Four Trends Challenging Brands in the Evolving Digital Marketing Ecosystem

It seems that every day we witness the emergence of new disruptive forces that challenge our personal, economic, political and social well-being. From the chaos at Twitter to the collapse of the FTX crypto exchange to stubborn inflation, recession forecasts, supply chain snarls, to war, food shortages, and on. And brands too are staring down major disruptive challenges as the digital marketing ecosystem continues to evolve at ever accelerating speed. 

Four trends present significant challenges and opportunities including: the Rise of H-Commerce, the explosive growth of the Creator Economy, the redefinition of ‘must see TV,’ global repercussions of the Privacy Priority, and the potential evolution of the Metaverse as a shopping medium, as outlined in the IAB’s recent Brand Disruption Summit 2023.

By Len Stein, President, Visibility Public Relations

Disruption #1: The Rise of Hybrid-Commerce 

E-commerce growth, combined with the resurgence of post-pandemic in-store shopping, has ushered in an era of hybrid shopping, which the IAB calls “H-commerce.” Defined by the fusion of online and offline shopping, H-commerce is not to be confused with omnichannel marketing. 

Both established and direct-to-consumer (DTC) brands are recalibrating their go-to-market strategies to meet new expectations of H-commerce shoppers, forcing brands to up their investments in technology to provide seamless shopping experiences. 

Meanwhile hybrid shopping is flourishing – three in four consumers shop with a fusion of on- and offline tactics. More than three-quarters (77%) of consumers research online and purchase offline (ROPO). Nearly six in 10 (58%) consumers make purchases on their phones while in a store from another retailer’s website vs. 42% in 2019. More than half (51%) of consumers make purchases on their phones while in a store from that retailer’s website vs. 38% in 2019 

DTC brands lead the charge to H-commerce 

The IAB cited several brands that are successfully transitioning from DTC plays to H-commerce formats. These include Simulate’s Nuggs, a plant-based chicken nugget product, which moved from DTC only to a constellation of ghost kitchens within three years of launch and Pop Up Grocer, a “family of curated shops featuring “better for you products.” 

Pop Up Grocer navigated to permanent storefronts plus DTC in three years enabling 600+ small brands to avoid mass marketing costs while challenging DTC economics.  And, Your Super, which following a three-year revenue growth of 12,000% since 2015, expanded its offerings of nutritious plant-based products into leading brick-and-mortar chains including: Target, CVS, Sprouts, and The Vitamin Shoppe.

Disruption #2: Seismic Shift to a Creator Economy redefining “Must-See TV”

Brand stewards need to understand the power of the creator movement. The top 50 creators today have a combined follower count of 1.9 billion consumers who spend more time with creator content than with Hollywood-produced content. And social platforms and publishers are fast building tools to bolster the Creator Economy.

  1. Mass market interest in creators is altering the power balance from professionally-produced “Hollywood” content to individually produced creator content. 
  2. Investment in broadcast/cable TV and film is decreasing while investment in creators skyrockets. 
  3. Brand investment in creator content is growing faster than investment in TV and streaming content, which has declined nearly 20% since 2018.
  4. Content creators are leveraging their influence to build consumer product brands. 
  5. Viewership of creator content now accounts for a significant share of time in America’s living rooms. 

Importantly, brands in many categories are leveraging creator talent in their advertising initiatives. The facts: Eight in 10 brands are using creator advertising; Coca-Cola, Denny’s, Pepsi and Toyota have launched creator programs while celebrities are tapping into the creator economy to build their own brands, i.e. Brad D

The move to infiltrate America’s living rooms is now well underway, with half of CTV and AVOD viewing attributed to YouTube. Among the 18+ age set YouTube represents 50% of ad supported streaming time, while TikTok’s TV app is moving its 1.2 billion users to CTV.

