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Consumers in emerging markets more open to sharing data

Countries like China, Brazil and South Africa are much more open to sharing their personal data with companies than consumers in Western countries, like the UK, France and the US, according to new research from emlyon business school.

The findings come from a global study of over 22,000 online shoppers, which looked into their willingness to share their personal information, like identification and financial data, with companies when purchasing products.

The researchers; Monica Grosso, Associate Professor of Marketing at emlyon, alongside colleagues from Bocconi School of Management, KU Leuven, CEFAM International School of Business and Management and the Center for Service Intelligence, wanted to understand what factors had an impact on the willingness of consumers to share personal data with companies.

The factors they reviewed were: whether the type of product had an impact, whether the country consumers were from had an impact, and whether and how customers could be incentivised to provide further data even if they weren’t willing to in the first place.

Through the survey, the researchers gathered data on over 22,000 shoppers, who were buying products from seven different categories; identification, medical, financial, locational, demographic, lifestyle, and media usage data.

The research also focused on the privacy concerns and willingness of participants in fourteen different countries, ranging from highly individualistic, such as the UK, France, the United States, Canada and Australia, to collectivist nations, including China, Brazil and South Africa.

The researchers also reviewed whether customers were more likely to share their personal data and information if there was some form of compensation for doing so.

Professor Grosso said: “Given sharing personal data online is often on a voluntary basis, it is difficult for companies to persuade customer’s to do so. Not only this, but in the wake of high-profile privacy scandals, customers have become increasingly worried about how organizations store and exploit their personal data. Consumers have therefore become more cautious about sharing such data with retail companies. Therefore understanding the market, and having a full-proof strategy to maximise data sharing of customers is vital for marketing departments”.

The researchers also found that once offered compensation and incentives for sharing their personal data, consumers in all contexts were more likely to provide their data to companies. This compensation and incentives included a tangible benefit for the customers, such as discount coupons or small free gifts, showing that there are clear, effective methods for companies to use to garner more data from their consumers.

Grosso added: “Companies are always keen to secure as much data as they can from their customers in order to inform increase future sales tailor marketing efforts to their needs, and boost customer brand loyalty, but often customers are reluctant and unwilling to provide such data. These results show trust can differ across contexts, and customers can be further encouraged to provide personal data through a number of tailored methods.”

For companies, the research shows that the willingness of consumers to share varies greatly over different countries. Therefore, if companies are looking to collect vital data from their customers in different country contexts, they should adopt different privacy strategies based on the information type, country, and product category.

Status of luxury brands ‘being ruined’ by customisation

As the fashion industry continues to give customers a more active role in designing their own products, luxury brands must be careful not to take customization too far, according to new research from Vienna University of Economics and Business (WU Vienna).

Many brands make it possible for customers to make their own design choices when it comes to selecting colors, fabrics, and cuts. But does this approach also work for luxury brands? Headed by Martin Schreier and Silke Hieke, researchers from WU Vienna’s Institute for Marketing Management set out to answer to answer this question, finding that, for luxury brands, there is such a thing as too much choice.

With new manufacturing processes opening up greater possibilities when it comes to customization, consumers now place a greater value on customized than on standard products.

However, while existing marketing research has shown that consumers like customized products because these unique products communicate their identity more effectively. This is only true for mainstream brands.

The WU Vienna researchers carried out a series of studies, showing that while luxury brands can indeed benefit from customization, there is also the risk of going too far. Particularly fashion-conscious customers – the primary consumer base of luxury brands – place great importance on their appearance and are more sensitive to prestige. Its because of this that these customers are highly aware of the signal value associated with luxury brands.

Customers pay a premium for the designer’s expertise and the status luxury brands convey. This means that the brand must remain clearly recognizable. If customization is taken too far, the consumers’ desire for self-expression can potentially erode the product’s signaling value.

“It pieces” like the Hermès Birkin bag have a special value because they are exclusive and they convey a clear brand identity.

