The past decade has celebrated brands like Walmart, Amazon and Tesco; brands that have been able to scale in size and dominate their categories. In contrast, the last couple of years have seen these behemoths battle not with other big brands but rather with thousands of tiny brands, each with low overheads and efficient customer acquisition tactics.
Through the ages, small companies typically have had profits that match their size, but modern technologies have allowed for a paradigm shift. ‘Micro-brands’ are the latest iteration of small brands that have been enabled by streamlined modes of production and access to a global market. The brands are using a combination of hyper-targeted marketing and small batch inventories to compete against the giants in their industries.
The Long Tail: Why the Future of Business is Selling More for Less authored by Chris Anderson back in 2016 is an illuminating read on this particular subject. His theory delves on the fact that the Internet created a platform for a plethora of retail sites that are cheap and easy to access to shoppers. On the supply side, the Internet also provides the same accessibility to an unlimited number of vendors and their services. This combination assisted a shift for consumer demand from the few ‘mass market’ brands to the millions of smaller niche brands. The chart below illustrates Chris’s theory with the narrow skyscraper of traditional gigantic retailers on the left and the long tail of micro-brands that seemingly extend infinitely into the distance.
Forbes refers to microbrands as “digital-first brands, direct-to-consumer brands, digitally native vertical brands, challenger brands and so on.” Brands that are typically mobile-first, hyper-social, channel fluid and deliver the perfect buying experience to net-savvy consumers with extremely high expectations.
Companies such as Casper (mattresses), Warby Parker (spectacles), Dollar Shave Club (men’s razors) and Glossier (cosmetics) were once seen as oddities, new-age e-commerce brands that delivered directly to customers houses. Time has proven that these companies were able to shake up mammoth incumbents who had grown used to uninterrupted global domination.
Operating through a direct-to-consumer (DTC) model and shaped by a combination of customer centricity, ease, and convenience, micro-brands are able to by-pass the traditional middle man and reap the benefits of directly engaging with their shoppers on a global scale. Highly engaged digital communities and access to data streams that can, in turn, inform their strategies for product, pricing, design and market expansion. These differences highlight the gap between what consumers want and what traditional retail offers.
A study that looked at factors of success for brands from 2000-2013 and 2013-2018 illustrates a significant change in the mindset of the global consumer. A change from the established norms of brand equity, familiarity and scale; to a market that prefers innovation, speed, authenticity, personalisation and customer experience. These changes line up with key demographic characteristics of Millennials, reflecting a market that will not settle for the ‘same old’.
20th-century consumers once did trust big brand names, and this helped consolidate and boost the growth of national chain retailers, but today’s shopper is increasingly wary about big brands. According to the Edelman Trust Barometer in 2018, only 48% of people say they trust big brands, down from 58 percent just one year before. This loss in trust is translating into shopping dollars shifting towards smaller brands who are seen as more authentic and trustworthy.
The table below by Nuxeo Research highlights 5 value drivers that consumer-packaged goods have traditionally benefitted from and their respective digital disruptors.
A look at some key factors that helped micro-brands be the successes that can be:
Low barrier of entry into the market place with social commerce platforms like Shopify allow them to sell anytime and anywhere
An efficient usage of social media has created the possibility to build authentic relationships through hyper-targeting shoppers and leveraging user-generated content
A key priority on customer experience enables them to build authentic relationships with customers
Designed with tightly managed supply chains, micro-brands carry low/no inventory and often produce small batches on demand
The ability to harness feedback and roll out iterations almost in real-time creates products that can evolve with the market
Being able to spot emerging niches and rapidly spinning off new product lines
A case study that is FashionNova: A brand that put its ‘social listening’ and influencer marketing strategy on steroids, producing fast-fashion through an Instagram first approach. It quickly identifies trends through its millions of followers and manufactures small orders on-demand which are then pushed out through a network of influencers. This results in its stocks selling out almost always. 2018 saw the brand launch 500 new styles every week, illustrating that the brand excelled at two key pillars – speed and scale.
As consumer tastes become more specialised, big businesses are being forced to accept that a certain percentage of the market will always be lost to agile micro-brands. The other alternative is that they too try to play the game of rapid innovation or buy out the smaller brands before they become unassailable – case in point Gillette buying Dollar Shave club for a billion dollars.
