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What does the notion of ‘sustainability’ mean in the minds of consumers?

When a company claims to be ‘sustainable’ consumers feels this relates to ‘circularity’ and ‘naturalness’ and/or ‘social equality’ commitments, according to new research by Vlerick Business School.

Companies can benefit from actively including the operational indicators behind these associative concepts in brand positioning & marketing communication efforts towards consumers. The research reveals 19 elements that consumers associate with sustainability. These are bundled under three factor components based on the results of an exploratory and confirmatory factor analysis on the data collected.

‘Circularity’ bundles the associative elements in consumer minds that relate to avoiding exhausting natural resources and re-using materials (e.g., ‘circular economy initiatives’, ‘recycling programs’, ‘restoration/replenishment of natural resources’).

‘Naturalness’ bundles elements related to the use of non-artificial production methods and resulting products. Examples are ‘no chemicals in production’, ‘no pesticides for vegetables’, ‘no production of GMOs’.

‘Social equality’, finally, bundles elements that relate to the need to ‘care for people’. Examples are ‘gender equality’, ‘fair wages’ or ‘good labour conditions’.

These findings come from research conducted by Frank Goedertier, Professor of Marketing at Vlerick Business School, together with his co-authors, Joeri Van den Bergh, from Human8 and Vlerick Business School, and Bert Weijters and Ole Schacht, both from Ghent University. The researchers wanted to understand what operational associations (in terms of hands-on practices) are triggered in the minds of consumers when a brand claims to be ‘sustainable’.

To do so, the researchers surveyed over 5,500 consumers, across seven different developed countries: France, the UK, Germany, Belgium, Sweden, the Netherlands and Australia in two data collection waves. 19 separate hands-on practices were identified, as well as the extent to which consumers associate these with the ‘sustainability’ notion. The researchers grouped these into three categories (social equality, circularity and naturalness). An extensive literature analysis preceded the survey data collections.

“Sustainability is being increasingly proposed as an overarching goal for transforming the way we live, work, and consume, and more and more consumers want to purchase from brands that they know are sustainable in their practices”, said Goedertier. “However, it is unclear what hands-on practices consumers actually associate with (or expect from) a brand that claims to be ‘sustainable’. Our findings reveal specific notions that can allow companies to position their brands on sustainability in a way that reflects the hands-on practices and aspects consumers associate with it.”.

The researchers say that the findings are particularly interesting as previous literature focuses on separating both social and environmental factors when it comes to sustainability. In this study, consumers clearly group both together when it comes to identifying a sustainable brand.

By shedding light on how consumers view sustainability, the researchers hope that the findings will help companies generate more impactful and consumer-relevant sustainability communication and actions – highlighting the key areas consumers view as sustainable indicators.

Marketers experimenting more to fight economic downturn

Almost half of marketers (44%) are actively investing in experimentation as a direct response to the UK’s current economic slump.

That’s according to new research from Optimizely, which reveals marketers are using experimentation in the face of cutbacks as a way to deliver personal experiences that drive revenue, boost customer retention and deliver growth.

The Personalised to Personal report, based on a study of 100 UK marketing leaders and 1,000 UK consumers, explores the financial benefit of delivering targeted experiences that are “truly personal.” The research shows that an overwhelming majority of marketers (75%) believe it’s “more important than ever” to find new ways to optimise their personalisation strategy during tough economic times.

70% of marketers say they are marrying personalisation with experimentation to get ahead of the competition and deliver content that will stand out. Optimizely’s report argues that this is a smart move, at a time when 65% of consumers are more loyal to brands that get to know them at a personal level.

“At a time when UK consumer spending power is at its lowest levels due to high inflation, it’s more important than ever for brands to deliver online experiences that demonstrate they understand consumers, including their preferences and needs,” said Shafqat Islam, Optimizely CMO. “Experimentation is one of the smartest investments a brand can make. It allows companies to properly understand their customers’ behaviours and make decisions based on data, rather than assumptions, in order to provide the tailored experiences that customers love – driving loyalty and boosting brands’ bottom lines.”