According to the researchers, luxury brands can protect their ability to convey status by making the brand more prominent through overt means, for example through the obvious display of brand logos.

By assuring luxury consumers that others can receive the status signal that they are sending, these brands are able to give their consumers greater freedom for customization decisions.  In general, however, luxury brands should leave only a few design decisions to their customers to protect the signal value created by the brands and their designers.

The study has been published in the Journal of Marketing Research.

Ecommerce revenues remain buoyed as bricks-and-mortar reopens

As the UK High Street experienced a boost in the first week of non-essential retail re-opening, the digital High Street also remained buoyed, with revenues up +2.5% week-on-week.

That’s according to data from Wunderkind‘s Marketing Pulse report, which says as consumers hit the shops after months of closure, traffic on the High Street increased +178%, and an estimated £1.6billion was spent in-store on the first weekend of trading.

Web traffic also saw a rise, increasing by +2.4% over the same period (w/c 12.04 vs w/c 5.04) – which the behavioural marketing specialist says illustrates sustained digital demand.

This, Wunderkind suggests, is not only indicative of the seismic – and permanent – shift to digital, but of the importance in understanding and connecting more closely with shoppers to drive long-term brand advocacy and increased customer lifetime value. 

Wulfric Light-Wilkinson, GM EMEA at Wunderkind, said: “There’s been much debate as to whether the boom in online could successfully be sustained once retail reopened.  And, from what we’ve seen so far, even pent-up demand for real-life shopping experiences in the first week of opening hasn’t deterred consumers from the ease and convenience of shopping online, suggesting the shift to digital is here to stay.  But the real test now comes in how brands and retailers connect and engage with their customers moving forwards, to turn the new cohorts who have come online into repeat shoppers and those existing shoppers into long-term brand advocates.” 

While web revenues and traffic increased on the week before, email performance dipped slightly with revenue down a marginal -1.6% week-on-week. 

“This slight drop in UK email revenue retail could be down to a number of factors;” Light-Wilkinson suggested.  “Non-essential retail opened on the same day as outside hospitality, which also coincided with the last week of the Easter holidays – this may have prompted many to step away from their desks and take time off to enjoy new freedoms, perhaps explaining the slight dip in email performance during the week.”

Social mentions for the words ‘hairdresser’, ‘shops’ and ‘pub’ all saw significant spikes on the first day of restrictions easing, according to social agency, the tree, up 277%, 276% and 272% respectively on the day prior.

Additional $900 Billion Spent Online at Retailers Globally in 2020

As Covid-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online.

According to Mastercard’s latest Recovery Insights report, this amounted to an additional $900 billion being spent in retail online around the world in 2020.

Put another way: in 2020, e-commerce made up roughly £1.50 out of every £5 spent on retail, up from about £1 out of every £5 spent in 2019.

For retailers, restaurants and other businesses large and small, being able to sell online provided a much-needed lifeline as in-person consumer spending was disrupted.

Roughly 20-30% of the Covid-related shift to digital globally is expected to be permanent, according to Mastercard’s Recovery Insights: Commerce E-volution. The report draws on anonymized and aggregated sales activity in the Mastercard network and proprietary analysis by the Mastercard Economics Institute. The analysis dives into what this means by country and by sector, for goods and services, and within countries and across borders. 

“While consumers were stuck at home, their dollars travelled far and wide thanks to e-commerce,” says Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “This has significant implications, with the countries and companies that have prioritized digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital.”

