1. Message commerce
Mobile messaging apps are about to transform the way consumers interact with brands. In 2016, it will become much more common for people to use messaging platforms not just for customer service enquiries but also to manage bookings and make purchases.
Facebook is at the forefront of this trend – at least in the Western world – after announcing partnerships between its Messenger app and US retailers Everlane and Zulily at its F8 conference in March 2015. Dutch airline KLM confirmed in November that it would begin to offer booking confirmation and boarding passes on Facebook Messenger by the end of this year.
The practice of carrying out transactions through messaging apps is already entrenched in China, where much of the fast-growing middle class has never shared Western consumers’ attachment to email as a contact channel, preferring instead to reach brands through message services such as Weixin – the Chinese version of Tencent’s WeChat app.
“Especially in consumer brands, everything is changing and everything is pushing towards messaging,” says Salesforce Marketing Cloud’s head of digital strategy, EMEA Jeremy Waite. He argues that this is because contacting brands through message platforms is more “natural and frictionless [than email] and it’s a beautiful experience”.
Waite does not believe that email is “broken”, as it is the “highest-performing marketing channel”, but he argues that managing online shopping through email is a fundamentally flawed process, since account set-up, order confirmation and delivery notifications each create separate threads that can be difficult to retrieve from consumers’ increasingly full inboxes. On messaging apps, a customer’s entire order and contact history is present on one screen, sorted under the brand’s name.
Facebook vice-president of messaging products David Marcus, previously president of PayPal, told Wired magazine: “The exciting thing about messaging, and the reason I let myself be convinced by [Facebook founder Mark Zuckerberg] not to be the CEO of a $50bn company in order to build this thing is that I believe this is one of the biggest opportunities in the next 10 years.”
The main questions for brands are how much resource to divert into messaging as an ecommerce platform, and when to do it. The balance between automation and retaining the human touch will determine whether this new channel helps acquire and retain customers.
2. Mobile-only brands
Next year will see the launch of Atom Bank, the UK’s first mobile-only bank. The business, which offers its services only via a smartphone app, is the brainchild of Metro Bank founder and serial disruptive entrepreneur Anthony Thomson. In an interview with Marketing Week in October, he suggested that launching a bank with high street branches would be like BT putting telephone kiosks back on the high street.
Thomson’s analogy is prescient for all new businesses planning to enter the market in 2016. The 2015 Ericsson Mobility Report predicts that by 2020, there will be 6.1 billion global smartphone users, overtaking those with fixed-line telephone subscriptions. As smartphone usage has soared, consumer interaction with brands has rapidly shifted to mobile.
Mark Evans, group marketing director at Direct Line Group, calls mobile phones the operating system of human beings. He says: “Organisations will assume that many customers want to do everything on their mobiles only. Being brilliant on mobile is going to become imperative.”
The world’s most disruptive brands are mobile-only. Uber has changed the way people order transport; Snapchat introduced a new ephemeral form of mobile communication; and WhatsApp has made SMS redundant. All of these businesses have taken a dominant share of their markets in a short time – and achieved astonishing valuations – with minimal physical infrastructure.
With the huge scope for technological innovation that mobile affords, next year looks set to spawn more mobile-only brands. The most successful will offer innovative services that complement the changing ways people use their devices, from researching purchases in store to exploring the world around them through location-based tools.
Marketing will be key. Competition is tougher than ever, with success predicated on strong word-of-mouth recommendations and a prominent showing in Google Play and Apple App Store. The true test will be whether startups can hit upon a unique idea that turns an app into a vital function in people’s lives, rather than irrelevant software that is swiftly uninstalled.
3. Delivery wars
Retailers have found something new to go to war on beyond price by offering same-day delivery services. In 2016, this could become the key differentiator for ecommerce, as price wars and discounting reach a floor and consumers begin to see convenient delivery options as the most important factor in choosing where to buy.
Just in time for the Christmas rush, Amazon announced it would offer members of its Prime service unlimited same-day delivery on eligible items free of charge in selected cities. For non members the service costs £9.99. Prime members can also benefit from one-hour delivery at £6.99.
Argos followed with its own offer of UK-wide same-day home delivery and in-store collection on 20,000 products at a cost of £3.95. More retailers will undoubtedly be forced to follow this lead next year. Consumers can also expect expanded weekend delivery options and growth in the number of lockers where shoppers can pick up purchases at train stations, car parks and supermarkets.
“With Argos and Amazon leading the way on same-day delivery, we don’t have any choice but to offer it to stay competitive,” explains Rob Wood, head of online at toyshop The Entertainer.
He says some customers are willing to pay for the service even if the product is £10 or less, while promotions have also driven take up. Wood adds: “On the hottest day of the year, we ran a 99p same-day delivery promo [on] our paddling pools. We sold 300 £30 paddling pools in three hours.”
Consumers already demand convenience and instant gratification, thanks to the number of apps that offer quick-response services, such as food delivery and taxis, but these expectations are now permeating all product categories. Retailers will have to decide either to offer faster services or risk customers going elsewhere.