Photo by Alex Kondratiev on Unsplash

Marketing budgets in the UK remain on the up

Total UK marketing budgets were revised up in Q3 2023, extending the current sequence of upward spending revisions to ten successive quarters, according to the latest IPA Bellwether Report, which reveals that this quarter’s overall growth was driven by upward revisions to the main media category.

The report also reveals that there was, however, a moderation of the upturn as persistent inflationary pressures, further increases in borrowing costs and a subsequent deterioration in the UK economic outlook drove some companies to be more cautious with their budgets.

While 21.1% of Bellwether firms increased their total marketing spending in the three months to October, a sizeable 15.8% registered a downgraded budget. This resulted in a net balance of +5.3%, pointing to the weakest quarter of total marketing budget growth since the final quarter of 2022 (down from +6.4% in Q2).

According to panel members that registered growth, marketing activities were deployed both as a defensive and offensive manoeuvre, with some hoping to reinforce their brand’s position in the market ahead of a downturn in the UK economy. Efforts to seize additional market share was seen at companies who were seeing key competitors prioritise short-term cost-savings over long-term business growth.

Supporting this, the main media advertising category was the strongest-performing segment of the Bellwether survey in Q3 as a robust net balance of +7.4% of companies upwardly revised spending in this crucial segment at the strongest rate in a year-and-a-half (-2.5% previously). This contrasted markedly with the Q2 report, where sales promotions budgets drove the upturn as cost-of-living pressures drove companies to provide support to cash-strapped customers. Within main media, other online advertising methods that aren’t captured by the other sub-categories rose sharply (net balance of +9.1%, vs. +8.3% previously) as companies engaged with new innovative tools such as artificial intelligence. Video (+0.9%, from +3.2%) and published brands (+0.8%, from -5.0%) were the other areas of expansion within main media, whereas audio (-10.8%, from -8.0%) and out of home (-12.1%, from -7.1%) saw contractions accelerate.

Events continued to be an area of marketing budget growth in the third quarter, continuing its strong sequence of expansion seen in every Bellwether Report since the opening quarter of 2022. A net balance of +5.9% of companies saw an increase in spending in this area (from +9.8%), with anecdotal evidence indicating a resilient appetite for engagement with clients and prospects face-to-face.

Other areas of budget growth included direct marketing (net balance of +4.3%, from +7.3%) and public relations (+4.0, from -1.9%). In fact, PR spending rose at the strongest pace in five years.

Meanwhile, spending cuts were recorded in the final three segments of the Bellwether survey. Other modes of marketing activity not accounted for continued to see budgets cut in the third quarter (net balance of -7.9%, from -6.8%), as did market research (-1.5%, from -2.9%). Notably, after a record expansion in the previous quarter, the latest data indicated a renewed reduction in sales promotions spending (-1.5%, from +13.4%).

Paul Bainsfair, Director General at the IPA, said: “Against a backdrop of economic stagnation and ongoing elevated levels of inflation in the UK, coupled with increasing global geo-political volatility, the trading environment for companies is unquestionably tough. But instead of seeing a re-run of last quarter’s slightly concerning results where companies revised up their short-term sales promotional activity to record amounts while reducing their main media spend, this time we are buoyed to see a more considered, reverse state of affairs. This quarter, those companies that can are heeding the evidence that in general, investing more in main media will help to steady them through the uncertain times and help to ensure the longer-term health and profitability of their brands.”

Marketers at loggerheads with IT departments over data

Seventy-eight percent of organisations report centralising customer data management within information technology (IT) teams, with marketers bemoaning the fact that use of new tech is often restricted by their cyber overlords.

The Gartner survey of 405 marketing leaders conducted in May and June 2023 found 59% of marketers agreed with the statement that “our IT policies and/or strategy constrains our use of emerging technologies.”