The bottom line is consumers are increasingly empowered and demanding, expecting that brands to wrap around their lifestyles and not the other way around. The world has become an accessible market of unlimited choice and the big brands of yesteryear can either change their established ways or watch microbrands of today become the household names of tomorrow.
A box is opened, its content taken out, shown to the cameras from every angle and a voice takes you through their first impressions. A simple but surprisingly popular format that helps you understand what it might feel like to own a certain product. From smartphones to vacuum cleaners, computers to toys, beauty products to lawn mowers, if you can buy it, there’s probably an unboxing video for it.
Unboxing videos work on multiple layers where on one hand, this format has been seen as a functional way for consumers to cut through all the marketing clutter they are subjected to and find out exactly what the product might be like. Is it worth the hype? Does it look the same as the ad? What might it look like in my hand? Anything to get a sense of its worth and value through another person’s eyes without any of the gloss that comes along with an advertisement.
On the other hand, unboxing videos play up to a deeper emotional layer that allows watchers to revel in the joy of watching something being unwrapped. Psychologists have noted that shopping is the modern-day equivalent to hunting, and unwrapping is a way of reliving the ‘kill’ and take pleasure in what we have captured. There is an undeniable pleasure in ripping off the packaging of a new product, peeling off its plastic and holding something unused in your hands. Apparently, it works just as well watching someone else do it. This is a throwback to the strangely hypnotic shopping infomercials on TV that were so easy to zone out with, watching hundreds of products be examined in a detailed and relaxed setting.
According to a Google study in 2014, the appeal of unboxing videos lies in the sense of anticipation within them, regardless of what’s being unpackaged. Most viewers would not intend to make the purchase, or even want to own the product that’s being shown. Our willingness to watch someone else unwrap products seems to scratch a subconscious itch. Essentially aspirational, unboxing videos are a way to satiate consumers who want something they can’t buy yet but are able to share in a fantasy and soak in the raw pleasure of opening a new product. Note – ‘fueling aspiration’ is a key part of successful marketing strategies.
Kids especially seem to love unboxing videos the most, as they get to experience the joy of opening a toy themselves. This format of videos has all the elements that kids enjoy, the surprise of what’s inside paired with being able to see their favorite toys. So popular that it sparked a ‘moral panic’ in the US, with multiple parents lodging complaints and calling for greater regulation. Unboxing videos are seen to blur the line between online content and advertising, teaching children to be materialistic at a very young age and contributing to their growing tech addiction. The greatest hook is that children like to watch things that are made by children for children and the internet has given this common phenomenon a global platform with a seemingly unlimited supply.
It is telling that the most popular genre of unboxing videos are toys taking 9 out of the top 10 unboxing videos on YouTube, with the most watched video racking up 321 million views over the last 4 years. Other popular unboxings are of gadgets like the iPhone, the Xbox and PlayStation. This global demand for unboxing videos even has brands jumping in and competing for views with their own official Unboxing videos trying to craft their brand narrative.
Consumerism is addictive and unboxing videos have a way of fueling the latent desire for new products that lives within all of us, conveying that it’s ‘things’ that make us happy. On the other hand perhaps, unboxing videos give us that space to stop and consider our purchases in detail before clicking through to buy, allowing to have someone who is ‘just like us’ go through the process instead. As noted by Professor Marsh in the UK, “Unboxing videos speak to very human interests, our interest in goods, in surprises and of course in other human beings”
Here are some of the top unboxing channels on YouTube for your viewing pleasure:
Avatar cultures have been around for years but it’s only in recent times that they have been gaining mainstream attention on social media. Virtual Influencers, cyber models, CGI models, AI accounts or even Brandfluentars (yes you read that right), no matter what you might call them, globally the industry has a potential to reach a value of up to $10 billion by 2020. The number of names that we have for them is a clear indicator of how confused the world is by their existence.