Disruption #3: The Metaverse will become a shopping medium

As dollars continue to flow into online gaming, brands are testing commerce storefronts in metaverse style game environments in anticipation of mass adoption projected to become a $2 trillion market by 2030. Almost one-third of companies will be selling in the Metaverse by 2026 while one in four consumers have already shopped metaverse stores; 

Metaverse commerce, selling direct to avatars, is the new DTC channel. Selling digital fashions, skins, and experiences “direct-to-avatar” (DTA), a key driver of metaverse commerce, is expected to generate $50 billion in sales from skins alone in 2022 and potentially top $1 trillion by the end of the decade. Brands and platforms, including American EagleGucci, Balenciaga, Fendi, and Meta, are embracing DTA by launching digital clothing collections and digital storesfronts

The pioneers here include: Forever 21’s virtual shop in Roblox, “Shop City” which allows users to manage digital stores and purchase digital products for avatars. Dick’s Sporting Goods launched a virtual high school where visitors can earn currency to buy back-to-school gear, as well as to socialize. And Gucci launched a virtual store, in May 2022, in Roblox called “Gucci Town” where users can purchase digital Gucci items. 

Evolving AR Shopping is Key to H-commerce

Globally, Augmented Reality shopping technology is poised to explode. So, who’s leading the way?

  • Augmented reality (AR) shopping technology, already a $2 billion market, is projected to grow 30x by 2031. Nine in 10 Americans will consider using AR for shopping cross-category. 250 million+ users have engaged with Snap’s AR shopping lenses 5 billion+ times. Walmart acquired MemoMi to build out its digital mirror AR technology for virtual try-ons. And Amazon launched an AR-based try-on tool for shoes from brands like: Puma, Reebok, Adidas, and New Balance. Pinterest also debuted an AR try-on tool to enable at home shoppers to preview furnishings from major retailers: Walmart, West Elm, Wayfair, Crate and Barrel, and CB2

Disruption #4: The Privacy Priority: Real-World Repercussions

In this new era, no company will be immune from legal penalties as privacy lawsuits are fast moving beyond the largest platforms.  Meanwhile operating systems and browsers have already reduced the size of the addressable audience that brands can target and use to measure ROI. Due to Apple’s privacy changes, digital platforms are projected to lose billions of dollars of revenue this year alone, plus the coming demise of third party cookies will increase customer acquisition costs and CPMs.

In 2023, five new state privacy laws will take effect, forcing brands to rethink their data strategies. Ongoing privacy legislation will not only further challenge brands’ ability to assess advertising performance but will increase the likelihood of lawsuits and regulatory penalties. Among the most notable are: the California Privacy Rights Act, the Colorado Privacy Act and the Utah Privacy Act

  1. Privacy legislation and growing signal loss have jeopardized the value of platforms and DTC brands. 
  2. Brands are innovating to recoup lost revenues due to signal loss and evolving their go to market strategies in privacy-compliant ways. 
  3. This is not the time to sit on the sidelines but to get educated and explore new privacy-driven opportunities. 

With signal lose making it harder for brands to track the customer journey, marketers need to look to other KPIs to measure performance, including advertising cost of sales. acquisition costs and marketing efficiency measures. Agencies, such as Dentsu and IPG’s Mediahub are transacting on attention metrics, which don’t rely on third- party cookies or personal data. Havas partnered with Lumen to create attention-based planning, buying and measurement tools, and GroupM is factoring in attention metrics for selecting TV measurement partners. 

These emerging trends, among others, will continue to sow disruption across the digital marketing space, forcing brand stewards to become increasingly customer focused in the on-going battle with ever escalating expectations. One hopeful solution, may be found in evolving market research tools, especially neuroscience techniques, which can enable brands to probe consumers’ subconscious decision making processes and provide insights to better understand and fulfil consumers’ needs, wants, fears and desires.  Perhaps it is time for market researchers to take a seat at the c-suite table.

Len Stein is president and founder of Visibility public relations. A pioneer in interactive marketing positioning and branding, Stein has represented leaders, including: OgilvyOne, Organic New York, DeepEnd and Rapp Digital, as well as innovative agencies: Archrival, Site Specific, Last Exit and Rokkan. Len is also a contributing editor to Branding magazine, and frequently writes for MediaPost’s Marketing Daily and the Bulldog Reporter. 

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