“Collaboration between IT and marketing has traditionally been focused on selecting applications with their own data stores, such as a marketing automation solution which stored contacts, leads, and content,” said Benjamin Bloom, VP Analyst in the Gartner Marketing practice. “Diversification of the usage of customer data, beyond marketing, forces marketers to re-evaluate how their applications interact with enterprise-wide data. Successful CMOs should seize the opportunity to re-focus and leverage a new class of cloud-based IT resources, unless they fall short of marketing’s needs.”

Marketing’s autonomy over their own technology choices is also shifting based on the vital role that data and cohesive workflows play in productivity: 78% of respondents said they must select their solutions from pre-approved vendors and platforms.

The survey also found that across key martech activities, IT is on average taking greater ownership, and the frequency of marketing teams with sole ownership is receding. This shift spans both business-centric work such as acquisition of budget for martech, and driving adoption and utilization to support customer journeys, to more technical work such as configuration and deployment of new martech, and managing vendor relationships and contracts; management of all of these shifted toward IT year-over-year.

Overall, while martech teams were open to letting marketing and IT play to each others’ relative strengths, the share of respondents stating IT had sole responsibility or was leading with marketing in support increased across every activity for which there was year-over-year data between 2022 and 2023.

“In a perfect world, marketers lead more business-focused work, and IT leads more technical and integration activities. The focus should be on getting the work done, not a territorial battle,” said Bloom. “Many marketers will welcome this shift given the dependence of many technical activities on underlying data warehouse infrastructure owned by IT, but just as encouraging is the increasing business-savvy from IT teams which can drive the ultimate goal of productive martech stacks.”

Generative AI leads inflated expectations on the 2023 emerging tech ‘hype cycle’

Generative artificial intelligence (AI) is positioned on the Peak of Inflated Expectations, projected to reach transformational benefit within two to five years.

The Gartner Hype Cycle for Emerging Technologies, 2023 report encompasses Generative AI within the broader theme of emergent AI, a key trend on this Hype Cycle that is creating new opportunities for innovation.

“The popularity of many new AI techniques will have a profound impact on business and society,” said Arun Chandrasekaran, Distinguished VP Analyst at Gartner. “The massive pretraining and scale of AI foundation models, viral adoption of conversational agents and the proliferation of generative AI applications are heralding a new wave of workforce productivity and machine creativity.”

The Hype Cycle for Emerging Technologies is unique among Gartner Hype Cycles because it distills key insights from more than 2,000 technologies and applied frameworks that Gartner profiles each year into a succinct set of “must-know” emerging technologies. These technologies have potential to deliver transformational benefits over the next two to 10 years (see Figure 1).

Figure 1. Hype Cycle for Emerging Technologies, 2023

Source: Gartner (August 2023)

“While all eyes are on AI right now, CIOs and CTOs must also turn their attention to other emerging technologies with transformational potential,” said Melissa Davis, VP Analyst at Gartner. “This includes technologies that are enhancing developer experience, driving innovation through the pervasive cloud and delivering human-centric security and privacy.”

“As the technologies in this Hype Cycle are still at an early stage, there is significant uncertainty about how they will evolve,” added Davis. “Such embryonic technologies present greater risks for deployment, but potentially greater benefits for early adopters.”

Four Themes of Emerging Technology Trends

Emergent AI: In addition to generative AI, several other emerging AI techniques offer immense potential for enhancing digital customer experiences, making better business decisions and building sustainable competitive differentiation. These technologies include AI simulation, causal AI, federated machine learning, graph data science, neuro-symbolic AI and reinforcement learning.

Developer experience (DevX): DevX refers to all aspects of interactions between developers and the tools, platforms, processes and people they work with to develop and deliver software products and services. Enhancing DevX is critical for most enterprises’ digital initiative success. It is also vital for attracting and retaining top engineering talent, keeping team morale high and ensuring that work is motivating and rewarding.

Key technologies that are enhancing DevX include AI-augmented software engineering, API-centric SaaS, GitOps, internal developer portals, open-source program office and value stream management platforms.

