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Christena Garduno is the CEO of Media Culture, a brand response agency specializing in media planning and buying for nearly 30 years. What Is Big Data Analytics?
Big data is transforming the relationship between companies and customers. Analyzing large amounts of data for marketing purposes is not new, but recent advancements in big data technology have given advertisers powerful new ways of understanding consumers' behaviors, needs and preferences. Big data helps you optimize each customer's demands and convert them into prospective purchasers.
The Role Of Big Data Analytics In Digital Marketing Strategy
A company's ability to forecast growth accurately and devise a viable marketing plan now relies heavily on the availability and analysis of information. By using big data analytics in your planning and decision-making, your company will be well-equipped to solve today's advertising problems and anticipate tomorrow's challenges.

The term "big data analytics" refers to the process of extracting valuable insights from large amounts of data, such as hidden patterns, unexplored connections and correlations, market trends and customer preferences. With new technological advances, it's possible to analyze company data and get answers instantly-a process that would be much less efficient with more conventional business intelligence solutions.

Big data is crucial in digital marketing because it provides companies with deep insights about consumer behavior.

Google is an excellent example of big data analytics in action. Google leverages big data to deduce what consumers want based on a variety of characteristics, such as search history, geography and trending topics. Big data mining has resulted in Google's secret source of proactive or predictive marketing: determining what consumers desire and how to incorporate that knowledge into the company's ad and product experiences.

But your company doesn't have to be a tech giant to use big data analytics successfully. Here are four key ways companies of all sizes can benefit from big data:

1.Receiving Data Analysis In Real Time: In the past, traditional scalable database engine technologies could process and analyze vast data collections. However, they did so at a glacial pace, requiring days or even weeks to complete jobs that frequently produced "stale" outcomes. In contrast, big data analytics systems can conduct complex procedures at breakneck speeds, allowing for real-time analysis and insights.

2. Enabling Targeted Advertising: Big data allows your company to accumulate more data on your visitors so you can target consumers with tailored advertisements that they are more likely to view. Google and Facebook are already doing this, but third-party merchants also have access to the same capabilities.

3. Analyzing Customer Insights: Big data is invaluable in sentiment analysis, which assesses how consumers feel about your business. With sentiment analysis, you can analyze your audience's likes and dislikes and determine whether they have positive, negative or neutral feelings toward your brand. Big data provides detailed information about your company's strengths and weaknesses, which can strengthen a marketing strategy aimed at retaining and wooing potential customers.
Four Types Of Big Data Analytics
4. Creating Relevant Content: Big data helps you deliver tailored content that aligns with your customers' interests and needs. It provides the information you need to create the right content for the right consumers on the right channel at the right time.

5. Protecting Customer Privacy: Users' concerns about digital privacy are reasonable, and large-scale data mining has introduced a wide range of applications to provide a smooth user experience and protect personal data in the case of an attack. As your business collects more data, it becomes more crucial to keep customers informed about how you store their information and what actions you're taking to adhere to privacy and data protection rules.

Different types of data require different techniques. The four main categories of big data analytics are:

1. Predictive Analytics: Predictive analytics, the most frequently used type of analytics, uses statistics, modeling, data mining and machine learning to forecast the future and zero in on proposed trends. It is generally used to anticipate the results of various problem-solving scenarios.

2. Descriptive Analytics: This strategy is the most time-consuming and often yields the least value, but it helps identify trends within certain customer groups. Descriptive analytics offers insights into past trends and identifies patterns worth investigating further.
Best Practices For Big Data Analytics In Advertising
3. Diagnostic Analytics: Diagnostic analytics provides an in-depth examination of the root cause of a problem. Data scientists rely on diagnostic analytics techniques, including drill-down, data extraction and recovery and churn-cause analysis, to understand the reason behind a certain outcome. This type of strategy is advantageous when investigating factors contributing to churn indicators and use patterns among loyal customers.

4. Prescriptive Analytics: This form of analytics provides a prescription for resolving a certain issue. Prescriptive analytics utilizes both descriptive and predictive analytics and is often based on artificial intelligence and machine learning. You may use prescriptive analytics to discover the optimal solution to a problem.

Start with these best practices to get the most business value from big data analytics:

* Use analytic innovation to your advantage. Big data processing and analytics innovations revolutionize how companies extract value from their consumer data. We're witnessing a transition from techniques that provide periodic snapshots in descriptive reports and dashboards to comprehensive platforms that continuously analyze inbound data to create real-time forecasts and prescriptions.

* Use a range of analytical approaches. You'll need a flexible architecture that welcomes variety in order to create a cohesive production environment from multiple analytic models. Integrate models created by various tools that have extendable libraries, web applications and standards.

* Balance expertise against automation. Even as technology expands, human knowledge is still required in big data analytics. Work with well-trained data scientists who have analytical skills informed by deep domain knowledge to construct successful prediction and decision-making models.

* Build a big data analytical pipeline. Big data provides additional ears and eyes for your marketing and advertising campaigns, empowering you to respond to audience activity and influence consumer behavior in real time. You now have the tools and know-how to develop effective big data advertising campaigns, thanks to cloud technologies like Amazing Web Services, Microsoft Azure and Google Cloud.

The growth of big data analytics offers advertisers new opportunities for forecasting trends and solving ongoing challenges. Embrace the power of big data to analyze real-time data and customer insights and create targeted advertising and content that hit the mark with your audience.

Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?

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Council Post: How Big Data Is Helping Advertisers Solve Problems

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A company's ability to forecast growth accurately and devise a viable marketing plan now relies heavily on the availability and analysis of information.

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It's no secret that Millennials and Gen-Z are different than their previous generational counterparts. As the ability to connect and learn more about a company has improved in the last few years, their desire to see programs, services, and investments that make a difference in the environment and the world are becoming an increasingly larger part of the CX conversation.

Sure, when we talk about CX we are typically referring to the actions that directly impact the customer and improve loyalty, but recently this conversation has started to include how companies are raising awareness for issues and taking responsibility for their footprint in the world - and it's making a difference.

A recent report from Aflac said that 77% of consumers are more willing to purchase from a company with a CSR pledge - 73% of investors agreed. Business leaders know it too. According to one study, 9 in 10 business leaders said consumers would hold them accountable for the environmental impact they make through their business - an even greater ratio than shareholders, employees, or government regulators.

Apple, Dell, Amazon, Google, and other large tech companies have made pledges in the last year to reduce their carbon footprint and improve other sustainability initiatives. Other consumer product companies have made similar pledges. Even if it's on a smaller scale, the research shows that these goals make a difference in CX and brand loyalty.
The Actions
In the last few years, several large companies have recently announced climate pledges, environmental goals, social responsibility initiatives and other CSR plans with the hope of attracting customers and creating a positive reputation around their brand. Here are just a few that caught my eye.

Amazon: Last month, Amazon launched a $2 billion Climate Pledge Fund aimed at investing in companies that build products, services, and technology to "decarbonize" the earth. This fund will help Amazon and other companies meet The Climate Pledge - an initiative to be net zero carbon by 2040 - ten years earlier than the Paris Agreement taken by other countries. Other companies that are part of the pledge include Verizon and Infosys.

Apple: Just this week, Apple committed to being 100% carbon neutral in their entire business including supply chain and product life cycle by 2030.Other promises include building a recycling robot to better dismantle Apple tech to recover rare earth materials that can be reused in other devices. Dave, the new robot, will join Daisy the other line of disassembling robots that Apple already uses. Apple is a cult favorite and with these initiatives they are likely to stay that way.

Clorox: If you're like me, you've got Clorox wipes all over your house right not to clean every surface. You wouldn't usually think of Clorox as an environmentally friendly company, but they've committed to making 90% of their product packaging recyclable. That one simple act could have a hugely positive impact on keeping plastic packaging out of landfills around the world.

Dell Technologies: Similar to the Apple initiatives, Dell announced the goal of reducing their carbon emissions by 50% by 2030. They have also pledged to increase recycling programs and use more renewable energy throughout their business properties. These small changes will have a big impact on our environment and likely improve how consumers view Dell.

