The Feed
Read daily effectiveness insights and the latest marketing news, curated by WARC’s editors.
You didn’t return any results. Please clear your filters.
![WARC Consumer Trends report 2024: Five trends to watch](https://cdn.warc.com/Images/Feed//en-GB/8c477354-a5a4-40f0-941b-623f6a002d5a/tile.png)
WARC Consumer Trends report 2024: Five trends to watch
Improving consumer confidence, rising global temperatures, and multigenerational households are among the biggest trends set to impact consumer spending in the year ahead, according to WARC’s 2024 Consumer Trends report.
Why trends matter
The 2024 Consumer Trends report explores the issues that are top-of-mind for consumers and their implications for marketers. Understanding these shifts is vital for businesses to anticipate changes in the market and ensure they remain attuned to customers’ needs.
Behind the report
Through the lens of WARC’s GEISTE framework, the report draws from an extensive collection of GWI surveys as well as proprietary research, case studies, and analysis. It is part of the Evolution of Marketing programme, which provides marketers with insight into emerging trends and significant shifts in the industry.
This year’s report consists of three variations, with regional analysis of emerging trends in:
Takeaways
- Consumers are feeling more optimistic about the future of their personal finances, and some areas of discretionary spending including travel and live events are seeing growth.
- Intensifying hot weather is creating demand for products that can mitigate the negative effects of extreme weather, such as cooling appliances and accessories. Per GWI data, purchases of air conditioning units have increased by 358% since 2020.
- More people are living in multigenerational households and sharing the responsibility for buying home essentials.
What you’ll find in the report
- How improving consumer confidence drives changes in spending habits
- How rising temperatures shift consumer demand
- The growth of multigenerational households
- How AI sets new expectations for customer experience
- The resurgence of live music and sports
![Mondelez tackles the dynamics of the US cookie buyer](https://cdn.warc.com/Images/Feed//en-GB/028f82bc-4b80-43f7-a904-01ecc6ed97ee/tile.png)
Mondelez tackles the dynamics of the US cookie buyer
Mondelēz increased its A&C spending by a percent that’s in the “high single digits” in H1, but more important for the business has been its response to the changing dynamics of the US buyer looking for cookies and crackers.
Three things
- Consumers are experiencing tension. Because of inflation, they have had less purchasing power, but they are now starting to see wages rise faster than grocery prices. Confidence is growing but high prices remain a concern.
- Consumers have changed where they shop. “The biscuit category is seeing the largest growth in chains like Value Club at Walmart, while in grocery we are seeing a share decline,” Mondelēz CEO Dirk Van der Put told an earnings call.
- The consumer definition of value has changed. Until relatively recently value was about the unit price per cookie, Van der Put explained, with people buying family and party-sized packs. “Now, particularly lower-income consumers, they have moved to a basket size that they can afford and if the biscuit brand that they like can fit in there at the right price point, they will buy it; if not, they will not buy any biscuits.”
Why it matters
Media investment can help drive consumer and customer loyalty, but ultimately price is the deciding factor for many at the lower end of the income scale. That’s why price-pack architecture is such an important aspect of an FMCG business. That and distribution, since lower-priced options give an entry to a range of new outlets.
Key quote
“Our proven playbook for price-pack architecture allows us to offer a broad range of options to meet … consumers’ differing definitions of value. As a result, our two largest US brands, Oreo and Ritz, are gaining share year to date” – Dirk Van der Put, CEO at Mondelēz International.
Sourced from Seeking Alpha
[Image: Mondelez International]
![Kraft Heinz doubles marketing spend on some brands](https://cdn.warc.com/Images/Feed//en-GB/7e49d0f4-6078-4dc1-8245-e52e493ce881/tile.png)
Kraft Heinz doubles marketing spend on some brands
Kraft Heinz increased its marketing investment by 9% in H1, with spending on drinks brand Capri-Sun doubling and the same planned for snack brand Lunchables.
What’s happening
- “We are re-engaging consumers through a recent product renovation [of Capri-Sun],” CEO Carlos Abrams-Rivera told an earnings call. “We have also invested two times the media support and are investing in trade to incentivize trial.”
- Sales of Lunchables have picked up following a decline at the start of Q2 and the business is building on that momentum. “We’re investing in R&D and doubling our marketing spend while optimizing our media mix, targeting strategies, and increasing our value equation,” said Abrams-Rivera.
- “We see a lot of opportunity for long-term sustained growth in Lunchables from further penetration into existing channels and expansion into new channels and occasions,” he added.
Digital marketing delivers
- Kraft Heinz has built a digital platform that allows it to rapidly create media campaigns and content for all of its brands across web, social, and mobile apps.
- Abrams-Rivera reported that the new platform has achieved a 28% increase in customer satisfaction, a 30% increase in engagement, and a 78% increase in conversion rate.
- “Our effective marketing continues to engage consumers at the speed of culture,” he added.
Staying relevant
- “We are satisfying changing consumer desires by evolving our core offerings to stay relevant to consumer trends,” said the CEO.
- For example, Heinz Pickle Ketchup is designed to deliver on a desire for “unique and elevated flavor experiences”, while Pure dressings “offer bold, globally inspired flavors often found in restaurants, now in the convenience of the grocery aisle”.
- Price is also an important consideration and Kraft Heinz has provided more entry-level price points and offerings in dollar store channels.