Pervasive cloud: Over the next 10 years, cloud computing will evolve from a technology innovation platform to become pervasive and an essential driver of business innovation. To enable this pervasive adoption, cloud computing is becoming more distributed and will be focused on vertical industries. Maximizing value from cloud investments will require automated operational scaling, access to cloud-native platform tools and adequate governance.

Key technologies enabling the pervasive cloud include augmented FinOps, cloud development environments, cloud sustainability, cloud-native, cloud-out to edge, industry cloud platforms and WebAssembly (Wasm).

Human-centric security and privacy: Humans remain the chief cause of security incidents and data breaches. Organizations can become resilient by implementing a human-centric securityand privacy program, which weaves a security and privacy fabric into the organization’s digital design. Numerous emerging technologies are enabling enterprises to create a culture of mutual trust and awareness of shared risks in decision making between many teams.

Key technologies supporting the expansion of human-centric security and privacy include AI TRISM, cybersecurity mesh architecture, generative cybersecurity AI, homomorphic encryption and postquantum cryptography.

UK consumers reckon 50% of personalised content is a turn off

Over half (51%) of UK consumers say that the targeted content they receive online is often “boring” or “unhelpful.”

That’s according to new research from Optimizely, the leading digital experience platform (DXP) provider, which reveals that while personalisation holds great potential for enhancing customer loyalty, the reliance on assumptions and outdated technology remain major obstacles.

Based on a comprehensive study of 100 UK marketing leaders and 1,000 UK consumers, the Personalised to Personal report shows that an overwhelming 70% of consumers feel frustrated that the promotions they receive are not directly relevant to their personal interests.

Concerningly, 83% of marketers admitted that their current personalisation efforts heavily rely on assumptions about customers rather than high-quality insights. 71% also acknowledged that generalisations still form the foundation of too many personalisation campaigns, pointing to a significant gap between the personalised experiences consumers desire and what brands currently provide.

The study also shed light on how outdated technologies hinder effective personalisation. Only 33% of marketers claimed to possess the necessary technology to deliver hyper-personalised experiences tailored to individual customers.

These shortcomings largely stem from outdated technology, with a staggering 74% of marketers feeling that their current personalisation tools are no longer adequate.

However, the report also highlights the immense potential of personalisation to foster customer loyalty. A notable 65% of consumers are more loyal to a brand that has taken the time to understand them on a deeper, more personal level.

“In 2023, delivering truly personalised content is absolutely essential to meet individuals’ interests and needs, as well as to foster brand loyalty,” said Shafqat Islam, CMO of Optimizely. “But when the vast majority of marketers are using outdated technology, it’s nearly impossible for them to regularly meet consumer’s expectations, leading them to miss out on the strong growth opportunities that a data-led personalisation strategy provides.”

The findings of Optimizely’s report highlight the urgent need for brands to bridge the gap between customer expectations and the personalised experiences companies currently deliver. By investing in modern, data-driven technologies, such as web experimentation, brands can optimise their personalisation efforts and forge deeper connections with their customers.

While having modern personalisation technology is crucial for providing relevant online experiences, brands must also focus on making their content engaging and exciting to avoid appearing dull. To achieve this, marketing leaders should think about adopting a content marketing platform, providing a dedicated workspace where teams can organize workflows, collaborate on assets, and efficiently run campaigns. By simplifying the content creation process, marketers can dedicate more time to crafting and refining content and less time on administrative tasks.

Over half (51%) of UK consumers say that the targeted content they receive online is often “boring” or “unhelpful.”

Positive customer service now ‘crucial’ to brand success

British customers are more likely to vote with their wallet when they are unhappy with a brand, with 1 in 2 (51%) said they will only give brands two chances after a bad brand interaction before choosing not to buy from them again.

64% said a good customer call experience would make them brand advocates, making the short call centre interaction even more crucial to brand loyalty, according to new online research from Infobip.