Patagonia: Another simple way to give back? Donate a certain percent of your profits to environmental issues. That's what Patagonia does with its 1% for the planet initiative. But Patagonia has gotten involved with the community and environmentalism in even more meaningful ways-connecting people online to meaningful local events, supporting grassroots protesters, launching petitions for various environmental initiatives, and making more than 70% of its clothing line from recycled materials. They're a company that proves you can get creative in your search for corporate sustainability, and despite the fact that many of their products have a higher price tag that similar products, their customers tend to be incredibly loyal.

Salesforce: Unlike the previous examples, Salesforce has made the environment a priority for several years. They consider the environment a key stakeholder in their business. The company has already achieved net-zero greenhouse gas emissions globally and delivers a carbon neutral cloud. Each year they release a stakeholder impact report in order to be upfront about their sustainability achievements.Salesforce is a clear leader in this field and one to emulate.

Target: With hundreds of stores across the country, Target has made a few small changes that - in addition to their carbon emissions reduction pledge - have really made a difference. In 2018, stores and supply chain locations reduced the amount of waste that was sent to landfills by 75% through recycling programs. Target is also aiming to put solar panels on the roofs of 500 stores in 2020 in order to improve their energy efficiency.

In addition to the above, I've seen a wave of tech companies getting behind sustainability as a key differentiator including Microsoft, Cisco, IBM, Intel and HPE. We are also seeing significant efforts coming from other big retailers and consumer goods companies such as Walmart and P&G. At this point, across industries, this trend is picking up steam and it is heading toward sustainability being a key focal point for all major brands.
The Reality: Consumers Care
All of these initiatives sound great. And as I mentioned, these examples are just a few of the many that I've seen in the sustainability space. Several of these companies and others have made pledges to tackle social issues that are hot button topics in our world today. Even the simple announcement from Walmart this week that they will close their stores on Thanksgiving - after years of early Black Friday mayhem - won them points in the media as well as in the eyes of the consumer.

And that's the point. When the market is saturated with products, the companies that choose to make a difference will stand out for their stakeholders. Knowing that Amazon, arguably the largest company in the world is making such a bold pledge and encouraging other companies to follow suit, puts them in a positive light in my mind. Knowing that my old computers are actually being repurposed makes a difference to me.

If your company truly values caring for the environment, that will shine through every level of your enterprise, from the way you make your products to the way you compensate your employees. Customers aren't loyal to brands. They're loyal to brands that truly get them - that care about the things they care about - that stay ahead of the trends they care about most.

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How Leading Global Companies Are Using Sustainability As A Market Differentiator

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In the last few years, the desire to see programs, services, and investments that make a difference in the environment and the world are becoming an increasingly larger part of the CX conversation--Especially for large global brands.

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CEO & Founder of leading product placement agency .
It's almost impossible to imagine a world without advertising, long before the days of social media, print, radio and television ads were reaching audiences all over the world. The first TV advertisement was broadcasted in the U.S. on July 1, 1941, before a Brooklyn Dodgers and Philadelphia Phillies game, by watchmaker Bulova, reading "America runs on Bulova time," and cleverly reached a large audience during peak watch time (clever, huh?).

Though this was not so long ago, the earliest print ads go back centuries. Today, the digital age delivers a new medium for marketers, but are consumers immune to modern persuasion efforts? They have, at the very least, grown tired of it.

The Rise And Plateau Of Traditional Paid Media

As technology has evolved, so have opportunities for marketers. When digital advertising made its debut, users were bombarded with the hover ad, more commonly known as the dreaded pop-up. Soon, pop-up blockers came to the rescue to allow users to block these ads, an option few people passed up. As technology continued to evolve, we began using cookies and shared data to hyper-target consumers.

Today, data aids in delivering highly targeted ads that align with a consumer's interests, searches and viewed content. Facebook generates 4 petabytes of data per day, an astronomical amount of information that should, in theory, result in near-perfect results from advertising campaigns. Modern tech and the use of data for targeting have certainly optimized how we deliver ad campaigns, but not without problems. Data has led to privacy concerns, among other issues, and at the end of the day, consumers are exhausted by the constant stream of products, services and gimmicks. Social media giants like Facebook have already begun backtracking and removing some key targeting options for advertisers. This trend is expected to continue.

Television is no exception. According to a report by Midia Research, 52% of consumers tune out TV ads. This figure is rising rapidly. Some consumers have ditched TV altogether, replacing cable with a la carte streaming services that allow them to watch their way. Modern streaming platforms like Netflix, Disney+ and Hulu make it easy to forgo invasive ads. Pay the price, and ad-free content is yours-a concept more subscribers are, well, subscribing to. New research from Fandom found that 57% of those surveyed indicated no interest in subscribing to any services with ads. Despite streaming platforms offering ad-supported options for less, users seem unswayed to switch.

So, How Can Brands Reach Unreachable Consumers?

As ad-based everything seemingly reaches its plateau, how will brands continue to build awareness and buy back attention from distracted consumers? Enter stage left: product placement.

Product placement, a type of in-entertainment marketing, is certainly nothing new. We've seen Coca-Cola traverse everything from movies to sitcoms since 1916. Apple used a product integration strategy to go from uncool to cool in pop culture in the early 2000s. In fact, according to a study by brandchannel.com, Apple products appeared in more than a third of No. 1 films from 2001-2010. So it's no surprise that Apple leans on product placement as a core marketing medium-it's effective and memorable. Product placement doesn't rely on distracting people to capture their attention because the attention is already there. It doesn't need a catchy headline and the expensive, highly produced content already exists, so there's no need to spend money on creating it. By partnering with various third-party productions, brands can side-step production costs and place their products into existing content that people are already paying attention to.

Product placement spending is growing at an accelerated 14.3% globally, reaching $26.2 billion in 2022, nearly doubling in size since 2016, according to PQ Media's Global Product Placement Forecast 2022-2026. In addition to the apparent brand value of product integration, brands see added multichannel value in perpetuity. Take our client, Theragun, for example, who we helped get featured in Sony's latest family-friendly blockbuster hit, Lyle Lyle Crocodile. Within three months of its release, it was shared across Instagram Reels and TikTok to reach hundreds of thousands of additional viewers.

There are many ways for a brand to develop a product placement strategy. The most efficient and often the most effective way is to build relationships with producers and creators. This takes time and patience, but it pays off-in fact, it's the exact strategy used by Apple. Many brands choose to bypass the process of building these relationships and opt to hire an external agency, which can ultimately save time and money. In addition, an agency may have more leverage in working with a production as they deal with a higher volume of brand integrations and have a stronger relationship.

Regardless of which route a brand chooses, one thing is for certain: Don't underestimate the power of reaching seemingly unreachable consumers through brand integrations in TV and film in 2023.

Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?

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Council Post: Reaching The Unreachable: How Brands Are Connecting To Consumers In A World Of Ad Avoidance

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As ad-based everything seemingly reaches its plateau, how will brands continue to build awareness and buy back attention from distracted consumers?

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Nate Llorando is the CEO of , Inc., one of the top 56 startups in California, who focuses 99% on the solution and 1% on the issue.
The new year often means setting goals and exploring opportunities, personally and professionally. For business owners, this may be the best time to explore new ways to expand market reach.

Mobile commerce, also known as m-commerce, is defined as transactions specifically taken place through mobile devices such as smartphones and tablets. There are three types: mobile shopping, mobile banking and mobile payment. M-commerce sales are expected to reach $4.5 trillion and make up close to 70% of retail e-commerce sales by 2024.

I gained my experience in m-commerce founding and working as the CEO of a company that offers turnkey solutions to help celebrities, athletes and influencers start and grow their own merchandise e-commerce stores. Now, I'd like to share some actionable steps you can take to successfully embrace the mobile mindset and reach even more customers:

1. Keep seamless shopping top of mind. M-commerce is becoming the new normal due to consumers loving convenience and expecting simplicity. Something as standard in 2020 as going to get credit cards from another room trying to check out can be seen as a huge inconvenience in 2023 and can end in shoppers abandoning their cart.

2. Integrate digital wallets and allow quick payments. The ease of use due to preloaded payment information by the customers can decrease shopping cart abandonment and increase sales. Companies should understand the importance of having fewer clicks. The fewer the clicks to complete the purchase, the more sales they will generate.

3. Prioritize location and interest-based ads to reach the right audience. Driving traffic through mobile marketing is not an easy feat. Thoroughly identify your target customers and budget generously for social media ad placements.