Sourced from Seeking Alpha
[Image: Capri-Sun UK]
![Heineken hits the limits of brand power](https://cdn.warc.com/Images/Feed//en-GB/353241fd-2a2e-421c-8da4-f02c4beb467b/tile.png)
Heineken hits the limits of brand power
Brewer Heineken was forced to “correct” its investment as consumers balked at high prices and the business ran up against the limits of brand power.
Context
- High prices led to a decline in beer volumes at Heineken last year: in October, Heineken reported volumes down 4.2% in Q3 ‘23, but revenue growth was up 4.5%.
- At the time, that seemed to indicate the power of the company’s brands which enabled it to increase prices to offset the effects of inflation.
- But in a Q2 ‘24 earnings call, CFO Harold Broek said: “We had to correct our investment because it was clear that the consumer was more worried about pricing and inflation than it was about brand power”.
What’s happening now
- The first half of 2024 has seen volumes growing again and “normalisation” across markets and greater stability in previously volatile markets like Vietnam.
- “This is the moment to consciously and materially step up our investments to really drive category growth as well as invest behind the power of our brands,” Broek said.
- A “material and significant” increase in marketing is now planned for the second half of the year (although not – yet – to the historic level of 11%). “We believe that we can spend this money in both an effective and disciplined way, well targeted against the biggest opportunities,” said CEO Dolf van den Brink.
- The company is building marketing mix models to assess the most effective ways of balancing longer-term above-the-line marketing with shorter-term activations near the point of consumption and promotional activities around events like the Euros.
Why it matters
Building strong brands can allow companies to command premium prices. But it’s not a linear progression and at any point there can be a backlash. Marketers have to be alert to shifts in consumer sentiment and react accordingly.
Sourced from Seeking Alpha
[Image: Heineken UK]
![Diageo looks to consumer insights to drive growth](https://cdn.warc.com/Images/Feed//en-GB/f8ce934c-b9c5-4111-99cb-cb4d203ad815/tile.png)
Diageo looks to consumer insights to drive growth
Drinks giant Diageo is strengthening its consumer insights as it seeks to address a “challenging consumer environment” and a decline in sales following several years of growth.
By the numbers
- Diageo reported that net organic sales fell 0.6% in the 12 months to the end of June; group organic volume declined 3.5%.
- Despite that, Diageo reports that it held or grew share in almost all of its measured billion-dollar brands globally (brands which include Guinness, Johnnie Walker and Don Julio).
Realigning marketing
- “By the end of this calendar year, we will have completed the rollout of our proprietary consumer choice framework across markets covering a significant portion of our net sales, deepening our understanding of consumer motivations and occasions,” CEO Debra Crew told an earnings call.
- “We are realigning our marketing organization into agile brand communities to quickly action against these insights to drive quality growth,” she added.
- The trends Diageo expects to tap into include convenience, alcohol moderation and “with-food” occasions; a pipeline of innovation launches is planned across multiple markets “to recruit new consumers into new occasions at scale”.
Why it matters
While Crew attributed the lower volume results to supply chain issues, the fact remains that an uncertain economic environment in many parts of the world means consumers are cautious in their spending decisions. A more nuanced appreciation of the consumer – and the capacity to turn such insights into action – will be important in not only encouraging people to loosen their purse strings, but to attract new consumers to its portfolio of brands.
Sourced from Seeking Alpha
[Image: Diageo]
![Meta bucks big tech’s earnings season with revenue surging ahead of costs](https://cdn.warc.com/Images/Feed//en-GB/3f32e7e0-8c6a-407b-9393-59e71f7dc8a1/tile.png)
Meta bucks big tech’s earnings season with revenue surging ahead of costs
Meta has taken a different track in the wider race for AI, pushing toward open source models rather than closed models; in reporting a strong quarter, the Facebook, Instagram, and WhatsApp owner has reassured the markets with an apparently more sustainable model of growth.
Why Meta matters
It’s one of the most important advertising companies on the planet with services used by over 3.2 billion people each day, according to company estimates shared with investors. A robust advertising business is providing enough growth that Meta can keep investing in artificial intelligence, as its open-source model looks to the kind of huge scale that has powered its other services free at the point of use while vocally aiming to be efficient and affordable. This contrasts with some of the scepticism now meeting fellow big tech firms as costs soar at both Microsoft and Google.
But a deeper triumph that comes through, from both the company’s comments to the market and the wider analysis emerging, is that Meta’s logic for building AI and for building it open source is better articulated to the market and the industry than competitors. Even with a technology as impressive as AI, you still have to show, not just tell.
What went on
In an earnings season in which high costs were anticipated but big returns were expected, investors appeared pleased with Meta’s healthy revenue growth relative to its costs:
- Revenue grew 22% year on year to $39 billion for the quarter
- Costs and expenses grew 7% year on year to reach $24.2bn for the quarter
- Income from operations grew 58% to reach $14.8bn
- Net income grew 73% to $13.5bn.
At the level of its advertising, the company had some more good news to share. On top of anticipating that it will grow bigger than TV, Meta has continued to improve its monetisation efficiency, echoing a trend that had helped shore it up earlier this financial year.
Ultimately, this means that Meta is selling each ad for more money (up 10% year-over-year this quarter) and has increased the number of times those ads are seen by 10% this quarter.