The research polled 2,000 UK Adults aged 18 and above, and aimed to find out the motivations and avenues which British consumers are complaining. The findings revealed the following about customer complaints in the UK:

  • Per my last email: Almost half (45%) of Brits say they prefer using email to lodge complaints; with almost half (48%) saying they preferred to because of convenience.
  • Please leave a message after the tone: Of the 17% who said they preferred call centres, unsurprisingly, Gen Zs (18 to 24-year-olds) came in last at only 10%, and it’s those aged 25-34 and above 65 that came in tops at 20% and 21% respectively. A finding that suggests that while millennials are commonly known to steer clear from making phone calls, younger customers will do so to get their problems fixed.
  • Poor service, product and delivery delays the biggest gripes: 33% say poor service was the main complaint motivator, followed by poor product (27%) and delivery delays (28%).
  • Retailers are repeat offenders: 2 in 5 (44%) said they complained about the retail sector, ahead of food delivery companies (19%) and utilities (16%).

Despite the motivations behind and methods of the complaints, the findings also showed that brands still have the chance to turn an unpleasant experience into a positive one, and even convert customers into brand advocates with a positive customer service experience.

  • Don’t show me the money: 1 in 3 said speaking to an agent who empathises with their problems (33%) help improve the overall complaint experience, more so than receiving monetary compensation (17%) – in a finding that suggests that people do not want money thrown at the problem.
  • There is no time to waste: 4 in 5 say that call centre workers who can address their issues (44%) and quickly answer their queries (40%) make the unpleasant complaint experience better.

James Stokes, Country Manager, UK & Ireland at Infobip said: “Regardless of the preferred method of complaining, brands only have a short timeframe to turn irate customers into brand advocates. Making customers happy is no longer a ‘good to have’. With customers showing willingness to vote with their feet, good customer service is crucial to businesses’ overall bottom-line. With an omnichannel customer service platform solution, we hope to empower call centre workers with the right tools to perform at their best, and ultimately allow customers to reap the benefits on their preferred communications platform.”

Generative AI ‘revolutionising’ retail experiences

Generative AI’s ability to fabricate hyper-customised content is turning the tables in retail marketing and communication strategies, also extending its reach into tasks such as inventory planning.

Kiran Raj, Practice Head of Disruptive Tech at GlobalData, said: “In a retail environment where the product-to-experience shift is increasingly significant, genAI can enable the creation of immersive, personalised experiences, integrating virtual and physical retail spaces in a manner that resonates with modern consumers’ expectations. Moreover, it is no longer about a one-size-fits-all engagement; rather, it is about a tailor-made experience catering to individual needs”

Saurabh Daga, Associate Project Manager of Disruptive Tech at GlobalData, added: “By leveraging key data points from customers’ purchase history and preferences, genAI can facilitate building personalized shopping experiences and targeted marketing strategies. The technology can empower retailers to deliver superior service at reduced costs, leading to greater customer satisfaction.”

GlobalData’s latest Innovation Radar report, “Cognitive revolution: genAI meets retail,” offers a view of how the disruptive technology is being deployed across the retail value chain, from inventory management and personalised marketing to customer experience and support.

GenAI can transform retail operations such as inventory planning, product recommendations, and customer service. Promising genAI applications include creating new product designs based on defined criteria and sentiment analysis to predict customer trends.

It cites traditional retailers like Carrefour and IKEA are using genAI to streamline operations and augment customer support. Meanwhile, e-commerce players like Amazon, Shopify, and Instacart are leveraging genAI to improve online shopping experiences and increase cart conversion rates. Big technology companies such as Google and Salesforce are offering genAI solutions to help e-commerce players as well as retailers optimize their online customer engagement.

Daga concluded: “While there are inherent challenges in implementing genAI, particularly in consumer-facing sectors like retail, the potential for substantial progress is undeniable. Challenges such as content quality and privacy must be managed through strong governance. Small and medium retailers can benefit from strategic partnerships to overcome entry barriers required to build the supporting technology, infrastructure, and personnel for genAI implementation.”