While the digital transformation has been neither universal nor consistent – due to geographical, economic, and household differences – the report uncovers several key overarching trends: 

  • Early digital adopters go into overdrive: Economies that were more digital before the crisis—such as the UK and US —saw larger gains in the domestic shift to digital that look more permanent than the countries that had a smaller share of e-commerce before the crisis. In the UK, the e-commerce share of retail sales pre-crisis was 22%, rising to 31% at the peak of the crisis. The current level stands at 24% and we expect this shift of 2 percentage points to be permanent. 
  • Grocery and discount store digital gains look sticky: Essential retail sectors, which had the smallest digital share before the crisis, saw some of the biggest gains as consumers adapted. With new consumer habits forming and given the low pre-Covid user base, we anticipate 70-80% of the grocery e-commerce surge to stick around for good. As an example, as a result of the lockdowns in the UK, roughly one-fifth of all grocery shopping is now done online.
  • Consumers increase their e-commerce footprints, buying from up to 30% more online retailers:Reflecting expanded consumer choice, our analysis shows that consumers worldwide are making purchases at a greater number of websites and online marketplaces than before. In the UK, people are buying from 22% more online stores, on average. 
  • International e-commerce rose 25-30% during the pandemic: International e-commerce got a boost both in sales volume and the number of different countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25-30% year over year from March 2020 through February 2021. 

Global online Advertising Expected to Reach $1,089bn

A rise in expenditure on digital media across various industries and a surge in popularity of streaming platforms is driving the growth of the global internet advertising market, according to new data.

A new report from Allied Market Research pegged the global online advertising market at $319 billion in 2019, growing to hit $1,089 billion by 2027, equivalent to a CAGR of 17.2% over the forecast period.

The report cautions that rising adoption of ad-blockers has restrained the growth to some extent, but that the emergence of advertising automation and a rise in adoption of identity-based pay-per-click (PPC) marketing are projected to pave the way for lucrative opportunities in the coming years.

Specifically, it says the impact of COVID-19:

  • Increased use of social media leading to rising drift to resort to social media platforms to endorse various media content with the target audience, which boosted the global market for Internet advertising.
  • That trend is likely to continue post-pandemic as well, since advertising of media and entertainment content over Twitter, Facebook, and Instagram has almost become a new drift in the recent times.

The global internet advertising market report is analyzed across platform type, ad format, pricing/revenue model, enterprise size, industry vertical, and region. Based on platform type, the mobile segment accounted for nearly two-thirds of the total market share in 2019 and is expected to rule the roost by 2027. The same segment would also manifest the fastest CAGR of 18.9% during the forecast period. 

Based on pricing model, the performance-based segment garnered more than half of the total market revenue in 2019 and is expected to lead the trail by 2027. At the same time, the hybrid segment would manifest the fastest CAGR of 22.7% throughout the forecast period.

Based on geography, North America held the share in 2019, holding around two-fifths of the global market. The market across Asia-Pacific, on the other hand, would cite the fastest CAGR of 21.6% from 2020 to 2027. The report also analyzes the market growth across LAMEA and Europe.

IAB: 50% of marketers saw an increase in affiliate spend in 2020

Many affiliate programmes saw high double and occasional treble digit growth in 2020, according to a new report from the IAB Affiliates & Partnerships Group.

With almost one in five brands and agencies spending more than £250k per month on their affiliate campaigns, the organisation says it’s clear that it’s a serious route to market.

However, Kevin Edwards, Global Strategy Director at AWIN and Chair at the IAB Affiliates & Partnerships Group, says growth has to be weighed against those brands who reduced their spend.

The travel sector remains an important one for the affiliate channel and the IAB remains hopeful that it will fire back in the second half of 2021, taking advantage of pent up consumer demand. It expects the most favoured affiliate business models – cashback and content sites – will be ready to support brands when that time comes.

Edwards says that digital marketing in general faces challenges in tackling the ability to track campaigns in the future, so offering clarity on the current state of play within the channel is vital: “Alongside demonstrating the value of affiliate marketing and ensuring transparency and trust are at the heart of what we do, this survey sets out a blueprint for future projects.

“The affiliate industry has a proud heritage of demonstrating its value to brands and agencies, and this survey helps guide our future strategy in proving why we should be front and centre of advertisers’ future marketing plans.”

You can download the report from the IAB website here.

Shift to subscriptions increases brand connections

Subscription businesses have grown nearly six times faster than the S&P 500 over the last nine years, driven by an increase in consumer demand for the use of such services.