These models might not have a physical form but that is not easy to understand in the world of social media. Each with their own distinctive personalities and identifying with real racial, social or gender groups, the advances of CGI it is very tough to spot them online without a closer examination. While you might scoff at the idea of virtual influencers being popular, take a look at Lil Miquela, one of the first on the scene is an online star today with over 1.5 million followers on Instagram and Brud, the company that created her valued at $125 million.
Their popularity has not gone unnoticed by brands of the world with the fashion and beauty categories being amongst the first to experiment with virtual influencers. Prada, Chanel, Burberry, Diesel, Moschino, Supreme and Balmain to name a few looked to ride the spike in interest in this new age form of influence. Fashion brands have been able to make the most of the PR exposure that was a result of this unusual choice of models. These virtual influencers have done everything from sporting the brands clothing to appearing with real-world celebrities and even appearing as a hologram within live events.
For brands, virtual influencers have been seen as a natural evolution of the digital world after being burned a number of times over the last couple of years with adverse publicity that has engulfed the influencer economy (artificially inflated follower numbers and volatile personalities). While brands have tried to implement processes that minimize such risks (careful vetting of influencers and rigid terms of conduct contracts), some marketers have decided to jump ship and work with influencers that are made of pixels and are much easier to control. No more coaxing humans to pose a certain way or say a certain thing, virtual influencers hold the potential of complete creative freedom.
If you think about it, human influencers have an expiry date, but virtual IP can be extended infinitely. The newest kind of content system for the influence economy, as after all does it matter if an influencer is fake if they have the same ‘influence’ as someone who is real?
One of the concerns that might leap to mind is the value of authenticity, now that consumers know that the ‘person’ they are being exposed to isn’t real but a digital creation.
Mobbie Nazir, Chief Strategy Officer at We Are Social points out “Many consumers are fed up with overly-contrived social media posts that purport to showcase ‘real’ life, and may prefer unashamed artificiality. This gives brands the opportunity to be openly fake – indeed, owning it and coming across all the more real for it”.
Akin to the world of videogames brands using virtual influencers can benefit from coming across as ‘meta’, sharing that ‘knowing’ bond with its customers of this virtual reality, allowing themselves to suspend their disbelief and play along with the antics of these characters.
From a consumer standpoint, it also helps that we are becoming more and more used to and dependent on technology in the context of everyday life. From digital assistants like Siri and Alexa to chatbots online we are increasingly accustomed to interacting with fictional characters and more importantly being influenced by them.
While Virtual Influencers are seen as a shiny new toy it is by no means a magic bullet and comes along with its own concerns. Foremost, they might not work across all industries, being more receptive in the fashion world rather than healthcare where the same influence might not translate. The other major concern is if human models now have to compete with perfectly animated avatars, there is a huge risk to the ‘self-esteem’ of the human race.
International fashion photographer Manny Roman noted, “While I do admire digital art, I don’t like the non-realistic message that is being sent out to society, I fear the CGI models image will escalate the body and image dysmorphic epidemic”.
Another concern (that we can thank Elon Musk for) is the potential power of AI and what impact that could have on society as a whole. Will AI evolve to a stage that the influence on human-kind is decided and determined by technology and algorithms (On second thought, it seems like that’s already here). The important point to note is being able to distinguish the lines between technology and reality and acknowledging the mental effects the blurring of those lines might have (As seen in video game addiction in young children).
The future of virtual influencers could range from real models being scanned and working simultaneously across multiple locations in the world to reality TV shows that star hyper-realistic virtual characters, essentially anything could be possible. Ultimately there are still many questions unanswered and many avenues still to be explored in this category that makes it hard to gauge whether it is a positive step for the future of a negative one. But it is clear from the traction it has had so far that virtual influencers have proven themselves worthy of a seat at the table alongside their real-life counterparts.
The rise of in-house agencies is certainly one of the biggest changes within the marketing world over the past few years. In-house teams are brought together usually to run digital marketing programmes, or design work, or social media.
The business case for an in-house agency is typically a mix of:
Focus & attention – no agency can know or care as much as we do about our business.
Greater agility – being always on they make businesses more responsive.
Managing the digital engine – having the core drivers of direct e-commerce owned and managed in-house.
Cost savings – shedding the cost of external agencies in favour of internal teams.
