Digital, based in Clerkenwell, London. The team helps clients deliver multichannel marketing through the use of customer behaviour analytics and optimised ways of working, technology and
processes, to create a seamless customer experience. He has 18 years’ marketing experience, specialises in business transformation through digital, and has extensive experience across a wide range of sectors, including retail, automotive and technology, media and telecommunications.
PETA WILLIAMSSenior ConsultantPeta is part of the digital marketing team within Deloitte Digital, focusing on marketing change projects across B2B and B2C organisations. She has worked across financial services, telecommunications, media and retail industry clients, delivering programmes
to implement marketing technology, organisational change, and marketing processes and operations analysis. She has a Masters in Business Management and a diploma in Marketing from the Chartered Institute of Marketing.
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