4. Learn and apply tailored content such as product recommendations based on recent purchases and views. Capture audiences with relevant video content and engaging social media presence. In my experience, a majority of the buying audience caters to the brand and social media creators' back stories. Interesting stories and meaningful reasons relating to the merchandise being sold most likely do well in m-commerce sales. An enticing or engaging connection between the brand and/or creator, audiences and the products lead to successful marketing campaigns and ability to scale up.

5. Place customer experience at the top of your priority list. This means ensuring your e-commerce website or app has fast loading time and minimal steps from adding to the cart to payment processing. Implement chatbots to respond to customer inquiries quickly and have simple surveys in place to record experience.

6. Remember that new opportunities come with novel threats. Businesses that use m-commerce have access to consumer data that includes demographic and financial information. It is crucial to thoroughly research or consult with experts to understand your responsibilities to protect your customers' data and comply with all applicable privacy regulations.

There are over 4.76 billion social media users globally. The hunger for connectivity and convenience is not subsiding anytime soon. It is essential to stay competitive by embracing m-commerce.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

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Council Post: M-Commerce: A New Sector With Tremendous Growth

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The hunger for connectivity and convenience is not subsiding anytime soon.

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The concept of wellness has been around for a long time. Remember Jane Fonda workout tapes, neon legwarmers, and the "cookie diet"? These days, consumers view wellness through a much broader and more sophisticated lens, encompassing not just fitness and nutrition but also overall physical and mental health and appearance. They also have more choice in the types of products and services they buy and the way they buy them.

Our latest research shows that consumers care deeply about wellness-and that their interest is growing. In a survey of roughly 7,500 consumers in six countries, 79 percent of the respondents said they believe that wellness is important, and 42 percent consider it a top priority. In fact, consumers in every market we researched reported a substantial increase in the prioritization of wellness over the past two to three years.

We estimate the global wellness market at more than $1.5 trillion, with annual growth of 5 to 10 percent. A rise in both consumer interest and purchasing power presents tremendous opportunities for companies, particularly as spending on personal wellness rebounds after stagnating or even declining during the COVID-19 crisis. At the same time, the wellness market is getting increasingly crowded, creating the need to be strategic about where and how companies compete.

In this article, we'll reveal what our survey data tell us about changing consumer attitudes and behavior toward wellness. We'll couple these insights with the best strategies for companies-both established players and new entrants-to meet consumer needs and preferences in this strong and growing market.

How consumers define wellness

Since views of wellness are constantly evolving, companies must understand the market from a consumer perspective. Our Future of Wellness survey revealed the categories that interest consumers most (Exhibit 1).

Better health, probably the most traditional category associated with wellness, extends beyond medicine and supplements to include consumer medical devices as well as personal-health trackers. Consumers are increasingly taking their health into their own hands: we are seeing a rise in targeted, data-driven care, apps to help consumers seamlessly book their medical appointments or obtain the prescriptions they need, and devices that help them monitor their own health and symptoms between doctor's appointments.

Better fitness has been challenging over the past year. Many consumers struggle to maintain pre-COVID-19 fitness levels when they can't go to their gyms as frequently or participate in sports in the same ways as before. For instance, a UK study found that a majority of consumers worked out less after the pandemic lockdowns began, and many did not return to their previous exercise levels even as those lockdowns were eased or lifted. However, fitness goals persist. Creative offerings (such as Peloton, Mirror, and Tonal) that meet the needs of consumers in their homes have seen unprecedented growth in the past year.

Better nutrition has always been a part of wellness, but now consumers want food not only to taste good but also to help them accomplish their wellness goals. More than a third of consumers around the world report that they "probably" or "definitely" plan to increase spending on nutrition apps, diet programs, juice cleanses, and subscription food services over the next year.

Better appearance primarily involves wellness-oriented apparel ("athleisure") and beauty products (such as skincare and collagen supplements). A number of service-oriented offerings in this area have sprung up recently for nonsurgical aesthetic procedures, such as microneedling, lasers, and oxygen jets.

Better sleep is a relatively new category popular with consumers-and maybe that's no wonder, given the stresses the pandemic has unleashed. Traditional sleep medications such as melatonin now have company: app-enabled sleep trackers and other sleep-enhancing products (for example, blackout curtains and gravity blankets). Half of consumers around the world reported a desire for more products and services to meet the need for higher-quality slumber.

Better mindfulness has gained mainstream consumer acceptance relatively recently, in the form of meditation-focused apps, such as Headspace and Calm, and relaxation- and meditation-oriented offerings, such as Travaasa and Soothe. During the COVID-19 crisis, reports of mental distress have increased globally; more than half of consumers in each of our surveyed countries said they want to prioritize mindfulness more. Half of the consumers said they wished that more mindfulness products and services were available, indicating an opportunity for companies.

Each of these six categories is important for consumers across our survey countries. Better health consistently appears as the most important wellness dimension (and the one with the highest level of spending) across every market we researched.

At the same time, relative responses vary in other categories. For example, consumers in Japan prioritize appearance while those in Germany emphasize fitness; respondents in Brazil and the United States are most interested in mindfulness, those in China and the United Kingdom in nutrition (Exhibit 2).

In overall spending, consumers expect to increase their purchases of both wellness products and services over the next year. We expect a greater shift toward services, especially those (such as personal training, nutritionists, and counseling) that emphasize physical and mental health (Exhibit 3).

Finally, companies should understand that wellness consumers aren't a monolithic bloc with lockstep preferences. Our survey showed that they tend to fall into distinct groups that behave very differently. Wellness enthusiasts are high-income consumers who actively follow brands on social media, track new-product launches, and are excited about innovations. The socially responsible prefer (and are willing to pay more for) brands that are environmentally sustainable and with clean/natural ingredients. Price-conscious consumers believe wellness products are important but meticulously compare features and benefits before purchasing to get the best deal.

Loyalists prefer to stick with their current routines and the brands they know, while passive participants are only marginally involved with the wellness category and don't actively follow brands or new products. We found that wellness enthusiasts and socially responsible consumers are the biggest spenders. The loyalists and passive participants spend far less than people in the other groups.

While consumers in each market are motivated by a unique set of brand-loyalty drivers, all have some motivation that's connected to price and lifestyle compatibility.

Consumer trends and how companies can respond to them

The research unearthed that consumers' reported improvements in wellness levels have fallen behind their hopes and expectations in every country except China and Brazil, suggesting that the market may be underserved. Most consumers around the world report that their personal wellness levels are stagnating or even declining (Exhibit 4).

The research also revealed six consumer wellness-related trends that have been gaining momentum over time. Overall, these trends have implications for industry players across the sector, from traditional consumer healthcare to fitness offerings and nutrition to beauty, apparel, and retail. A number of strategies, applied correctly, can help companies meet the consumer's needs and capitalize on the rapid growth of this sector.

Trend 1: Natural/clean products get their day in the sun

Consumers are keen for natural/clean products in an array of areas, such as skincare, cosmetics, multivitamins, subscription food services, and sleep enhancers. The magnitude of the shift is striking. Consumers overwhelmingly indicate a preference for natural/clean products, particularly in Brazil and China.

In the case of dietary supplements, consumers around the world said, by 41 percent to 21 percent, that if they had to choose between more natural supplements and more effective ones, they would choose the more natural option. Same with skincare: by 36 percent to 21 percent, consumers said they would choose the more natural option over the more effective one.

Potential strategy for companies. Reevaluate your development road map to consider whether you have more opportunities to introduce natural or wellness-oriented products or to acquire natural/clean product lines. This strategy could look different by segment: in apparel, products designed with organic/natural materials and sustainability in mind; in consumer health, natural/clean beauty products; in retail, merchandising with an eye to products that resonate as authentically natural.

Zarbee's Naturals focused on providing a solution for parents seeking natural remedies for their children; Sephora's private-label brand has launched clean makeup products and has significantly expanded its clean makeup presence in its stores.

Trend 2: More personalization, please

While many respondents told us privacy is still a concern, many (particularly in Brazil and China) are more comfortable trading privacy for personalization. Furthermore, a substantial majority of consumers around the world say they prioritize personalization now more than they did two or three years ago. In the United States, the United Kingdom, and Germany, more than 88 percent of consumers report prioritizing personalization as much as or more than they did two or three years ago.