Because others are doing it – in-house teams are in vogue and seen as the modern way to go.
There are many companies that operate a mixed model of some in-house, supplemented by external specialists.
While some in-house agencies operate very effectively, there are some problems that are all too common.
Three big ones are:
Ready, fire, aim
This is when companies are looking for short-term wins, but end up delivering short-term whims that lack strategic purpose or cohesion. Having the means of production at hand can make it too tempting to execute before thinking it through.
The risk is inconsistency, a lack of relevance, confusion and a dilution of brand strength.
Cars with no petrol This is when the creation of in-house capability is a mask for reducing the marketing budget. It can become an excuse for minimising marketing effort.
The risk is an erosion of brand health through underinvestment.
Drinking our own Kool-Aid
This is when companies limit their activity to only what they do in-house. An internal focus without debate and the stretch of strategic and creative interpretation can lead to companies limiting the scope and quality of what they do.
The risk is weak marketing and communications, resulting from limited strategic, creative or technical crafting.
Headlight works with a number of in-house teams, providing expert strategic direction, problem solving and insights to help clients get the best from their marketing investment.
Please get in touch for a chat if you need help with your in-house team.
Advertising is only getting more pervasive, obnoxious, and intrusive. That’s not my personal opinion (though I absolutely agree); that’s the internet speaking.
According to recent consumer surveys, digital advertising doesn’t exactly have the best rep. Pop-ups interrupt the browsing experience at every turn. Creepy remarketing stalks you with the same display ad everywhere you go. Autoplaying videos embarrass you in waiting rooms and on buses. You can hardly read a news article without having to scroll past a dozen ads and accidentally clicking on one of them.
The Millennial generation as defined by Pew Research is anyone born between the years 1981 and 1996. In 2018, this includes everyone age 21 to 37 (That’s about the age gap between Kylie Jenner and Kim Jong-Un) this extends from people just entering the workspace to ‘adults’ with 2 kids or more.
The much-hyped label ‘Millennials’ has resulted in a blanket buzzword that is often met with derision. It brings up an image of Snapchat-happy narcissists who hate hard work and criticism but love ethical products and spending all their money on avocado toast.
Apparently, millennials are killing countless industries, here are a few from a seemingly never-ending list.
In the marketing sense, it is illogical to assume that a 21-year-old and a 37-year-old consume the same media, have similar life interests or even react to the same stimulus. Understandable that “a generational name helps to start a conversation,” according to Jason Dorsey, president and lead researcher of millennials at the Centre for Generational Kinetics, a research firm that studies millennials and Generation Z. “Otherwise, we might be saying ‘twentysomething’ and ‘thirtysomething,’ which is not actually generation-specific but a demographic.
Author and journalist, Summer Brennan, came up with an interesting idea aimed at getting people to accurately understand the term ‘millennial’. Every time you see a headline that mentions ‘millennials’, replace it with ‘adults under 40’.
If you do that for the examples stated above, ‘adults under 40′ killed the napkin/cereal/yogurt/diamond industry; ‘adults under 40’ are afraid of doorbells does sound a little absurd. It does help to take a deep breath and objectively take buzzwords out to get a real understanding. This all comes down to the way we frame conversation shapes our worldview. Specific words and phrases have the power to change minds.
A famous quote from Winston Churchill (originally describing Israel) seems to sum up the generation pretty well “a riddle wrapped in a mystery inside an enigma”.
On the other end of the spectrum, one of Deloitte’s startling revelations was that media consumption behaviours of Gen Z, Millennials, and Gen X are now so similar, they nicknamed this combined group the “MilleXZials.” But that definitely needs a blog post in itself and a revamp of the way we compartmentalize and understand the world.
Gen Z has grown up in a world full of distrustful government leaders, increased awareness of privacy issues and generations laden with debt. This has only made them distrustful of authority and big brands. Thanks to their Gen X parents, they are more realistic that opportunities are not boundless (unlike Millennials) and that they need to continue to master new skills to stay relevant. Below are a few Gen Z insights to keep top of mind to get a grasp of what this generation is all about.