4. Marketers win over the c-suite
You could argue that this trend has already come to pass, since research from executive search firm Heidrick & Struggles released in October showed that British companies are increasingly turning to marketers to fill the top job of CEO. More than a fifth of FTSE 100 CEOs come from a marketing or sales background.
Marketing Week predicts 2016 be the year that marketers across business sectors finally prove their worth to the executive board. O2’s marketing and consumer director Nina Bibby agrees.
Speaking at a M&C Saatchi event exploring the hidden value of brands in November, she said: “We are a brand that runs a business, not a business that runs a brand. I’m on the company board and have an equal voice and view around the C-suite just like everybody else.
“If there’s a trumpet for championing what we do, it is the chief financial officer, the CMO and our head of customer service who really understand the customer and the brand.”
At the same event, Disney’s CMO for the UK and Ireland Anna Hill added that marketers are steadily gaining more respect from other board members as they are perceived to be closer to the consumer.
She told Marketing Week: “Marketers are 100% involved on a company board level [at Disney], with the chief financial officer and the CMO really driving the decision making. The company understands that it’s all about the brand. Although we’re hoping that everybody is getting closer to the consumer, that encapsulates my job [in particular].”
Refreshingly, she claimed that carving a niche for the customer’s voice in board-level conversations has not met any resistance. “It hasn’t been challenging to be honest, everyone has embraced it.”
Bibby’s and Hill’s experiences lend credence to what Sir Ian Cheshire, former CEO of FTSE 100 company and B&Q owner Kingfisher, told Marketing Week in August: “The two areas that will be far more important in the future will be marketing and the IT and digital world. Some sort of fusion between those two is going to provide a lot more of the leadership of businesses as a whole.”
5. The Big data lockdown
Brands don’t learn, it seems. Or at least that’s the inference you could make from the vulnerability big corporations continue to show to the threats of computer hacking and inadvertent data loss. Telecoms network TalkTalk is the highest-profile UK brand to have had its systems breached and customer data stolen this year, with Ashley Madison – a Canadian website that facilitates extra-marital affairs – another major casualty in August 2015.
There are several reasons that 2016 will be the year when consumers assert ownership of their personal data, thus depriving brands of the right to treat it as a business asset. First, home secretary Theresa May has signalled her intention to push through new legislation – nicknamed ‘the snooper’s charter’ – mandating internet service providers to make customers’ browsing data available to security services.
This could create significant distrust among privacy-conscious consumers about what will happen to the data that companies hold about them, pushing them towards encrypted services; and web browsers such as TOR that mask their identity and location.
Second, the EU has just agreed the text of its General Data Protection Regulation. Brands will have to prepare themselves for enforcement from the end of 2017.
Requirements include companies that process high-risk data having to appoint a data protection officer and notify customers whenever a data breach occurs, as well as having to gain “unambiguous” consent for data processing. Many businesses may consider letting customers manage their own data to be preferable to the risks and costs of storing it themselves.
Finally, a renewed push from the government on its Midata programme could force brands to give more of consumers’ data back to them in useful forms.
6. Programmatic in traditional media
Automated media buying has continued to stretch its tentacles into all areas of advertising this year. There has been an increased uptake of the technology by brands and their agencies and an increased proportion of ad space bought via the method, where brands pay for audiences instead of specific ad positions. Programmatic will account for 70% of online ad spend in the UK next year, eMarketer predicts.
In 2016, programmatic will also start taking over traditional media. It continues to make slow progress in TV, but growth is likely to be more explosive in outdoor media, where every advertising frame in the UK has been allocated a unique 10-digit code to enable automated buying through auction software.
The sheer volume of outdoor media sites, and the almost limitless flexibility of campaign timings and durations on outdoor screens, will surely see the proportion of out-of-home media bought programmatically surge past that of TV in fairly short order.
Direct Line’s CMO Mark Evans says: “[With] the notion of somebody walking past at a specific time of day in a specific part of the world – and you know a bit about them from what their mobile is sending out – advertisers that use outdoor would be licking their lips.”
On programmatic TV, he adds: “Sky in particular has caught my eye in the past couple of months with the new AdVance product, which effectively [allows] sequencing of messaging both online and offline. That’s a really interesting thought.”
As well as Sky, ITV has also extended its programmatic offering into co-ordinating online campaigns that synchronise with TV ads. Progress will also continue next year towards more automated buying of linear broadcast TV, for example through Sky’s AdSmart offering, which allows brands to reach different audience segments watching the same TV programme with different ad executions simultaneously. The ‘long tail’ of programmes with small audiences that cannot be recorded by BARB figures are most likely to be sold in this way.
Game insight and marketing director Fred Prego says: “At the end of the day, Game is a consumer driven company, I am a data-driven marketer, and the advances in programmatic trading for media are really exciting. For traditional media, we are encouraging that.”
However, he cautions: “The one thing that we need to bear in mind is that no matter how sophisticated the algorithm we are using, media will always need a human touch to make sense of the data. We have got a lot of data, the guys have got the tools, but there needs also to be a human factor in between.”