That’s according to  Zuora’s bi-annual Subscription Economy Index (SEI), which was conducted online by The Harris Poll among 13,626 adults across 12 countries.

It reveals the growing consumer preferences for use of subscription services over the ownership of physical products. Results found within the End of Ownership report include: 

  • Use of subscription services is growing. 78% of international adults currently have subscription services (significantly higher than 71% in 2018), and 75% believe that in the future, people will subscribe to more services and own less physical ‘stuff’. 
  • Subscriptions increase brand connection. Nearly two-thirds of subscribers (64%) feel more connected to companies with whom they have a direct subscription experience versus companies whose products they simply purchase as one-off transactions. 
  • Consumers want to pay for what they use. Nearly three-quarters of international adults (72%) would prefer the ability to pay for what they use, rather than just a flat fee. 
  • Convenience, cost savings, and variety are top subscription benefits. Convenience (42%) tops the list of benefits for subscribing to a product or service instead of owning it, followed by cost savings (35%) and variety (35%, up from 32% in 2018). 

As a result of this burgeoning consumer lifestyle trend, subscription businesses have grown. For the first time since its inception in January 2012, the SEI growth rate reached 437% growth as it analyzed the impact of subscription businesses by sector, comparing subscription businesses in Software as a Service (SaaS), Internet of Things (IoT), Manufacturing, Publishing, Media, Telecommunications, Education, Healthcare and Business Services to their respective S&P 500 Industry benchmarks. 

When looking only at the year 2020 the Subscribed Institute found that:

  • Subscription business revenue outpaced that of their product-based peers. Last year, revenues of subscription companies in the SEI grew 11.6%, while the S&P 500 sales declined -1.6%. In Q4 alone, subscription businesses experienced revenue growth at a rate of 21%, seven times faster than S&P 500 companies’ growth rate of 3%.
  • Revenue per subscriber surpassed the 2019 rate. Subscription businesses in Q4 2020 had an 18% average revenue per user rate, compared to 14% in Q4 2019. The increase indicates that subscription businesses in the SEI are deepening relationships with customers and delivering services that increase in value over time. 
  • Subscription companies in the SEI performed better compared to regional stock markets. In Q1 2020, lockdowns and other safety measures seemed to slow subscription revenue growth (in APAC, revenue even contracted), but when lockdowns returned in Q4, subscription revenue growth accelerated, indicating that subscription companies were effective in adapting their offerings quickly. 

“The time is now for companies to embrace the subscription business model,” said Amy Konary, Founder and Chair of The Subscribed Institute at Zuora. “Our bi-annual Subscription Economy Index suggests that brands can increase value to their customers through the on-going delivery of services when and where they’re needed.” 

Download the Subscription Economy Index and the End of Ownership reports.

Using emotion in advertising increases the sales of high-price and high-quality products

The use of emotion in TV adverts increases sales of high-quality and high-priced products, according to new research by emlyon business school.

However, if you’re trying to increase the sales of a low-quality and low-priced product, informative adverts are more likely to be successful, say researchers.

The study, by Ivan Guitart, Associate Professor of Marketing, and his colleague Stefan Stremersch, Professor of Marketing at the Erasmus School of Economics, looked into how informational and emotional appeals in television adverts influence online search and sales. They found that the impact of these appeals depends on the price and quality of the product.

The authors analysed the volume of online search, sales, and the content and expenditure of more than 2,300 ads promoting 144 cars during a period of four years.

The findings reveal that for high-price and high-quality products, an increase in emotional content in adverts led to more sales and online searches than an increase in informational content.

In contrast, for low-price and low-quality products, the use of information in adverts was more effective at increasing sales than the use of emotions. However, this is at the expense of the number of online searches these products get.

If managers of low-quality products want to increase the volume of online search their products receive, they should design adverts with more emotional content.

