Global Marketing Monitor: Weekly Market Trends (March 06, 2021)

The week also brought us an opportunity to review how some of the world39s largest brand owners fared in the fourth quarter and through all of 2020 On our calculations organic growth for the packaged goods industry was remarkably normal but unsurprisingly featured rapid growth in ecommerce As television will remain an essential medium for those marketers for many years to come connected TV will play an increasingly important role News of the week from Roku Nielsen and Vizio further illustrated trends in that sector tooWe monitor earnings results and public information related to marketers and media owners along with government data and economic releases from countries around the world We do this to better understand consumer trends as well as advertising and digital transformation issuesGoogle39s announcement this past week that it quotwill not build alternate identifiers to track individuals as they browse across the web nor will we use them in our productsquot was noteworthy for the advertising industry It followed on last year39s announcement that the company would remove support for thirdparty cookies in Chrome and followed on Apple39s introduction of limitations on tracking in new versions of iOSThe news was significant for how it concentrated many minds in the industry around the meaningful ways in which marketers and agencies will need to change workflows to optimize their digital advertising budgets to accomplish existing goals On the other hand it39s also significant as a reminder to brand owners that changes to how ads can be targeted should lead to a reassessment of the balance of resource allocations between quotperformancequot and brandbuilding which of course are not necessarily mutually exclusiveamp8203amp8203amp8203amp8203amp8203amp8203amp8203No impact on total advertising growth of shifts of spending intoout of digital Some context of the bigger implications is worth stating to start we don39t expect the news to have a noticeable impact on total advertising industry growth As we have noted in the past when there have been changes in data policies whether at a platform media owner or governmental level spending levels have not been noticeably impacted Of course changes in the availability of data or preferred uses of data can significantly impact what media owners and technology platforms win or lose on a relative basisImpact on Google39s revenue is probably limited For Google specifically the news probably does not have a meaningful impact on revenue at least not a noticeable one To start it helps that Google is already as large as they are so moving the needle on a growth trajectory is challenging to begin with Search advertising is primarily bought based on context and YouTube is wellpositioned to sell on the basis that doesn39t rely on narrow targeting This is because video advertising can sell well without depending on the kind of precision that banner ads rely on and also because an advertiser who wants to use digital video will continue to find that YouTube dwarfs every alternative supplier This means that property will probably be able to satisfy related media goals better than alternatives Further to the extent that Google39s advertiser base is heavily skewed toward smaller businesses and to the extent that small businesses tend to budget for advertising in general on a ruleofthumb basis these advertisers39 budgets would not be impacted by much with the loss of unique user identifiersAlphabet39s public positioning is now more closely aligned with Apple39s and contrasts more starkly with Facebook39s At the same time as Google39s product changes are intended to have the effect of causing the advertisers and ecosystem participants they work with to use less data that refers back to individuals Facebook is publicly advocating the benefits of individual targeting with its quotGood Ideas Deserve to Be Foundquot campaign Arguably Alphabet will be better positioned to argue to consumers that they are just as privacyfocused as Apple and to governments and regulators they can present themselves as much more privacyfocused versus Facebook To the extent that the direction of travel from regulators has aligned with Apple and now Alphabet39s orientation among larger technology companies Facebook may find itself more isolated than beforeIn the shortterm Alphabet may become incrementally less competitive in some parts of the industry but may be betterpositioned longterm in others The news may make Alphabet less competitive in selling thirdparty inventory because it may be harder for them to monetize that inventory versus other sellers Similarly their ad tech products may be less competitive for marketers who prefer to continue buying digital advertising with unique user identifiers On the other hand to the extent Alphabet helps amp8211 or doesn39t get in the way amp8211 of efforts by parts of civil society to push the industry away from userlevel identification the industry might further shift away from those concepts To the extent that Google39s preference clears a path towards laws or norms among advertisers moving away from the use of unique identifiers it could negatively impact other ad tech companies Toward those ends we saw a pretty meaningful hit on companies39 stock prices focused on ad tech such as Criteo LiveRamp Magnite The Trade Desk Pubmatic and Viant While it is significant to those companies the combined total of revenue that those companies collectively generate is substantially smaller than the entirety of Google39s ad tech businesses related to the legacy of Doubleclick which itself is not large enough for Google to have to disclose revenues on a standalone basisOpportunities to reassess the role of brand building versus performance may follow To the extent that this news will likely compel marketers who have not already formed a preference around dealing with the cookieless world to accelerate related efforts If shortterm targetingdriven quotperformancequot thrived in the world of cookies and becomes harder to accomplish in the future one of the knockon effects at the brand managerbusiness unit leader level could be an opportunity to reassess the allocation of resources towards longerterm brandbuilding vs