Though AI was very much the focus, in its ad business it is seeing vital improvements in the American usage rates of some of its older services, like Facebook, and more internationally popular products like WhatsApp. The US market remains critical as its most lucrative on a per user basis.
“We are in the fortunate position where the strong results that we’re seeing in our core products and business give us the opportunity to make deep investments for the future, and I plan to fully seize that opportunity to build some amazing things that will pay off for our community and our investors for decades to come,” CEO Mark Zuckerberg told investors and analysts on an earnings call.
Those investments will certainly be deep. “The amount of compute needed to train [open-source AI model] Llama 4 will likely be almost 10 times more than what we used to train Llama 3, and future models will continue to grow beyond that.” Like fellow chief executives talking to the markets this week, Zuckerberg too laid the ground for building further capacity for computing.
Managing costs and establishing a logic
This earnings season, in tech at least, has been about who can manage the costs of AI infrastructure best while linking that investment to returns in its core business of advertising, mostly by driving its recommendations engine. For Meta, some of the initial big bets began some years ago when it suffered a significant signal loss. Now, those ambitions are bigger and taking shape fast:
- For advertisers: “In the coming years, AI will be able to generate creative for advertisers as well. And we'll also be able to personalize it as people see it.”
- For consumers: Meta AI “is on track to achieve our goal of becoming the most used AI assistant by the end of the year.”
More broadly, Meta’s bigger reasons for developing AI are well articulated as part of Zuckerberg’s open source manifesto. An open ecosystem improves the technologies adjacent to AI, whether in energy or silicon or through integrations and has the added benefit of making them accessible to developers. Once best practices are established and lessons have been learned by more than one company, Meta can then build its monetiseable products on top without being locked into one vendor.
Key quote
“I think you all know this from following our business for a while, but we have a relatively long business cycle of starting a new product, scaling it to something that reaches 1 billion people or more and only then really focusing on monetizing at scale,” said Zuckerberg.
Sourced from Meta, Seeking Alpha, WARC
![Radio moves online and increases listening hours](https://cdn.warc.com/Images/Feed//en-GB/e371774b-8520-4b2d-a723-178ccac5c4b6/tile.jpg)
Radio moves online and increases listening hours
Online radio listening in the UK has overtaken analogue radio (AM/FM) for the first time, while the number of listeners across all devices has risen along with average listening time.
Why radio matters
More people are tuning in and they are listening for longer across the week. According to the Media Nations 2024 report from regulator Ofcom, the first quarter of 2024 saw the highest number of weekly radio listeners across all devices in the past 20 years (just under 50 million) and an average listening time of 20.5 hours per week (up six minutes year on year).
Ofcom attributes much of this to the success of commercial radio, as seven in ten people aged 15+ tuned into commercial stations at least once a week (70.4%) compared to 55.6% for BBC stations. Which suggests that brands that don’t include radio as part of their media plans may be missing a trick.
Takeaways
- Listening to live radio on a radio set continues to reach the majority of adults aged 15+ each week (69%).
- The next most popular type of audio is streamed music from services such as Spotify, Apple and Amazon, with half of people listening to these services at least once a week (50%), followed by online radio, which reaches three in ten (30%).
- About three-quarters (74%) of 15-34-year-olds listen to streamed music each week, but half still listen to live radio at least once a week.
- Online radio listening continues to grow steadily, overtaking analogue radio (AM/FM) for the first time this year and now accounting for over a quarter (28%) of all live radio hours, mostly through smart speakers.
- The proportion of adults listening to podcasts each week has almost doubled in the past five years to one in five adults, although it remains comparatively low compared to live radio and music streaming.
Sourced from Ofcom
![P&G CFO ‘pleased’ to see increased media spend](https://cdn.warc.com/Images/Feed//en-GB/744e9798-b917-48ca-98d0-cddf481c31da/tile.jpg)
P&G CFO ‘pleased’ to see increased media spend
Productivity improvements at Procter & Gamble funded a rise in marketing investment during its FY Q4 and CFO Andre Schulten professed himself “pleased” to see that.
The case for increased investment
“In terms of overall spend, I’m actually pleased to see increase in media spend and market support that’s market constructive,” he told an earnings call. “I think it helps the consumer understand the category better, it helps drive penetration, which is still a huge opportunity across multiple categories, so that’s very positive.”
Funded by productivity
- Selling, general and administrative expense (SG&A) as a percentage of sales increased 260 basis points versus the prior year, driven by 300 basis points of marketing reinvestments.
- “We have line of sight to savings from improved marketing productivity,” said CEO Jon Moeller: “more efficiency and greater effectiveness, avoiding excess frequency and reducing waste while increasing reach.”
- “We’re taking targeted steps to reduce overhead as we digitize more of our operations,” he added.
Getting the timing right
- A strategy centered on innovation and superiority will sometimes have relatively low levels of advertising reach, Moeller noted (a state of affairs he termed “confidential superiority”).
- “We’re trying to, in an effective way and in the most efficient way we can, increase reach so that more consumers are aware of our products and the benefits that they provide them,” he said.
- “Obviously that effort at some point reaches the right level of maturity, but we’re still on the incline curve in that regard right now,” he explained. “It takes some time temporarily for the business to respond. It does not respond overnight, because of purchase cycles and commercialization cycles.”