Potential strategy for companies. Develop personalized marketing capabilities to target the precise consumer segments that may be most interested in your products, with messaging and storytelling tailored to those consumers. Consider introducing personalized or semipersonalized offerings to your product road map.

A wellness start-up, for example, provides personalized vitamin and supplement subscriptions based on information that consumers submit through a quiz. A fitness-tech company created a fitness tracker that collects physiological data to provide personalized sleep and fitness information to users. Membership includes the tracker, access to daily analytics and coaching, and the ability to join online communities.

Trend 3: The future is digital

The shift to digital channels is happening at the speed of "a decade in days." Our research suggests that the change will be sticky: a majority of consumer categories will continue to project more growth in e-commerce than in other channels over the next several years.

We do see traditional channels holding for certain product categories: fortified foods, multivitamins, and skincare still largely sell through brick-and-mortar stores. Other breakout categories (such as fitness wearables) are almost entirely online native. Consumers in China report the highest share of wellness spending online, followed by those in Japan and trailed by those in Europe, the United States, and Brazil.

Potential strategy for companies. Create seamless omnichannel and digital offerings to ensure that you meet your consumers where they are. Beyond building channel partner relationships, consider developing a supply chain, package sizes, marketing, or the like specifically for e-commerce. For service offerings such as gyms, use a holistic online strategy to build app-enabled features that keep consumers engaged throughout the ecosystem.

For example, one vitamin brand sold only online and known for being sustainable originally offered vitamins for women but has expanded to include products for men and children. Its ecosystem includes the company's app, which is integrated into Apple Health, as well as an active social-media presence.

Trend 4: Under the influencers

Influencers are a key part of the wellness market, and one that traditional companies have had to learn how to leverage for connecting with consumers. In the United States, Europe, and Japan, 10 to 15 percent of consumers say they follow social-media influencers and that they have already made a purchase based on an influencer's recommendation. A much higher percentage say they definitely or probably will consider doing so in the future.

In China and Brazil, the percentage of consumers who say that an influencer has driven their purchasing decisions is much higher, at 45 to 55 percent. This trend applies consistently across both large-scale social-media influencers (defined as 100,000 followers or more) and small-scale influencers (less than 100,000 followers). In unwelcome news for celebrities, their influence appears to be waning among most consumers, particularly in the United Kingdom.

Potential strategy for companies. Use influencers to win with your consumers across social channels, partnering with agencies to identify people who will be a natural fit with your brand and resonate authentically with your target consumer base. For instance, one European fitness-apparel company heavily utilizes influencer marketing on Instagram and YouTube to reach its target audience of young fitness enthusiasts.

In 2015, McKinsey data showed that social media influenced 26 percent of purchases across all product categories, a percentage that has increased since then. Our survey shows that wellness is no exception: in every market we researched, more than 60 percent of consumers report that they will "definitely" or "probably" consider a brand or product posted by a favorite influencer.

Trend 5: The rise and rise of services

Services has been a growing part of the wellness market: experiences are increasingly available as offerings. We see this trend reflected across countries-consumers are shifting toward services that address physical- and mental-health needs (for instance, personal trainers, nutritionists, and counseling services). We see services as an enhancement to-not a replacement for-the overall wellness space. Products remain a consistent and critical part of the segment, at roughly 70 percent of self-reported consumer wellness spending globally.

Potential strategy for companies. Consumer healthcare companies could consider diagnostics or coaching offerings that support a direct connection to the consumer. One company partnered with a telemedicine provider to introduce an app that gives parents immediate video access to healthcare providers for their children. Fitness companies could consider offerings such as connected devices and virtual communities-products and services beyond gyms and exercise equipment.

Peloton expanded its service offering to include subscriptions for its fitness app, in-person studios, and live virtual classes, allowing it to reach consumers who may not own Peloton workout equipment. The company's sales soared in 2020 as the popularity of home workouts increased during the COVID-19 pandemic.

Trend 6: Category lines continue to blur

With the above trends in mind, companies are considering how to play across the health and wellness categories and channels. It's critical to identify the areas where consumers are open to giving these companies permission to extend their brands.

A majority of consumers report that they don't want a single solution or brand to help them with all facets of wellness, suggesting that targeted extensions are a more effective approach for companies.

Potential strategy for companies. Assess M&A opportunities to gain entry into more categories within the wellness ecosystem. With this approach, it is important to ensure that any acquisition has a clear strategic rationale and makes sense in view of the acquirer's existing equity, skill set, and capabilities. If those pieces are in place, we find that a well-defined and executed programmatic M&A strategy can help build resiliency and yield excess returns to shareholders over time.

Lululemon's acquisition of Mirror, for example, gave it a digital offering to supplement its core fitness-apparel business. It has also experimented with nutrition, mindfulness, and fitness offerings in stores through studios and community-based classes. These moves seem to align with the company's brand messaging. Meanwhile, other mindfulness and fitness apps have expanded into "sleepcasts" or moved into personalized health coaching and disease management to promote better health outcomes.

Winning in the wellness market

The global wellness market is healthy and growing. In every category we surveyed, more consumers said they were going to spend more on wellness than those who said they would spend less. The majority of consumers planning to increase their spending was especially large in some categories, including memory/brain enhancers, anti-aging products, beauty supplements, noninvasive cosmetic procedures, nutrition (sports nutrition, juice cleanses, nutrition coaches, fortified foods), and meditation/mindfulness offerings.

This market offers room for growth to all sorts of industry players: traditional "nutraceuticals" companies with experience in regulatory and licensing requirements; global entrants with extensive value chains, marketing capabilities, and deep channel relationships; regional consolidators with local knowledge and partnerships; and emerging brands with digital know-how, integrated consumer data, and an agile operating model.

At the same time, the wellness sector is getting more competitive, so companies should think critically about strategies to engage consumers and whether an ecosystem model might make sense. Companies will want to be purposeful about where to play and how to win with an effective delivery model-whether that model is end-to-end ownership, strategic partnerships, outsourcing and co-manufacturing, or marketplaces.

Wellness is here to stay as consumers across nations plan to increase their spending on personal health, appearance, fitness, and more. If the pandemic has taught us one thing, it's that physical and mental health will remain a priority for millions of people across the globe for a long time to come.

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Feeling good: The future of the $1.5 trillion wellness market

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Our new survey shows the future of the $1.5 trillion wellness market is bright as consumer interest and purchasing power rise across countries.

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Council Post: How To Get Involved In The Thriving Experience Economy

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The more your experience can create Instagram-able moments, not only will you likely attract more customers, but you'll also delight your current audience, too.

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Ben Crudo is CEO of Diff Agency. Ben is a retailer turned technologist and an e-commerce expert helping retailers win today and tomorrow.
Poshmark's recent billion-dollar sale to South Korean search giant Naver was a win for both companies: It brought international expansion and live shopping opportunities to Poshmark, and it helped Naver establish a stronger foothold in the U.S. But more than that, the acquisition signals a sea change for sustainable shopping.

Consumer awareness is spreading. Reports say 82% of shoppers want brands to embrace sustainable and people-first practices, and Gen-Z is leading the charge. One survey found three-quarters of Zoomer shoppers see sustainability as more important than brand names.

Brick-and-mortar retailers have only just begun to figure out how to make shopping greener with initiatives like plastic bag bans, for example. But in the New Year, brands should finally explore ways to tap into the utility of tech to push sustainable shopping forward-and transform e-commerce in the process.

Sophisticated UX Drives Adoption

Poshmark is far from the only resale shopping marketplace, but its success has a lesson: Leaning into technology can help brands thrive where their competitors have lagged behind.

If you think about it, the resaler isn't doing anything particularly new. Craigslist, eBay and even Facebook Marketplace all offer essentially the same service. Though, trying to find what you're looking for on those platforms can be a frustrating experience.

While second-hand shopping ticks all of the reduce, reuse, recycle boxes, consumers still want convenience. This means they might not have the patience to tolerate categorization issues that make old-school resale sites feel like random bazaars.

This is where Poshmark is getting it right. The site manages to mirror the polished e-commerce experience shoppers have come to expect. It's easier to list items, information is presented in visually appealing ways and complex search tools make discovery easier.

