Hard times for the ‘gig economy’
Brands that make up the rapidly growing ‘gig economy’ faced a number of obstacles this year. In October, an employment tribunal in the UK ruled that Uber can no longer classify its drivers as self-employed and must pay them the national minimum wage, as well as providing statutory workers’ rights. Although Uber has said it will appeal against the ruling, it comes amid mounting scrutiny and opposition towards services that use self-employed labour models.
Home sharing service Airbnb is already facing legal challenges in cities around the world, particularly with regard to laws governing short-term rentals, while in November riders for food delivery service Deliveroo announced they were taking legal action to gain union recognition and workers’ rights.
Not long ago it seemed as though the gig economy, with its blend of convenient services and technological innovation, was on an unstoppable march. These legal challenges have dented the momentum of brands operating in this space, threatening their ability to grow revenues at scale, so it will be interesting to see how they respond in 2017. Uber has already sought a legal ruling to class it as a digital platform rather than a transport provider in the EU.
The media’s scrutiny of low-wage work and income inequality suggests that brands must tread carefully with their communications as they tackle these issues.
There are already signs that some companies are wise to this challenge and are seeking to contribute positively to the debate. At the Web Summit in November, Deliveroo CEO William Shu urged the tech community to actively find solutions “to determine what the future of work looks like”. Actions speak louder than words though, so keep an eye on how the gig economy behemoths respond to their troubles in 2017.
Price hikes and retail disputes
Unilever’s pricing stand-off with Tesco in October was the tip of the iceberg in terms of economic instability caused by the UK’s Brexit vote. The steep fall in the value of the pound led Unilever to ask for a 10% price rise for its brands to account for higher import costs. Tesco refused, Unilever cut its supplies and panic ensued as brands such as Marmite and Ben & Jerry’s temporarily disappeared from shelves.
Although Unilever and Tesco resolved their dispute, consumers have been warned to expect more price rises and retailer-supplier conflicts in 2017. Former Sainsbury’s boss Justin King said recently that supermarkets will not be able to absorb the rising cost of importing goods, while Bank of England governor Mark Carney has forecast rising inflation next year – a trend that could also affect the price of big ticket consumer goods or energy bills.
Price rises are part of a much bigger challenge facing brands following the Brexit vote and the victory of Donald Trump in the US presidential election. Both events threaten global free-trade agreements and could have huge implications for businesses around the world. China’s state-run newspaper Global Times has already warned that it will halt sales of iPhones and American cars if Trump decides to start a trade war.
Although the outcome of Brexit negotiations remains unclear, and Trump has not yet assumed power, brands should prepare for 2017 on the understanding that economic turbulence and rising prices could be the norm.
Brands that can clearly communicate these challenges to consumers, or better yet innovate and find new business models to keep prices down, are most likely to ride out the turmoil and potentially take market share from struggling rivals.
Marketers take a hard line on measurement
2016 has been the year of measurement mess-ups, which comes at a time when marketers are under increasing pressure to prove return on investment in digital and ad spend more generally.
Facebook – the headline culprit – “should hang its head in shame for measurement errors”, according to Marketing Week columnist Mark Ritson, after the social media site overstated how long users watch videos and discovered a number of errors in the way it measures audiences across its products, among other mistakes.
If brands cannot trust a data-gathering product-heavy technology giant like Facebook, where will that advertising budget go?
“This challenge affects brands, agencies and publishers in equal measure so a collective industry movement is the only way forward,” says Henry Clifford-Jones, director of marketing solutions, UK, DE and ES at LinkedIn. “Rather than something for publishers to fear, though, I hope this will be a driver for tangible, positive changes across the industry.”
The big question is whether the industry can create a common metric to compare “apples with apples”, according to Andy Brown, CEO and chairman at Kantar Media, but “this will take a little time to be achieved,” he adds.
Rob Bassett, head of UK and EU multinational advertising at eBay, meanwhile, believes more brands will recognise “that viewability is not always the most important aspect of an advertising campaign”.
He says the obsession with viewability has “created a world in which volume of views eclipses other important factors”, specifically relevance. “Next year, we will see finding more intelligent ways of engaging with consumers become as important as viewability. Specifically, targeting by mindset or mood rather than by demographic or outdated behavioural information,” he adds.
At accessories retailer Claire’s, global brand communications & PR director, Hind Palmer says: “We see the industry changing very fast. How we measure and what [is considered a good] return on investment is totally different from few years ago and is continuously evolving.” She predicts that more social media platforms will be created in the coming years, “which will open new ways of communicating and promoting, therefore new measurement tools will be needed”.