Sourced from Seeking Alpha, Procter & Gamble
[Image: P&G]
![Advertising taskforce report sets out key AI themes](https://cdn.warc.com/Images/Feed//en-GB/cbd34094-950d-4d86-ab88-4d5298905222/tile.png)
Advertising taskforce report sets out key AI themes
A new report from the Advertising Association AI taskforce explores how the industry is tackling the challenges that come with the responsible use of AI.
What’s in it
Advertising and AI: Showcasing Applications and Responsible Use considers:
- the AI context and opportunity;
- issues around regulation;
- the importance of responsible AI adoption, including a 12-point checklist which encompasses key priorities around transparency, compliance and ethics;
- six in-depth case studies from brands, including McDonald’s, O2 and Belvita, illustrating how AI is already being used effectively in advertising campaigns;
- learnings for companies wanting to benchmark their own trajectory against the wider industry.
Why responsible AI use matters
The initial hype around AI has waned – to the point where some are now questioning if it is really all it is cracked up to be – but it’s not going away. Use cases clearly exist within the advertising industry, where it is set to have a transformative effect across the entire advertising value chain, from strategy and ideation to production, media execution, and regulatory compliance.
The tech is still at an early stage, so the opportunity is there to ensure it is used wisely. The report, which acknowledges that it is but a snapshot of developments, notes that “By thoughtfully combining human and AI, as a form of co-intelligence, we can reshape what is possible in creativity, business impact, and social good”.
Key quote
“By showcasing how the advertising and marketing industry is using AI, as well as detailing how the industry is tackling the ethical challenges of responsible use, we can provide valuable insights into the future roadmap for AI” – Konrad Shek, Public Policy & Regulation Director, Advertising Association.
Sourced from Advertising Association
![How Sephora avoids the “hammer problem” when utilizing new technology](https://cdn.warc.com/Images/Feed//en-GB/cf10a57e-6adb-4d19-8ad3-3d806a63ee95/tile.jpg)
How Sephora avoids the “hammer problem” when utilizing new technology
When it comes to new technology, marketers have a “hammer problem,” using it to solve every perceivable problem, said Sephora’s Stuart La Brooy, vice president at Sephora (LVMH) at eTail Asia 2024
This can happen when they over-invest in the latest emerging technologies for their marketing campaigns, only to discover that the tech didn’t matter ultimately. But there are ways to avoid this and still achieve tech strategy success.
Why taking pause matters
Instead of immediately turning to tech to solve a problem, marketers should first interrogate the problem, identify who can solve it and map out the key stakeholders involved because it is necessary to consider the flexibility, time and effort required to arrive at the solution.
Takeaways
- Manage stakeholders and be clear about the position of everyone in the team, while setting a timeline ambition of key milestones.
- Stay oriented on the problem but be very flexible in how you solve it; having a pilot and iterative scale-up approach helps.
- The time and effort to be invested in a tech roadmap can be better determined when the above points are understood.
![Global Advertising Trends: Gaming an untapped opportunity](https://cdn.warc.com/Images/Feed//en-GB/2e47eec4-8fb6-4f6c-afe5-8bb79b43490a/tile.png)
Global Advertising Trends: Gaming an untapped opportunity
Gaming has a vast global audience and is a key driver of culture, yet in-game advertising spend remains stubbornly low, according to WARC Media’s latest Global Ad Trends report, ‘Gaming: Advertising’s untapped opportunity’.
Why gaming matters
“Gaming has long been heralded as a vital emerging opportunity for brands, particularly those wanting to reach younger audiences,” notes Alex Brownsell, head of WARC Media. But with a complex ecosystem spanning devices and platforms, it defies conventional definitions of a channel – one reason in-game advertising spend remains low. But this may soon change as game publishers focus on improving ad monetisation, although Brownsell adds that “evidence is needed to make the case for gaming as an advertising medium”.
Key insights
- In-game advertising investment doesn’t reflect the scale of the audience and cultural impact
The worldwide games market generates revenues far in excess of the music and movie businesses combined. And some 3.4 billion people globally play video games across age groups; research by Newzoo has found that 72% of 35-54s and 46% of over 55s game at least once a week.
Enthusiasm around in-game ads peaked during the pandemic and since 2021 the share of advertisers planning to increase spend on gaming has fallen by 20 percentage points, from 72% to 52% per WARC’s Marketer’s Toolkit 2024 survey – this despite a majority of advertisers (surveyed by the IAB) agreeing that gaming is a brand-safe channel.
- Gaming is a complex ecosystem rather than a singular channel
The gaming advertising ecosystem spans devices, genres, formats, and market preferences, all of which contributes to the slow uptake of in-game ads. Additionally, gamers themselves are not uniform: over half (53%) play video games to escape from everyday life, while 63% see gaming as a good way to spend time with family and friends, per Microsoft-owned Activision Blizzard Media.
- Game publishers are building ad capabilities
Gaming offers full funnel potential. However, while programmatically traded mobile app inventory is dominated by endemic gaming advertisers, most larger brands use in-game advertising to drive mid- and upper-funnel goals. But understanding the overall impact of gaming can be challenging: gaming companies and agencies are trying to step up, forming dedicated gaming practices to assist with media and creative requirements.
- Gaming generates higher attention rates
Research by Dentsu, Lumen and Activision Blizzard Media found gaming environments generate higher viewability and attention rates: in-game rewarded video ads achieved a 100% on-screen impression rate (exceeding the benchmark of 83%), an average of over 10,000 attentive seconds per thousand impressions.