Professor Guitart said: “Managers of low price and low-quality products need to decide whether they want to use high level of emotional content to increase online search at the expense of sales, or use high level of informational content to increase sales, at the expense of online searches.”

The researchers say increasing online searches is an important objective because the more consumers learn about products the more likely they are to talk about them and even purchase them.

The findings of the study give insights and advice for marketing managers in their advertising strategies. Marketing managers of high-quality and high-price product should appeal to emotions if they want their adverts to drive sales, while marketing managers of low-quality and low-price products should highlight the practical applications of their product in order to boost sales.

The study was published in the Journal of Marketing Research.

70 percent of marketers expect to boost spend in 2021

Nearly two-thirds of those surveyed by the CMO Council say they will boost marketing spend in the coming year and most don’t expect to downsize or re-structure their organisations.

While many industry sectors have struggled in the past year, it appears most marketers have already done all the cutting, pruning and restructuring of budgets and teams in 2020, notes the Chief Marketing Officer (CMO) Council. 

The organization has 16,000 members in 10,000 companies across more than 110 countries worldwide. Members collectively control nearly $1 trillion of annual marketing spend.

Key indicators of a positive outlook come from a year-end Getting It Done in 2021 audit of around 200 CMO Council members across all regions worldwide. Key findings reveal:

  • A surprising 65 percent will increase marketing spend in 2021; just 10 percent will reduce their budgets, while 24 percent expect no change
  • A large percentage of marketers (70 percent) report significant or growing investments in marketing technology to improve effectiveness
  • Most important areas of marketing automation and transformation will be sourcing and using customer data insights, executing campaigns more effectively, as well as improving operations and performance 
  • Just a quarter of marketing leaders say they will downsize or re-structure their marketing organizations in 2021, in contrast to 64 percent who will not
  • Working more effectively with lines of business is the number one priority for marketing leaders, who are also keen to lower cost, increase efficiency and do a better job of both globalizing and localizing campaigns
  • Over half of marketers surveyed want to optimize their customer journey, and more than a  third want to boost acquisition and conversion rates through better data-driven interaction and digital innovation
  • Interestingly, across company sizes, regions and industries, priorities remained consistent: marketers are looking to increase spend and automate; likewise they are looking to save costs through efficiencies rather than through staff cuts

“The most relevant and compelling areas of conversation among our members right now are all about ROI, efficiency and revenue optimization,” said Manuel Hüttl, Senior Vice President Europe beim CMO Council.” This means being more focused on digital marketing transformation, creating value from customer data, and upgrading customer engagement and experience.” 

The online survey was fielded in December and early January and a summary report and infographics can be downloaded at https://cmocouncil.org/thought-leadership/reports/getting-it-done-in-2021.

UK entertainment sales driven to new highs by lockdown streaming

Locked down Britain turned to digital music, video and games in record numbers in 2020, increasing entertainment revenues by 16.8% to a record £9.05bn, according to preliminary data compiled by the Entertainment Retailers Association (ERA).   

It was the fastest growth rate since records began, driven above all by digital services, who saw revenues increase by £1.4bn over 2019 to a new high of £7.8bn. 

Digital video services spearheaded by Netflix, Disney+ and Amazon Prime Video increased revenues by a remarkable 37.7% over 2019 while growing music streaming subscriptions saw recorded music revenues score their best result since 2006.

Gaming comfortably retained its lead as the largest of the three sectors, generating sales of more than £4bn for the first time.

Overall more than 80 pence in the pound spent on entertainment now goes to digital services rather than physical formats. Amid generally declining physical formats, vinyl LPs remain the shining exception, increasing sales by 13.3%. 

ERA CEO Kim Bayley said, “If there was ever a year in which we needed entertainment, it was 2020. The trend towards an increasingly digital entertainment market may be long established, but no one could have foreseen this dramatic leap as digital services filled the gap left by shuttered cinemas, concert halls and retail stores. With much of the country shut down, ERA’s members provided a welcome revenue stream for thousands of musicians, actors, directors and countless backroom staff.”