Refashion is just one of the areas beginning to embrace this approach. Investing in technologies to improve user experience offers an opportunity to spark the widespread adoption of sustainable retail options.

The E-Commerce Advantage To Leveraging Shoppers' Good Intentions

There's a disconnect between shoppers' perceptions and the realities of shopping online, largely because the e-commerce behind the scenes is out of sight. Retailers can help encourage more sustainable habits by lifting the curtain and giving consumers the information they need to make sure their shopping aligns with their principles.

One study showed 20% of items bought online are returned. Each year in the U.S., five billion pounds of returned merchandise ends up in landfills. Packaging, failed deliveries and expedited orders-all of these variables can add up and widen an e-purchase's carbon footprint.

Shoppers are motivated to make more sustainable choices, but they need help understanding what their decisions mean. Retailers can help educate their customers by being transparent about what check-out choices mean for the environment. Providing information about packaging options, what happens to returns and options to combine orders can help shoppers buy responsibly.

Even rebranding to appeal to shoppers' altruistic aspirations can be of benefit. Imagine the uptake if "Regular Shipping" was labeled "Low Carbon Emission Shipping" instead.

The Sustainable Retail Ripple Effect

In truth, prioritizing sustainability takes effort. Businesses can be a powerful driver of change, but it will take leadership from a few giants building use cases to encourage other companies to adjust their practices, something that is already playing out: In a mic drop move, Patagonia's Yvon Chouinard announced his company's profits would go directly toward climate initiatives.

Certainly, not everyone can afford to take a similar route. But by taking a bold step, Patagonia has put pressure on other businesses to think more creatively about their ESG. In fact, investors are already demanding it. A study by the Northern Trust Institute found 53% of high-net-worth investors say ESG influences their investment decisions.

We're now seeing many companies take action. Apple recently called on its global supply chain to accelerate its path to carbon neutrality. Clothing brands like Pact are taking responsibility for the life of their products-growing and harvesting their own organic cotton, ensuring the tailoring is as responsible as possible and offering customers carbon-offset shipping.

Companies that stand for something achieve a halo effect on all their products, giving them a coveted status of their own.

In 2023, we're faced with an exciting opportunity to raise the bar for more sustainable e-commerce. Environmentally friendly doesn't have to be limited to the products e-tail shoppers buy. With refashion's rebranding as a hot commodity deserving of the trappings of a glossy website, it's clear sustainable shopping is primed for a level-up.

For too long, we've accepted the belief that sustainable and economically profitable were mutually exclusive concepts. More and more companies are demonstrating that logic is a lie. Indeed, even for-profit companies can contribute to a virtuous cycle.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

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Council Post: What Recent Trends Say About Sustainable Shopping In 2023

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In the New Year, brands should finally explore ways to tap into the utility of tech to push sustainable shopping forward.

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Digitalization has spawned a golden age of consumer sovereignty. Customers are better informed and have more choice than ever. eCommerce has also facilitated innovative business models and a role for aggregators that help companies come online and extend their reach. While third parties are helping business find new avenues of growth online, this has sometimes come at a cost to brand owners who can struggle to build a dialogue directly with consumers. With this digital intermediation, one wonders: what happens to brand loyalty in the digital age?
Brands Mean Business
A brand is one of a company's most valuable assets. It's what makes a company instantly recognizable and often the reason customers return again and again. Customers perceive a brand as a hallmark of trust, which creates a sense of loyalty that can last a lifetime.

Digitalization empowers brand owners to reach new markets, either directly or through aggregators, often at low or no incremental cost. Consumers are spoiled with choices in ways to shop and can choose to buy directly from the business or through an intermediary marketplace like GrubHub or even Amazon. Aggregation models have appeared in almost every sector, from food to financial services. While intermediaries can generate new revenue streams for brand owners, they can also make it difficult to build loyalty. The food delivery market in particular illustrates these complex market dynamics.
Food Delivery - Boosting Efficiency or Eating into Margin?
Early adopters of food delivery apps were demographically young and tech-savvy, but the pandemic changed all that and ordering at restaurants from your phone has become mainstream. Over 50% of U.S. consumers have placed a food order online while 38%[1] have used an online order aggregating service, such as Uber Eats, Grubhub or DoorDash.

In this post-pandemic world, the restaurant and aggregator vie to "own" the customer. And there is growing evidence that customers are platform-loyal. Why? Aggregators offer customers a choice of menus and a low-friction one-stop-shop for dining at home. And many offer their own loyalty programs, such as the Grubhub Pay Card, which allows employees working for companies that have a Grubhub corporate account to order on and off the Grubhub Marketplace.

Smaller restaurants must consider the costs and benefits of third-party delivery partners. Aggregators charge hefty fees - often as high as 30% - that can hurt restaurants' bottom lines. But an app or aggregator may also offer marketing tools and broader online reach. Presence on a food delivery app may be a way to reach customers who wouldn't normally dine in. Research[2] indicates that 3 out of 4 restaurants say that DoorDash has allowed them to reach new customers. But larger restaurants are fighting back with their own apps and delivery services.
Big Brands Hit Back
Many large restaurant chains are turning to loyalty programs to boost customer acquisition and encourage existing consumers to up their spending. Last year, McDonald's new U.S. loyalty program enrolled 30 million members within six months and has generated a 10% increase in digital customer frequency. But there are other reasons to invest in a loyalty program.
Customer Loyalty is Priceless
Loyalty programs enable restaurant chains (and other businesses) to become data driven. By tracking information such as what items customers purchase, which locations and at a what time they visit, restaurants can offer targeted promotions and rewards to increase retention, visits, and order size.

Restaurants (or brand owners) can incentivize sign-ups by offering lower prices or exclusive offers to members. And by encouraging people to order directly, suppliers can avoid paying extra fees and commission, which can fund extra benefits for customers. But in some cases, customers are actually willing to pay to join loyalty schemes.
Should Customers Pay for Their Loyalty?
Amazon is the world's largest aggregator through its online marketplace for third parties and has a brand value estimated at $345 billion. For an annual fee Amazon initially promised its loyal customers free shipping through its Amazon Prime subscription. But the benefits of membership expand continually as does the Amazon service portfolio. Charging members an annual or monthly fee allows Amazon to offer its best benefits to customers who will get the most value out of its loyalty program. The Amazon Prime premium loyalty program is arguably the most successful of all time - over 60% of all U.S. householders are subscribers.[3]

The success of Amazon shows how digital technologies can simultaneously disrupt market dynamics and create new business models. For many consumers, Amazon is a trusted brand and the ultimate department store where they can browse and buy almost anything. For many small suppliers, the Amazon Marketplace is a new route to markets that would otherwise be beyond reach. But a loss of direct customer connectivity may decrease the opportunity to build a dialogue, cross sell or upsell.
Who Wins?
Online retailers and aggregators have created a dynamic market structure that's continually redefined by innovation, collaboration and competition. Many brand owners use multiple channels, including social media to increase brand awareness and promise customers a superior experience, more choice or simply a better deal if they buy direct.

Brand owners in all sectors are free to choose whether they partner with aggregators, go it alone or do both. These choices are not irreversible and strategies can be modified in the light of experience. In this new order, there are many unknowns, but the consumer is certainly the winner.

[1] https://www.restaurantdive.com/news/diners-are-delivery-platform-loyal-study-says/561641/

[2] https://doordashimpact.com/restaurants

[3] https://www.claruscommerce.com

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Brand Loyalty In The Digital Age: The Battle For Customer Attention

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While third parties are helping business find new avenues of growth online, this has sometimes come at a cost to brand owners who can struggle to build a dialogue directly with consumers. With this digital intermediation, one wonders: what happens to brand loyalty in the digital age?

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Director of Sales and Strategic Partnerships at ReadyCloud, the Shipping, Returns, Growth Marketing and CRM Suite built for e-commerce.
Mobile commerce (m-commerce) as a subset of e-commerce refers specifically to purchases made over devices such as smartphones or tablets as opposed to a desktop or laptop. As a rapidly growing m-commerce trend, voice shopping is an avenue online retailers should be considering for their business operations. As a disclosure, my company ReadyCloud is a provider of an automated e-commerce product returns solutions.