- Gaming content commands active engagement
While Gen Z spends an average of 12.2 hours per week on games, there is also a generational shift to more active engagement: 53% of Gen Z consumers spend more than half of their time engaging with game IP in other ways than playing. Consumers in markets like China, Hong Kong, Taiwan and Vietnam, for example, are more likely to use games to socialise. According to data in WARC’s latest Spotlight South East Asia, 31% of Malaysian gaming consumers had bought a product they saw while playing games.
- Game developers are moving to boost advertising revenue
In-app advertising has seen major growth in the past year. Gaming companies such as Roblox are working hard to boost advertising revenue, but such expenditure may be ineffective without adequate support in other channels, particularly social, which are key to facilitating discovery and engagement.
Netflix has reportedly spent $1bn on its gaming business since launching three years ago, with game downloads up 200% since 2022. Elsewhere, investment in gaming content has helped The New York Times to retain users, with other digital platforms including LinkedIn and YouTube following suit.
Read a complimentary sample report of WARC’s Global Ad Trends – Gaming: Advertising’s untapped opportunity here. WARC Media subscribers can read the report in full. A WARC podcast discussing the findings outlined in the report will be available from 20 August.
![Microsoft counts cost of AI investment against slowing cloud growth](https://cdn.warc.com/Images/Feed//en-GB/28571622-5659-4bed-9b9c-24db8345224b/tile.jpg)
Microsoft counts cost of AI investment against slowing cloud growth
Microsoft posted solid results for the final quarter of its fiscal year with robust growth across all of its business segments – but despite growth of its Azure cloud computing, which the markets had hoped its AI developments would supercharge, its spending is way outpacing its earnings; it joins the other big tech firms scaling up AI in facing questions about the size of the investment relative to the size of the eventual prize.
Why Microsoft’s AI matters
The business of AI is turning out to be tricky. While demand for AI services is growing, CapEx needed to power it is rising even faster. Of course, whether or not generative AI fulfils the lofty promises that some of its evangelists have made, cloud computing companies tend to need more chips and more data centers and these will remain useful. But, increasingly, rather than being the heralds of the next big thing, AI’s creators are having to temper expectations.
The news chimes with a similar picture emerging at Google, which has seen expenditure growth outstrip cloud revenue growth as analysts now ask for more clarity about how AI systems are actually being used.
A wider question concerns the ultimate returns of AI relative to the huge amounts of money invested in the technology: fundamentally, are the productivity gains promised going to really be in the trillions? As MIT professor Daron Acemoglu noted in a Goldman Sachs report:
“Eighteen months after the introduction of generative AI to the world, not one truly transformative – let alone cost-effective – application has been found.”
On a marketing level, this now places the onus on the developers of AI services to make clear what AI can help people achieve if they start using it in their day to day.
What’s going on
According to executives on a call with investors, demand for AI services is outpacing its available computing power, hence its cloud computing business growing 29% year-on-year in this last quarter versus 31% in the previous three months.
This contrasts with capital expenditures almost 80% up on the previous year to reach $19bn over the course of the quarter. Satya Nadella, CEO, told investors that the expenditure was necessary to “capture the opportunity”.
Still, AI accounts for around 8% of Azure cloud growth compared to 7% in the previous quarter – so the technology is becoming more important to Microsoft’s biggest business segment.
What emerges from this season’s big tech earnings is a connected and concentrated market, with Microsoft’s sustained confidence in AI for the future fuelling big excitement in NVIDIA’s continued prospects. While it appears that a clamour for the technology among other major tech firms such as TikTok, as reported by the Information, is behind a lot of the extant growth driving Microsoft’s own business, it’s likely that this demand will have to broaden.
Long term infrastructure
While expenditure is growing, it’s not like the money will be totally wasted even if AI doesn’t fulfil its promise; the company is firm that the land and data center expenditure is toward vital “long-term assets” that are expected to monetise fully over a 15-year period, CFO Amy Hood told investors.
Still, the general sense of AI’s promise is now shifting to the long term rather than being just around the corner and will probably look quite workaday rather than flashy. Executives’ remarks are shifting to a defence of the spending. As Google’s CEO Sundar Pichai put it last week: “The risk of under-investing is dramatically greater than the risk of over-investing for us here, even in scenarios where it turns out that we are over-investing.”
Sourced from Microsoft, Seeking Alpha, WARC. Image: Microsoft
![Younger audiences desert broadcast TV](https://cdn.warc.com/Images/Feed//en-GB/8b4fe25c-0768-4e8d-982a-09f20e279633/tile.jpg)
Younger audiences desert broadcast TV
Overall viewing of TV and video in the UK increased in 2023, driven by online platforms, but less than half of 16-24-year-olds were watching broadcast TV in an average week, according to Ofcom.
By the numbers
- Media Nations 2024, Ofcom’s annual study into the nation’s media habits, charts a sharp decline in broadcast TV* viewing by younger audiences over the past six years, from 78% watching weekly in 2018 to just 48% in 2023.
- Children aged 4-15 are tuning out at a similar rate, with only 55% watching broadcast TV each week in 2023, compared to 81% in 2018.
- Broadcast TV’s weekly reach among 45-54-year-olds fell from 89% to 84% in a single year, while for those aged 65+, weekly reach remained above 95%.
