Monthly Brandtech Blend – December 2020

Home Blends & Trends 24 December 2020

As 2020 comes to an end, with its many challenges and disruptions, we would like to share the last brandtech news update of the year with you. Although these are unusual times, we remain dedicated to educating our clients and explaining the latest changes and trends that are shaping our industry.

So what’s been going on lately? Europe’s Digital Services and Digital Markets Acts are underway; the gaming industry is having a moment; the epic story of The New York Time’s successful digital transformation is told through a great infographic; direct-to-consumer brands are slowly moving away from Facebook; and a recap on how the biggest advertisers are spending their media dollars right now…

Europe’s Digital Services and Digital Market Acts: new rules for tech giants

The European Commission recently announced two new sets of rules to update regulations on the digital market, a tremendous revision of the commission’s current regulations on the subject.

The Digital Services Act will focus on making platforms responsible for content they host, but also deals with the need for more transparency on how the displayed content is selected. The Digital Market Act is concerned with the monopolistic role of tech giants on the European market; the goal is to prevent anti-competitive behavior and abuse of a dominant position. Although Europe refers to big platforms and tech giants as “gatekeepers” within regulatory texts, it is fairly clear that the main targets are Google, Facebook, Amazon and Apple.

The gaming industry has become a cultural touchstone, and advertisers are jumping in

Gaming is becoming one of the largest and fastest-growing forms of media for young people. Unsurprisingly, the coronavirus was not an obstacle to gaming’s growth – quite the opposite, as it contributed to helping the industry thrive. In the US alone, gaming sales rose 37% Y-o-Y. However, many marketers were caught off guard with this tremendous increase and they are now scrambling to develop full plans now that they fully comprehend the size of the opportunity.

How The New York Times achieved a successful digital transformation

Newspaper businesses used to make a fortune selling ads. But as news has moved online over the past two decades, advertising dollars dried up and moved online too – and unfortunately not to publishers. Instead, advertising money went straight to Google and Facebook, which meant that many newspapers were forced to close. The New York Times was not spared, even though it is one of the United States’ biggest newspapers. However, the company has managed to turn things around and now records 4 times more subscribers in 2020 than at its print-era peak: 6.5 vs 1.6 million!

So how did the media company do it? Between reinventing their product and flipping their business model from ad-supported to subscription-first, they actually managed to generate strong financial growth every year.

Media buyers want to diversify away from Facebook

For several years now, D2C brands have been knowingly way too reliant on Facebook for their media investments, as the platform performed extremely well in helping them hit their goals. This was for good reason, as Instagram is one of the cornerstones of the direct-to-consumer market. But the game is once again changing, and these brands are increasingly moving their advertising dollars towards Snap, TikTok or even Pinterest, as well as streaming video platforms. And there are several reasons.First of all, the platform is becoming way too expensive (average CPMs are between $14-17 vs $4-5 on Snap or TikTok). Also, Facebook’s Ads Manager doesn’t work as well as one would expect and appears to regularly break down. What’s more, last summer’s global Facebook boycott pushed marketers to test other channels and consequently realize they could perform well (solid ROAS and cheaper CPMs). A shift is thus in progress, but for now Facebook and Google still capture most of these brands’ media investments.

How are the world’s biggest advertisers spending their money?

After a brief spending pause, a lot of the big advertisers have adopted a new consumption model – one in which users and business are actually used to living with Covid-19. For instance, Procter & Gamble increased its marketing spend by $100 million but actually managed to save $200 million in agencies or production fees. Amazon both spent and earned in advertising, raising its investments by 14% but also increasing its own advertising revenue by 51%. Coca-Cola continued to see its revenue drop as beverage sales in restaurants, bars and other OOH venues were closed, which inevitably decreased its marketing spend by 30%. The company also announced streamlining its business and aiming to cut several of its 420 “master brands”.

Salesforce’s biggest purchase ever: workplace chat app Slack, for $27.7 billion

Slack was born as a gaming company in 2009 and quickly turned into a major competitor of Microsoft, with more than 12 million daily active users (in October 2019), and a market value of around $25 billion. Although the competition is fierce between Slack and tech giants such as Microsoft and Facebook, the company grew into a full communication and productivity suite with video meeting, file hosting, and other specific chat features. As Salesforce is also a major competitor of Microsoft in the cloud sector, this acquisition sounds like a good idea for both companies to secure a strategic place in the cloud and enterprise market in the future.

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