This phenomenon, which uses voice recognition and artificial intelligence to facilitate purchases, has been further popularized by the use of smart speakers for the home. But voice shopping is not limited to special devices. Millions of consumers are also using their smartphones' voice assistants to make purchases, and their number is on the rise.

M-Commerce and voice shopping are both seeing massive growth.

Paying attention to growth trends is key to predicting the patterns that will impact e-commerce for years to come, so e-tailers should be aware that m-commerce and voice shopping are both seeing massive growth. It's only logical that the two will intertwine, especially due to the ways in which mobile devices are so well-suited to voice shopping.

These three m-commerce statistics tell the first part of the story.

1. By 2025, retail m-commerce sales in the U.S. are expected to reach $710 billion, up from $360 billion in 2021.

2. In 2021, 73% of all e-commerce in sales were attributed to m-commerce, up from almost 59% in 2017.

At the same time, the rapid adoption of voice shopping reflects a similar growth spurt.

4. Voice shopping sales are on track to reach nearly $20 billion by the end of 2022, a huge jump from $2 billion in 2018.

5. 71% of consumers say they prefer conducting voice searches to manually entering their queries.

6. About 60% of U.S. e-shoppers reported making either daily or weekly purchases using their smart home voice assistants.

Voice shopping is fast, convenient and accessible-just like m-commerce.

Another reason voice shopping and m-commerce are such a perfect pair can be seen in the perks they both offer in speed, convenience and accessibility. Convenience, in particular, has played a significant role in the rise of e-commerce as a whole, and recent years have seen developments that make online shopping even easier for consumers.

Voice shopping is one such example, giving consumers a fast and simple option for buying items they want or need. Speaking is faster than typing, so purchases can be made in a matter of seconds. This also benefits online retailers, whose customers are more likely to purchase if the experience is streamlined and straightforward.

And again, voice shopping is accessible through a number of devices beyond smartphones. Many tech brands offer smart speakers with voice command functionality, and approximately 95 million units are in use in the U.S. These devices come at varying price points, often for less than a smartphone.

Digital assistants are standard offerings in smartphones.

For many consumers, their voice shopping device is their smartphone. Voice assistants like Siri come standard with iPhones, while Android users can set up Google Assistant with just a few taps. These stock offerings point to a future where the majority of voice shopping is likely done on mobile devices.

Unlike smart speakers, smartphones are close by at any given moment, so customers can make purchases while on the go or from any room in the house-not just the room with the Google Home in it. The ubiquity of smartphones is a major driver of m-commerce in general, but it's these voice assistants that bridge the gap and make voice shopping a no-brainer for consumers.

Even Amazon's Alexa is available as a smartphone app, so users can speak directly to the e-commerce behemoth's trusty shopping assistant. Other household names like Starbucks, Walmart and Nike have partnerships with smartphone brands to enable seamless voice shopping. As more businesses adopt the technology, there will be a wider array of online stores to shop with the help of voice assistants.

Voice shopping improves the consumer experience.

Per PwC research, 93% of users are satisfied with voice assistants, showcasing the potential of voice-powered mobile commerce. This, again, can be attributed to both the speed and convenience they offer.

Voice shopping via mobile devices also provides consumers with financial data security through its use of tools like mobile wallets and digital payment platforms. These encrypted payment processors and facilitators can give shoppers peace of mind and the confidence to buy from an online store that may have been previously unfamiliar to them.

Purchasing isn't the only function of voice assistants in m-commerce, though. Research has shown 51% of m-commerce shoppers are using their voice assistants to research products. Voice assistants help consumers discover new items and compare offerings from different brands, leading to greater satisfaction when they finally do buy.

There are still millions of consumers who are not yet utilizing voice shopping or m-commerce, but user adoption will likely be followed by high retention rates as consumers discover the power of this pair.

Modern consumers expect personalized shopping experiences.

Personalization is a key aspect of the customer experience, but it deserves its own spotlight because of its impact on modern e-commerce. Nearly three-quarters (71%) of consumers expect personalized shopping journeys, and 76% say they are frustrated when they are served a one-size-fits-all experience.

Voice shopping facilitates a personalized purchasing experience for e-commerce consumers, which aligns perfectly with their expectations. Today's shoppers are used to seeing their names addressed in email subject lines, recommended products on their Amazon homepage and discount coupons for their birthdays. Online retailers use a wealth of data to create curated experiences, and voice shopping assistants can be a rich source of information about each user's purchasing behaviors.

In fact, with voice assistants being able to store purchase history, voice shopping represents one of the fastest ways to replenish previously bought items. This data also helps voice assistants recommend other products that might interest consumers, furthering the personalized shopping experience.

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Council Post: 6 Reasons Voice Shopping Is The Future Of M-Commerce

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As a rapidly growing m-commerce trend, voice shopping is an avenue online retailers should be considering for their business operations.

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Chris is the CMO of , a hybrid research agency & tech firm that empowers brands with agile insight. He also hosts the MRX Lab podcast.
A Google search of "brand purpose" quickly brings one conclusion into sharp focus: Not everyone can agree on exactly what it is. Some marketers believe it's no more than a fanciful characterization of a company's mission statement. Others think purpose exists at the center of a golden circle of existential business questions. And some will declare that purpose sits atop a business's collective hierarchy of needs, mirroring the position of self-actualization in Maslow's famous pyramid.

One especially notable interpretation, and perhaps one of the easiest to understand, comes from Disney, which draws a clear distinction between mission and purpose. In its explanation, a company mission exemplifies what we do, while purpose defines why we do it. The mission is to operate a business, lay bricks and park cars, while the purpose is to share in a dream, build cathedrals and create happiness. It's inspirational stuff, truly. But is it enough? And, more importantly, is it authentic?

Modern consumers are more adept than ever at spotting corporate greenwashing - inauthentic claims to environmentally friendly operations. It won't be long before consumers are scrutinizing brand purpose, too.

As Marketing Week columnist Mark Ritson puts it, "A true brand purpose doesn't boost profit, it sacrifices it." But it's hardly a secret that for many brands, "purpose" is simply an intermediary focus that drives the ultimate goal of shareholder value.

This is where discussions on purpose become tricky. The common thread between definitions of brand purpose is that it represents a reason for being. Ideally, that reason for being improves the lives of customers in some way. In exchange, customers spend money and increase shareholder value.

But this representation focuses only on the relationship between two stakeholders. The effect of a firm's operations on employees, local communities, societies and the environment - all of which can be considered stakeholders - is ignored. The oldest tactic to address these relationships is corporate social responsibility (CSR).
A Generalized Model of Purpose
More recently, environmental, social and corporate governance (ESG) frameworks, along with enlightened shareholder value (ESV) philosophies, have cycled into fashion. But they still remain disconnected from brand purpose. That is to say, brand purpose and non-shareholder stakeholder value don't need to align for a firm to succeed. Purpose holds an equal status to operational management. They are both tools through which value can be generated.

But change is coming. The disconnect between the consumer expectation of brand purpose as a driver of net positive behaviors, and the common reality of it as simply a reason to be, is more apparent than ever. As a researcher and marketing strategist, I regularly work with brand owners who initially approach brand purpose as a tactic to add into a tactical marketing portfolio, which is indicative of the much larger corporate trend - one which slots brand purpose into existing frameworks, rather than engaging with the new ones developing around it.

Customers, regulators and employees are all demanding more from corporate leaders - greener operations, more positive societal impact and improved welfare. These desires often clash with the existing model of purpose and lead to inherent judgments about which businesses are purposeful and which are not, based on their industry, product and operations. In short, consumers can see through purpose. Often, the view they hold of brand purpose does not align with how marketing leaders want to portray it.

So, what's the solution? A simple but radical idea: replacing the existing model of brand purpose that is driven by an individual company's mission centered around business activity (shareholder value) with a generally defined goal of equitably improving the well-being of all stakeholders. When I introduce this to my clients, it's like a light-bulb moment - a whole new way of understanding the place of business in the world.