- When they are watching, 16-24-year-olds are doing so for shorter periods at only 33 minutes each day (down 16% year on year), and just 20 minutes of that is spent watching live TV (compare that to the 1 hour 33 minutes they spend daily watching video-sharing platforms such as TikTok and YouTube).
- Thirty-four percent of time spent watching YouTube at home is now on a TV set – up from 29% in 2022. This increases to 45% among children aged 4-15 – up from 36% in 2022.
- Taking TV and video content together, people in the UK averaged 4 hours and 31 minutes of viewing a day in 2023 (an increase of 6 minutes or 2% since 2022).
- This was primarily driven by an increase in daily viewing on video-sharing platforms (up 12% to 49 minutes) and on broadcasters’ video-on-demand services, such as iPlayer and ITVX (up 29% to 20 minutes).
Why TV viewing habits matter
It’s important to remember that linear TV continues to account for the majority (87%) of total viewing of broadcaster content, although viewers skew older and the battle to pull in a younger audience remains ongoing in the face of the attractions of streaming and video-sharing platforms.
An alternative take
“Overall, the story of TV viewing is one of remarkable resilience and adaptation in the face of incredible competition,” says Matt Hill, research and planning director at commercial TV body Thinkbox. He cites separate stats showing that among 16-34-year-olds, TV content accounts for 93% of all TV-set viewing, with UK broadcasters taking 71% and YouTube just 7%.
* Broadcast TV refers to viewing of scheduled TV channels watched on the TV set in the home and includes content watched live as well as catch-up viewing watched within 28 days of when it was first broadcast.
Sourced from Ofcom
![Perplexity aims to become an advertising company](https://cdn.warc.com/Images/Feed//en-GB/d44ff305-c2b0-48f8-b8de-49eaaca4dab4/tile.jpg)
Perplexity aims to become an advertising company
AI startup Perplexity has announced its intention to become an advertising-funded company with a program to “support the work of media organisations” and creators through a revenue-sharing deal with a handful of key partners including TIME, Der Spiegel, Fortune, Entrepreneur, The Texas Tribune, and WordPress.com.
The news points to one of the ways in which AI might pay for its use of quality content while also raising the question of whether the short-term revenues are worth the long-term disintermediation for publishers.
Why Perplexity matters
One of the most popular consumer-facing AIs, Perplexity’s news is twofold: yes, it’s planning to share revenue but first it has to make some. To that end, the announcement includes the fact that the service will soon place ads on its service.
It has also been under pressure for insufficient citations to journalistic organisations on which some of its summaries are based, WIRED reporting found.
The news indicates how a possible model of AI-mediated web usage will move away from sending traffic to sources, as per the Google method that constitutes much of the modern web and which OpenAI’s new SearchGPT product aims to continue.
What’s going on
“In the coming months, we’ll introduce advertising through our related questions feature,” says a Perplexity blog post.
“Brands can pay to ask specific related follow-up questions in our answer engine interface and on Pages. When Perplexity earns revenue from an interaction where a publisher’s content is referenced, that publisher will also earn a share.” Of course, the actual financial terms of the deal have not been disclosed.
In addition, these partners will receive additional perks, such as access to the startup’s APIs that will enable each publisher to “create their own custom answer engine on their website.” Participating publishers will also receive one-year access to Perplexity’s Enterprise Pro to aid research.
In comments to The Verge, chief business officer Dmitry Shevelenko emphasised the vital importance of its advertising bet: “We need advertising to be successful because it is going to be our main business model.”
Sourced from Perplexity, WIRED, The Verge
![Podcasts: big deals and visual formats drive sophistication](https://cdn.warc.com/Images/Feed//en-GB/fdd2cdd3-9c21-47f4-a5e5-35ddf9cac057/tile.jpg)
Podcasts: big deals and visual formats drive sophistication
Podcasts are a fast-growing medium and a vital advertising channel – and as the deals and businesses built around them expand, podcasts are starting to look more and more like TV.
Why the podcast market matters
Podcasts are popular, sticky, and are attracting a growing proportion of advertising spend. For marketers of brands, big and small, the medium is becoming more important to the overall media mix. For more, check out WARC’s best practice collection on podcasting.
But the shape of the market and the platforms are shifting. While there is still a lot of space – and necessity – for smaller titles, a handful of supernovas are emerging with additional businesses enabled by the central content pillar of the original podcast.
Meanwhile, new distribution platforms point to consolidation as YouTube – already a significant podcast platform – enables a different kind of show to grow while accessing a different kind of budget. It’s a situation that is seeing the video platform eating increasingly into connected TV budgets.
Big stars, big deals
Podcasts are raking in some vast deals as podcasting shifts to an industry of megastars, according to the Wall Street Journal, with the top 10 podcasts in the US reaching up to 35% of total listeners. This has built some behemoths that do a lot more than just sell ads: revenue streams increasingly comprise subscriptions, live events, and merch.
But advertising is still growing fast, with an expected 12% growth in advertising spend on podcasts globally. Podcast advertising is forecast to grow to just shy of $4bn globally, with just over half of that coming from the United States. Such huge audiences are drawing major consumer brands to some of the podcasts with the highest reach.
While growth both globally and in the US is no longer in the 2021 peaks, it remains in robust double digits.