Image by Hannes Edinger from Pixabay

Digital engagement ‘key to driving luxury purchases’

The outlook for luxury shopping in 2023 is positive, according to a poll of 500 shoppers that found nearly half (45%) of respondents purchased 3-5 luxury goods in 2022; while just under a quarter (24%) purchased 6-10 items, and 11% purchased luxury goods more than eleven times.

In good news for the 2023 outlook, the same research conducted by Wunderkind reveals that 70% of consumers are confident about their personal economic prospects and 89% expect to maintain or increase their level of online purchases this year.

However, success for luxury brands will be contingent on delivering consistently personalised digital engagement across multiple channels – as the same proportion of respondents (89%) said that, when considering whether to purchase from a new brand, personalisation of messaging and content has a significant influence on their decision-making.

While luxury consumers are often fiercely loyal to their chosen brands, with a tendency toward repeat purchases, Wunderkind’s research showed that 45% are open to broadening their horizons and trying new brands.  Social media channels were considered the most influential for staying engaged with luxury brands, the favoured option of more than half (53%) of respondents, followed by a brand’s app (46%) and email (45%).

Reflecting on their journey to purchase, 50% of consumers stated that they research a product 3-5 times before they buy. For millennials in particular, this journey is often fragmented and ‘omnichannel’ – spanning 3-5 channels or platforms before ultimately closing the purchase.

Cian Agnew, Executive Director of Client Partnerships at Wunderkind, said: “There are valuable lessons in the research for brand marketers in the face of economic uncertainty.  While 70% of luxury consumers are confident about their personal economic outlook for 2023 – indicating a broadly undiminished appetite for shopping – the consideration phase is still relatively elongated, with consumers researching products across multiple brand channels, and in multiple sessions, before ultimately adding to basket.

“These findings support the need for brands to have strategies in place to effectively capture visitors via their owned channels – and to then re-engage and bring them back on-site if they don’t convert on their first visit.  Communicating in a way that’s highly relevant, personal and tailored to the individual is key bringing consumers back – and turning casual browsers into loyal, repeat purchasers.”

Image by justinedgecreative from Pixabay

B2B buyers value 3rd party interactions more than those with digital suppliers

B2B buyers report that they value third-party interactions 1.4x more than digital supplier interactions, according to new Gartner data.Its survey of 771 B2B buyers conducted in November and December 2022 revealed some third- party interactions, such as reading customer references or reviews and consulting directly with third-party experts, are better suited to provide customers with value affirmation.

“Buyers want to feel confident throughout their purchase journey, and third-party sources can help get them there,” said Rick LaFond, Director Analyst in the Gartner Marketing practice.

The survey showed YouTube as the top social media channel to influence a recent B2B purchase decision, followed by Facebook, Instagram, Twitter, LinkedIn and TikTok (see Figure 1).

 

Figure 1. Social Media Platforms Informing Recent B2B Purchase Decisions

Source: Gartner (June 2023)

“Social channels are extremely under leveraged platforms for B2B brands,” continued LaFond. “Marketers can go beyond using social channels for flashy short-form videos promoting brand values to truly demonstrate how the brand supports different customer needs and pain points across various stages of the buying process.”While third-party interactions are top of mind for B2B buyers, a supplier’s digital channels still can have a large impact on the purchase process. When asked to identify which digital supplier interactions were engaged during a purchase decision, B2B buyers identified a supplier’s website as the most leveraged channel, followed by the supplier’s social media channels, an online search for the supplier and the supplier’s interactive tools (e.g., product recommenders, price calculators).

“Brands do not need to have their social strategy solely rely on third-parties,” said LaFond. “The data clearly shows that buyers are approaching social from a holistic buying perspective.

“Brands’ digital experiences must improve if they are so far down the list of what customers value. Most B2B CMOs are probably not tapping into the return of third-party interactions despite the weight they carry in serving as information sources for their buyers.”