Such an approach changes the relationship between a brand and a market. No longer is a market the place where financial value is captured, but it is the place where a business has an opportunity to improve well-being and add distributed value. It's no understatement to say this is a lofty ambition and one that can feel quite abstract. It is, after all, a fundamental move away from the product-, sales- and market-orientations that occupy most strategic positions. But, as many world leaders have pointed out, business as usual is no longer an option following the Covid-19 pandemic. So, how can agencies and marketers work together to create purposeful organizations? Let's break it down into a few key steps:

* Review stakeholder well-being outcomes. Start by identifying all parties that purpose should affect and what improved, long-term well-being means to them. For most firms, this will include customers, employees, suppliers, local communities and shareholders.

* Develop a purpose statement that addresses all stakeholders. To do this, it's important to move away from the notion of the traditional, singular sentence that encapsulates a simple idea. Firms that exist within a complex web of stakeholders won't be able to communicate what better, long-term outcomes look like for all these disparate groups and the trade-offs made between them in a snappy tagline. And that's okay. Purpose should be truthful and reflective of real aspirations. That is what is most important.

* Redefine measures of success. In a market-oriented business, success is easy to measure. Have activities increased shareholder value? Has the value of the business as an entity grown? However, in a purpose-driven organization, this measure fails to address the well-being of many stakeholders. Therefore, it's important to redefine what success looks like and take a holistic view across the corporate influence on all invested parties. Only in doing this is it possible to truly become purpose-driven.

* Grow purpose from the inside out. Finally, and contrary to most marketing communications, the influence of a purpose statement should grow from within. Why? Because it affects more than positioning and perception; it affects the very tangible ways in which a firm operates. It affects how you choose suppliers, what investments you make, product development decisions, and more. For purpose to be believed in by increasingly wider groups, it needs to be acted upon by those with the power to do so first.

Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?

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Council Post: The Future Of The Purpose-Driven Brand

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The disconnect between the consumer expectation of brand purpose as a driver of net positive behaviors, and the common reality of it as simply a reason to be, is more apparent than ever.

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Cofounder of FortySeven Software Professionals, with over a decade of experience advising F500 companies and growth-stage startups.
Working in the IT industry for many years has made me consider how technologies are helping to improve the processes of businesses. Some say that technology implementation isn't worth it, but I believe that we can incorporate the potential of technology into any existing project. That's why it's so important to see more use cases of the implementation of trending technologies like artificial intelligence (AI), machine learning (ML), augmented reality (AR) and virtual reality (VR).

During the pandemic, most of us couldn't afford to travel or visit tourist sites, exhibitions or other recreational activities. But the ones who were not afraid to implement new technologies gained the advantage and created new business models for their existing services and products. The most popular use of VR in tourism was dedicated to improving experiences at tourist sites and attractions. Many museums created opportunities to visit their exhibitions via their website and 3-D technologies. This experience helped us to blur the boundaries between the digital and physical worlds. And at that period in time, it was a necessity for many people. As time is passing, we see more and more use cases of AR and VR in many different industries.

There is still a difference between AR and VR that we should keep in mind. Augmented reality overlays digital information onto the physical world to create a mixed-reality experience. Virtual reality, however, places users in an entirely digital environment that completely shuts out the real world. Both technologies are providing unique benefits. These technologies are already revolutionizing how businesses engage with customers, and we can only imagine how they will change the e-commerce industry and others in the near future.

AR and VR are changing how customers interact with businesses and products. This creates a more engaging and immersive experience. As mentioned, AR allows customers to overlay computer-generated images onto real-world views. This allows them to visualize how products would look within their environment. This feature is very useful for customers purchasing furniture, accessories and fashion products.

VR provides customers with a fully virtual experience in which they can see and feel products and services. This technology is ideal for companies in the tourism and hospitality industries as it allows customers to experience hotels, resorts or destinations virtually. Let's take a brief look at how AR and VR can enhance customer experiences as well as boost business outcomes.

Which industries are using AR and VR?

Automotive: BMW's i Visualizer app makes use of AR to let customers view and customize their cars in real time. Volkswagen uses VR to train its employees about new technologies.

Retail: Ikea's Place app uses AR for customers to place virtual furniture into their homes to see how it looks before making a purchase.

Beauty: Sephora's Virtual Artist and L'Oreal use AR, allowing customers to try on makeup virtually.

Healthcare:AR technology is used to aid surgeons in operating rooms by providing real-time guidance and information.

Tourism:The British Museum uses VR to create virtual tours of its exhibits. Travel companies use AR to offer interactive guides to landmarks and cities to their customers.

E-Commerce: Amazon has used AR technology to improve virtual shopping experiences since 2017. Assistants such as AR View and Room Decorator allow customers to see how a product might look in their own homes. There are also apps to see how sneakers look on your feet or whether clothes look nice on you.

Education: AR technology can be used as an interactive tool to enhance traditional textbooks. This includes animations, 3-D models and videos.

These technologies have the potential to improve customer experience and increase employee productivity. They can also transform how we communicate and collaborate with one another. Virtual reality can be used in remote offices to create virtual meeting rooms that recreate the feeling of being in an actual office. In fact, we use it quite often when having online meetings with our customers and development teams. When you can do everything online, as an employer, you need to find the right strategy for implementing these technologies to improve communication between teams.

AR and VR are not only improving the customer experience but also helping businesses be more visible in crowded markets, thereby increasing customer loyalty and engagement, as well as the profits of companies.

When a new technology is ready for widespread adoption across all sectors of society, people often talk about how everything will change-from how we do business to how we communicate with one another. When speaking about AR and VR, I definitely agree, thanks to my experience working at an IT consulting company. I see the use cases and impacts of these technologies almost every day.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

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Council Post: The Impact Of AR And VR On Customer Experience

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AR and VR are not only improving the customer experience but also helping businesses be more visible in crowded markets, thereby increasing customer loyalty and engagement, as well as the profits of companies.

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In today's data-driven business landscape, it's imperative for company leaders to be well-versed in the nuances of data privacy and data protection. Those who aren't experts in tech may use the two terms interchangeably, but each has a distinct meaning and implications.

On a broad level, data privacy relates to individuals' rights to control their personal information, while data protection comprises the measures taken to secure that information from unauthorized access or misuse. Below, 13 members of Forbes Technology Council further explore and explain data privacy and data protection, their differences and their impact on businesses.

Members pictured from left to right.
Photos courtesy of the individual members.

1. True Data Protection Requires Securing Every Point Of Entry

While data privacy refers to access and data protection relates to the tactics used to keep data secure, both are critical to a successful cyber defense strategy. Today, bad actors are using any and every method to infiltrate your systems, including phishing, telephony denial of service (TDoS) and even using your voice network to gain key information for attacks. To prevent costly breaches, companies must secure every single point of entry. - Roger Northrop, Mutare, Inc.

2. Data Protection Covers The 'Technical' Side Of Compliance

Data privacy is the conceptual activity of defining who has access to what data and for what purpose, while data protection refers to the processes, activities, tooling and policies to ensure that data remains technically protected and that the data privacy rules are enforced. In other words, data protection is the "technical" part of the "legal and compliance" elements defined by data privacy. - Clément Stenac, Dataiku

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3. Data Privacy Encompasses Consumers' And Partners' Rights To Manage Their Data

Data privacy encompasses ways that businesses ensure that customers' and partners' data remains private. It also includes those parties' rights to erase data, request a full copy of such data or have that data modified. Data protection, on the other hand, has a larger scope that not only includes data privacy, but also how we ensure data is safe from cyber threats and data leaks. - Jamilia Grier, ByteBao

4. Data Protection Requires Infrastructure Managed By Qualified Engineers

In short, data protection is about the infrastructure required to store data safely. Data protection requires qualified engineers to organize it. These are practical means to prevent any type of data leakage. Data privacy is more about compliance with regulations and laws. It's the guarantee that data is visible only to specified parties. Usually, data privacy begins with stable data protection. - Oleg Lola, MobiDev

5. Modern Data Privacy Is Moving Toward Limiting Data Collection And Storage

We came from a paper world, where data was expensive, and moved to a digital world, where data became a business enabler. The more you knew about your client, the better you could generate cross-business. Slowly, we have moved to a world where accumulating tons of client data is no longer appropriate, but it is hard for many organizations to accept the need to limit data collection and dispose of unused data sets for privacy reasons. - Cyril Korenbeusser, BNP Paribas

6. Data Privacy And Data Protection Are Both Key To Building Brand Trust

While data privacy relates to how brands collect and use consumer data, data protection from security threats is a separate concern. While the two are distinct in terms of how they are approached by brands, protecting both elements is key to building and maintaining trust with consumers, which will result in a strong and secure brand reputation. - Dale Renner, Redpoint Global Inc.