YouTube grows in importance
Podcasts are becoming an increasingly visual medium. In the UK, Channel 4 News’ flagship podcast, The Political Fourcast, is finding significant viewers thanks to publishing on YouTube. With an average viewership of 100,000 per episode during the UK general election campaign earlier this summer, the show trails only market leader The Rest is Politics among the political podcasts assessed, according to Press Gazette.
- YouTube is different from other audio platforms in that it offers the production improved discoverability rather than the word of mouth that traditionally drives podcasts.
- Generally, if audiences watch for a long time, consistently, then the algorithm will push the show to more people. “Video is where the growth in the podcast market, certainly for us, really lies,” said Ed Fraser, managing director of Channel 4 News.
- Originally an audio-first format, the show “never quite found success,” explained Mike Deri Smith, head of digital at Channel 4 News. Instead, the show has now settled into a classic political talk show format with guests interviewed by news anchors. “We know how to make video work,” Deri Smith added, “that could be a point of distinction for us.”
- “YouTube is looking more like TV, and podcasts need to step up.”
- But critically, it’s not TV – YouTube is very sensitive to age-appropriate content: a lot of Channel 4 News coverage of the war in Gaza has been age-restricted, for instance, with those decisions very difficult to overturn.
Sourced from WARC, WSJ, Press Gazette
![Skechers targets performance sports](https://cdn.warc.com/Images/Feed//en-GB/b07a0f78-6f9d-4ea7-820a-99ff616c8694/tile.png)
Skechers targets performance sports
Shoe brand Skechers, perhaps best known for its comfort pitch, is looking to target the performance sports market, with an initial focus on soccer and basketball, both Nike strongholds.
What’s happening
- “What’s happening is that our features and our comfort are expanding the base of our existing customers,”COO David Weinberg told an earnings call. “We’re looking forward to achieving significantly higher acquisition as we get into more performance athletics, but we’re just at the very beginning of that.”
- The company has collaborated with elite athletes and product testers to “elevate the fit and technologies across the division”.
- Skechers has a growing number of brand ambassadors from the world of sport, including high-profile football players like England captain Harry Kane. It also kitted out the Malaysian Olympic team with footwear for the opening ceremony and for daily use during the Games.
- As well as deploying these athletes in marketing campaigns, the business has created dedicated social channels for Skechers Football and Skechers Basketball.
Context
- Skechers’ involvement in sport comes at an opportune moment when long-time sector leader Nike has been experiencing some difficulties, all of which have opened up new avenues for other brands.
- A former Nike brand director dissects the issues in a blog, including an ill-fated elimination of sporting categories in favor of gender-led products, and winding down wholesale relationships to focus on DTC, with an attendant switch away from brand marketing to digital marketing.
Why it matters
- Skechers has maintained a balanced approach to product, marketing and distribution that is delivering record sales growth (+7.2% in Q2). “We engage with diverse consumers through a comprehensive, multi-platform, 360-degree marketing approach,” said Weinberg.
- While it has a DTC option, Skechers continues to spread its net wide. “[Consumers] will go and shop in different places at different times for various different reasons, not all pertaining to the way we promote or where our shoes are offered specifically,” Weinberg pointed out.
- “That’s why we’re constantly saying that we want to be where our consumer prefers to shop, whether it’s for Skechers or not,” he added. “And we promote all [options], knowing we capture that consumer somewhere along the line.”
Sourced from Seeking Alpha, LinkedIn
[Image: Skechers]
![China’s e-commerce sector takes stock](https://cdn.warc.com/Images/Feed//en-GB/e0aa304d-8120-4aac-8ef9-6b79b6a593db/tile.jpg)
China’s e-commerce sector takes stock
E-commerce platforms face problems on all sides, with consumers increasingly reluctant to part with money and vendors increasingly vocal about what they see as unfair business policies.
What’s happening
- Hundreds of suppliers to PDD-owned Temu protested this week outside the app’s Guangzhou office, a particular pain point being the handling of after-sales issues.
- Slim profit margins can disappear if the platform “fines” vendors when customers complain or ask for refunds, according to the South China Morning Post.
- PDD also introduced a policy, copied by other platforms, that requires sellers, rather than buyers, to bear the cost of returns; the consequence, one apparel vendor told Reuters, has been that the return rate has doubled from 30% to 60%.
- That means an additional cost to sellers alongside costs related to traffic acquisition, and using influencers and livestreamers at a time when they’re also under pressure to lower prices to consumers.
- But evidence from recent sales festivals, including 618 and 11.11, suggests that, even at lower prices, consumers aren’t buying, or at least not at the levels they previously were.
What it means
Big discounts and generous returns policies helped drive China’s e-commerce boom to the point where the channel accounts for 27% of retail in the country. But some platforms are now re-evaluating their approach to address factors such as product quality and the user experience, since low prices alone are not a sustainable source of growth.
Jacob Cooke, CEO of e-commerce consultancy WPIC Marketing and Technologies, told Nikkei Asia that “there’s been this misconception that consumers are primarily motivated by low prices in the current environment, when in fact different demographics of consumers have different priorities, and those priorities shift depending on the product category”.
A new normal?
“There is no growth in sales, because there are no new customers and the average income of people is not rising like ten years ago,” one e-commerce operator told Reuters. “There is only competition, between platforms, between sellers. This is the new normal for the e-commerce industry in China.”