Gen Z is categorised as people born between 1996 and 2011
Material-related desires, such as driving a nice car, have become less important with having fun, travelling, creating deep connections and having a more meaningful life rising in importance to Gen Z
Have an 8-second attention span
Gen Z spend up to 11 hours per day on social media
More money conscious than Millennials
Hard work pays:
A stark difference from Millennials, this is a generation that is hardworking and does not expect to be lavished with praise and rewards at the smallest drop of a hat. Brands need to find a way to help them further their professional and personal lives. They have seen that millennials expect to be given things and realized that hasn’t always happened, so they feel a real responsibility to work hard and achieve goals for themselves.
Authenticity is key:
Growing up in a digital age, Gen Z has been able to spot sales pitches fairly easily and disregard flashy advertising to be shallow and not relevant. Authenticity has been seen as a crucial factor to connect with brands; where there has been a real effort put in to understand the audience and what is relevant + interesting. Reality over aspiration, where information from the horse’s mouth holds the greatest value and not the shiny packaging it comes in. According to research from Wundermann“They want to see their world in the ad world, they want it to be realistic. They don’t expect perfection. They don’t want to see a model with their hair blowing back in a cornfield, putting on mascara. They know that’s not true.”
Co-creation is the new User Generated Content:
Personalised interactions with brands allow Gen Z to create their own unique experiences. According to research conducted by Kantar Millward Brown Gen Z is characterized as heavy users of social platforms and oppose ‘homogeneous’ global advertising campaigns. They are much more attracted to ads that allow them to co-create or shape what happens, which is a contrast to Gens Y and X, who have a higher preference to links that have more information about the brand.
Even though Gen Z is seen to spend most of their time on digital platforms consuming data, they are also the generation that hates invasive ad formats the most. They are seen to be generally more open to outdoor and TV ads and have perfected the art of glossing over all digital advertisements that are thrown their way. Branded content is seen to be harder working than the dreaded skippable online ad formats where the art of storytelling earns it buck.
The importance of design:
Research from BD Network shows that Gen Z is known to be visual communicators, where they are best able to express their emotions through images. With a keen eye for design aesthetics, this generation is used to an on-demand world of infinite choices. They are seen to be extremely design conscious and look for brands that are able to reflect their own ‘unique’ personalities. They are quick to shut out brands that flaunt the obvious ‘stock imagery’ as not putting enough effort into its communication.
Privacy concerns to the fore:
Research by Wunderman revealed that Gen Z is the most conscious about the volumes of personal data that brands collect from them. This is the generation that expects a value exchange for what they are handing over to brands. Three out of 4 worry about information companies collect on them and are resigned to that being a necessary evil. However, this generation is savvy enough to know exactly what they want, and expect, from brands. Gen Z is saying ‘You’ve got my data. What are you going to do? Better make it efficient for me.’ For marketers, the key shift would be not about more transactions but about making those transactions easier.
As Millennials start to mature, Gen Z is the current crop of newly forming adult identities. With that comes new statements in style, tastes and trends. Of course, this also provides the legion of marketers and communications professionals a new cohort to focus their attention on.
One of the big trends at the moment is client companies building their own in-house agencies, or at least taking on things they previously outsourced.
Mark Pritchard, CMO for P&G recently mapped out their plans for a DIY agency approach at Cannes. In particular, he points to digital media wastage as the main problem.
He claims… “We’re reinventing media from mass blast to mass one-to-one, we’re getting advertising from less push to more pull, we’re reinventing agency partnerships from less outsourcing to more of our people’s hands on the keyboard.”
(read more here)
This is a phenomenon that’s been growing for a while now with more and more design studios, social media, and digital marketing teams emerging in-house.
Having seen quite a few of these in action, there is no right answer. Some clients are saving costs and delivering effective work. But others are struggling for quality in what they do, and lack creative impact and strategic insight – satisfying themselves without the benefit of professional expertise.
A while ago I wrote an agency selection best practice guide for the 3Cs and ANZA called “Navigating the agency selection process” (have a look here). In it there is a section that maps out different agency/outsource models and their implications, including in-house alternatives. I recommend you have a read if you’re contemplating going in-house. And if you’re not sure, get in touch for a chat (firstname.lastname@example.org)