shorterterm performancebased goals2020 Ended Up Surprisingly quotNormalquot for FastMoving Consumer Goods With virtually all public companies in packaged goods having reported fourthquarter calendar and fullyear 2020 results we can calculate that nonalcoholbased consumer packaged goods covering nearly USD 500 billion of annual sales grew 40 during the fourth quarter and 31 during the full year on an organic basis This was similar to trends observed in other recent years despite the pandemic Among the subcategory trends we observed the following stood outFood grew 41 during the fourth quarter and 39 during the year Growth was virtually uninterrupted throughout 2020 even during the second quarter of the yearBeverages were flat for the fourth quarter but down by 55 for the year primarily because of the sector39s exposure to awayfromhome consumptionPetcare continued with robust growth and expanded by 106 in the quarter and 99 during the yearPersonal care was up 48 for the year and 32 for the yearHome care segments were up 12 for both the quarter and the yearEcommerce now accounts for approximately 11 of revenue within the category Unsurprisingly ecommerce featured prominently for this group of companies While definitions of ecommerce sales vary amp8211 some will report grossedup revenues based upon what they estimate retailers sold via these channels Others only report their direct revenues for goods they know sold in this manner with definitions sometimes unclear growth was rapidly everywhere Looking at companies in the sector who consistently provide disclosures around ecommerce amp8211 86 of revenue from the category or virtually all of it amp8212 we can calculate that ecommerce sales grew by 57 and accounted for 11 of sales in 2020 versus 7 in 2019North America outperformed the rest of the world By geography North America was stronger than the rest of the world and helped produce more favorable results for companies with a geographic skew towards that region during all of 2020 companies reporting North America divisions saw 53 growth well above the 20 organic growth rate of the prior year and reversing a multiyear trend where growth outside of North America was much faster than within itAlternative sources of data on the sector convey slightly different trends Interestingly this data contrasts with a report released this week from IRI and consulting firm BCG which indicated that CPG sales covering 933 billion of annual sales grew by 104 in the US during 2020 following a period between 2016 and 2019 when growth averaged 18 Large CPGs as defined in the report and accounting for 419 billion of annual sales grew 75 within this group The difference in observed results is of interest as prior years appeared to be more similar the growth rate for our composite of large companies amounted to 13 between 2016 and 2019 versus IRIBCG39s large company figure of 05 Alternately we can also look at data covering the main sales channels for these retailers and observe that US retail sales from grocery stores pharmacies and drug stores quototherquot general merchandise stores a category which excludes department stores as well as warehouse club and superstores saw 78 growth during 2020 That same group of retailers experienced a CAGR of 32 between 2016 and 2019Methodologies and focus of data help explain the differences There are significant differences in how each data point is aggregated and what each reflects Still each can provide a useful reference point in describing trends affecting the packaged goods industry Among the factors explaining differences are the nature of the data IRI and BCG are capturing or estimating sales from the bulk of retail channels whereas our estimate captures the manufacturers39 revenue There can be differences because manufacturers sometimes sell directly to consumers They may sell through nonretail chains or there may be differences when revenue is recorded by companies versus when the products are sold Similarly the US Census Bureau will differ in its data capture sales at specific types of stores meeting certain definitions covering all goods sold through those stores However when assessing manufacturers39 current state the likeforlike revenue trends they experience are likely the most important metrics to focus onOther itemsVizio filed an S1 to go public next week and provided new data points for connected TV advertising A company primarily known for manufacturing television sets Vizio filed documents for a public stock exchange listing this week Data within the filing was notable because of the massive expansion in advertising the company has experienced as it has focused on the opportunity to sell connected TV inventory over the past couple of years Overall Vizio generated 72 million in advertising revenue in 2020 versus under 9 million during 2019 While small at present the results show that significant scale already exists across the industry at other OEMs including LG and Samsung Along with Roku Amazon and others connected TV inventory will take a growing share of TV advertising as consumption grows and efforts to monetize improveRoku further improved its position to expand connected TV advertising as well In another illustration of efforts to expand connected TV advertising Roku had a noteworthy week as well First the company announced on Monday that it would buy technology and peopleamp8212approximately 100amp8212from Nielsen The effort may be directly significant in monetary terms but it will undoubtedly help both companies strategically by improving the measurement and monetization of connected TV Roku followed up the news with a filing to raise 1 billion of new equity which if raised will provide the company with a meaningful amount of additional capital to invest against growth opportunitiesPhoto courtesy of GroupMClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Global Marketing Monitor: Weekly Market Trends (March 06, 2021)

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Brian Wieser

Breaking Barriers: Nada Bradbury’s AD-ID Strategy for Advertising Effectiveness and Women in Tech - By E.B. Moss

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Global Marketing Monitor: Weekly Market Trends (March 06, 2021)

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