Sourced from South China Morning Post, Reuters, Nikkei Asia
![YouTube sees a sporting future](https://cdn.warc.com/Images/Feed//en-GB/87617a56-2605-4e6c-b78f-275a96d0e74d/tile.jpg)
YouTube sees a sporting future
The number of hours of sports content viewed on YouTube has increased 45% over the past year and CEO Neal Mohan believes “we’re still in the very, very, early days of where this can evolve”.
Context
- According to Mohan, more than 35 billion hours of sports content was viewed on YouTube in the past year, with more and more of that viewing done on TV screens. “It’s not just the largest screen in the house, it’s our fastest-growing screen,” he told the Financial Times from the Olympic Games in Paris.
- On a recent earnings call, Alphabet chief business officer Philipp Schindler reported that YouTube views on connected TVs had increased more than 130% the past three years, and that CTV watch time for sports is growing 30% year-on-year.
- While not an IOC partner, YouTube has deals with some leading Olympics broadcasters to carry highlights from the Games. The platform is also working with influencers to bring behind-the-scenes Olympics content to viewers in some regions.
- Over the past year, YouTube has been building its own sporting presence, including a seven-year contract to show live NFL games, a deal with the Women’s Super League in England, and a tie-up with F1 to show a series about female racing drivers.
Why sport on YouTube matters
More sport, bigger screens, longer watch times and a live collective experience all point to YouTube being in a good position to hoover up a bigger share of advertising budgets that are shifting away from linear TV. Although it’ll be competing with other streaming platforms, including Amazon, AppleTV and Netflix, which are going down the same path to a greater or lesser extent.
Key quote
“We have been working in close partnership with leagues all over the world, with our broadcast partners, our media partners all over the world for many, many years. But I would say that despite that, we’re still in the very, very, early days of where this can evolve” – Neal Mohan, CEO at YouTube.
Sourced from Financial Times, Seeking Alpha
![Travel and tourism continues its post-pandemic recovery](https://cdn.warc.com/Images/Feed//en-GB/2b853a11-a7a0-4d4a-9e3a-eff5a05b6a46/tile.png)
Travel and tourism continues its post-pandemic recovery
Travel spending continues to rise globally with a record-breaking 4.7 billion passengers expected to take to the skies this year*: despite the high cost of living, discretionary spending is seeing a healthy recovery – here’s what you need to know.
Why the travel boom matters
Consumers are more optimistic about their financial outlook, but many remain cautious with their money due to ongoing struggles with the high cost of living, WARC’s 2024 Consumer Trends report finds. Identifying and focusing on specific sectors like travel, where consumer spending will likely increase as their confidence grows, can help businesses capitalise on emerging revenue opportunities.
What the data shows
- Globally, approximately one in five (19%) consumers say they or someone in their household has purchased travel tickets (e.g. flights) within the last six months.
- European travellers are feeling more confident about their spending power than before. A recent Accor study revealed that more than half (54%) believe they will have more money to spend on travel in 2024 than they did in 2023.
- Event tourism is on the rise. Nearly half of concert-goers (49%) and around two-fifths of music festival attendees (40%) and those at a sporting event (38%) have travelled to get there.
Key quote
“2024 will also be a great year for sports, with the Paris Olympics and Paralympics and the CONMEBOL Copa América, and travellers from all over the world will be eager to attend… We see the travel category increasingly embracing these moments less as individual events and more as end-to-end experiences” – Ellen Ferrari, EVP, Managing Director, dentsu International.
Go deeper
Explore this and other shifts expected to influence consumer spending in WARC’s 2024 Consumer Trends report. Based on an extensive set of GWI surveys, as well as WARC’s proprietary research, case studies, and analysis, the report covers five major trends influencing brand selection in the year ahead.
The 2024 Consumer Trends report forms part of the Evolution of Marketing programme, which provides marketers with insight into emerging trends and significant shifts in the industry.
*According to data from the International Air Transport Association (IATA)
![Ads labelled ‘made with AI’ spook some clients](https://cdn.warc.com/Images/Feed//en-GB/e3c85b87-ce18-4638-a853-2728cfec54e1/tile.jpg)
Ads labelled ‘made with AI’ spook some clients
Images made with the help of generative AI, even for minor alterations, are labelled on Meta platforms like Instagram with “Made with AI” – and some clients don’t like that.
Why AI labels matter
Advertising is often just as much about the context and presentation of an ad as it is about the content of the ad. While AI is supercharging a lot of new features that help with image-making, they also trigger labels – introduced by Meta in May – that will flag the image as made with AI, according to an agency professional speaking to Digiday. It appears that clients are fearful of that contextual effect.
What’s going on
In an anonymous interview as part of the website’s Confessions series, an unnamed agency executive explains how some clients “do not want to be communicating to a consumer that what they are seeing, this product, is not real, or it’s been enhanced.
“And so we’re in this very strange space where photo retouching has been happening since there was Photoshop. And now, that photo retouching, because it’s being done with a generative AI tool, is now calling into question the credibility of the image or asset itself.”
This has led to an odd situation in which creative teams are avoiding using AI features baked into standard programs like Photoshop in order to not trigger the label.
Where this goes
AI-generated imagery and text is coming like a wave, partly out of practitioners’ volition but also as a result of the tools we use to do our jobs. The issue here is that the language (and platforms’ policies) we have to describe whether something was made with AI, or whether it is an image enhanced with AI, are not changing as fast as the technology requires.
Sourced from Digiday
Email this content