7. Data Privacy Is Something Every Employee Is Responsible For

Companies expect to audit their data protection technologies, but I recommend far more frequent audits of data privacy. Data privacy, the day-to-day proper handling of personally identifiable information, is something everyone at your organization is responsible for, and policy compliance can be challenging. For larger teams who handle PII, an external auditor can help avoid a damaging and costly breach. - Jeff Fettes, Laivly Inc.

8. Data Privacy Is About Access; Data Protection Is About Security

Data privacy is about defining who gets to see the data. It is a company's duty to ensure that only people who need the data have access to it and that it is used in approved ways. Data protection is about making sure the data is kept safe from theft and misuse by those who should not have access to it. Both are important to gain and keep your customers', vendors' and employees' trust. - Laureen Knudsen, Broadcom

9. Data Privacy And Data Protection Work Together To Protect Companies From Risk

It is important to understand that data privacy and data protection are different sides of the same coin. Fundamentally, data privacy dictates how a company handles the data it has in its possession. Data protection focuses on the measures a company takes to protect that data. Both are important and necessary to keep a business running smoothly and to protect companies from risks. - Neil Lampton, TIAG

10. De-Identifying Data Helps Address Both Privacy And Protection

Company leaders should know that you can get both simultaneously. You can adhere to privacy constraints with data by de-identifying the information. By de-identifying the information, you have also protected the data-pretty neat. Data protection usually remains within a company's "four walls" and hinges upon how your employees act to ensure protection. Privacy is a commitment to customers that must be honored. - James Beecham, ALTR

11. Data Privacy Applies To Highly Sensitive Data; Data Protection To All Data

Data protection is the foundation built to keep data safe, no matter its level of sensitivity. A combination of techniques should be applied for maximum protection from ransomware, data leaks, accidental damage and so on. Data privacy applies when dealing with highly sensitive data; ways to address it include ensuring limited data collection, establishing highly restrictive access controls and meeting compliance requirements. - Suresh Sethuramaswamy, Microsoft

12. There Are Multiple Global Regulations Regarding The Collection And Sharing Of Data

Due to the distinct legal ramifications and requirements, both data privacy and data protection are crucial for firms to consider, and failing to do so can have negative effects in terms of both legal and brand reputation issues. There are multiple regulations to consider: Europe's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) impose specific requirements on businesses regarding the collection and sharing of personal data, whereas the Payment Card Industry Data Security Standard (PCI DSS) outlines the requirements for safeguarding sensitive financial data. - Neelima Mangal, Nutcache

13. To Ensure Both Data Privacy And Protection, You Must Monitor Your Entire Data Pipeline

Do you monitor your entire data pipeline? Data privacy is the front end, where you control what data is public and what data is collected. Data protection is the back end, where you secure all the data stored on your servers. If you don't know where to start when it comes to data collection, storage and security, begin with end-to-end encryption and a full analysis of your data pipeline. - Nicholas Domnisch, EES Health

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Council Post: 13 Tech Experts Explain Essential Facts About Data Privacy And Data Protection

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In today's data-driven business landscape, it's imperative for company leaders to be well-versed in the nuances of data privacy and data protection.

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One of the first genius marketing moves came in the 1930s when radio soap operas were sponsored by Procter & Gamble.

Each episode was introduced with a short message from Duz laundry soap. They knew that soap operas had a captive audience with housewives doing the family's laundry. Soon more household brands came on board, and when the shows migrated to television, the brands came with. Before the days of big data, advertisers were already delivering highly targeted campaigns.

Recommendation engines are a core component of major brands, as they drive increased engagement, purchases and customer satisfaction across platforms like Spotify, Netflix, Amazon, etc. Future-thinking brands will have to employ technology that is both more targeted and more conversational, speaking to the customer's most immediate and unique needs.

To that point, conversational AI is becoming a big deal in advertising.
Talk Human To Me
At the moment, voice is boxed into smart speakers, appliances, and mobile devices, and users employ a wake word to activate the voice capabilities. From there, it's a purely transactional exchange: "Hey, Siri, what's the weather like today?" "Hey, Alexa, order a case of sparkling water."

The companies that made voice a market player stuck to their core competencies, relegating voice to user-activated search and purchase functions. Voice is how people communicate and engage with each other. The only reason our computers have keyboards is that voice technology has not yet evolved to the point where you can talk to it.

Star Trek popularized this notion of voice as the user's primary (and sole) method of interacting with the computer. If we begin to approach voice in this way, you can visualize a future where companies can passively advertise to customers through their cell phones in areas where they don't have a computer. Voice can be a force multiplier for making advertising more organic and natural.

Voice allows you to advertise without being intrusive. The key element here is the conversational piece, being able to speak directly to customers like a trusted friend or advisor.

If a customer is walking through a mall at a time of day when they regularly purchase a coffee, imagine being able to ask a customer if they'd like to have their regular coffee order placed at the closest Starbucks for easy pick-up. Without having to open their app, go through the menu and place the order, the customer can simply say "sure" or "no thanks."

Human hearing holds the key to breakthroughs in voice technology. In daily conversation, we naturally extract an enormous amount of information from other people's voices-their identity, their spatial position and even their mood.

Imagine a voice interface that effortlessly recognizes and preserves all of that information. By gaining full data access to their user base, brands would understand their customers better than ever before and gain the ability to target customer needs in real time. Watching a football game? Get served an ad for pizza delivery or get a coupon from Wingstop.

Instead of implementing voice simply as a tool for searching and purchasing, brands should be considering how they can deploy voice to advertise to their customers passively. The human element-being able to listen to customers where they are and enable barge-in solutions-is essential to this future.

This is the final mile for voice, and we're getting closer.
Speak Through Versus Click Through
According to PwC, 71% of consumers prefer voice search over typing.

Just as we saw the normalization of click-through ads that you can skip on YouTube, voice will allow you to skip or speak through things like podcasts or other content. This pulls the customer relationship out of the digital realm of screens and clicks and brings it closer to a conversation. Being able to say "no thanks" or "not interested" feels less intrusive than having to click to skip something. This is where we are headed, but we are not quite there yet.

Smart speakers have been found to have lower NPS compared to other smart devices, potentially due to poor user experiences for consumers who expect a truly conversational experience but end up getting something less. The tech barriers are familiar, and we haven't surmounted them yet. Crowd noise, barge in, distinguishing voice from TV and being able to spot specific user voice are still the barriers to widespread voice adoption.

Some of the most common use cases for voice assistants today are at home or in the car, often when there are multiple competing inputs. As voice interfaces become more ubiquitous, they need to not only meet the minimum criteria for small tasks but also be consistent and accurate.

This is an essential feature, especially as brands move to own a voice strategy that is more human and conversational.
A Voice Strategy Focused On The Future
When considering their long-play voice strategy, brands need to lead with the human element.

This means understanding every time a consumer interacts with your brand using voice, knowing who is talking, even in the noisiest environments and differentiating one voice from another in a crowded group. Unlocking these features will empower brands to drive more value for consumers and improve engagement, retention and a longer-lasting relationship.

This puts the customer relationship much closer to a conversation and pulls it out of the digital realm of screens and clicks.

The history of advertising is replete with sharply conceived campaigns that have launched incredible brands into the stratosphere. I think of Nike's "Just Do It" campaign in 1998 or Apple's "1984" commercial that introduced the world to one of the most iconic brands.

Just as Nike and Apple did before, brands that capitalize on and prioritize voice in their marketing strategy are now going to establish themselves as the iconic brands of the future tomorrow.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

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Council Post: The Advent Of Voice: Why CMOs Should Look To Voice AI As The Future Of Advertising

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Just as Nike and Apple did before, brands that capitalize on and prioritize voice in their marketing strategy are now going to establish themselves as the iconic brands of the future tomorrow.

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Council Post: Influencer Marketing In 2023: Benefits And Best Practices

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Influencer marketing has become a crucial element in the modern marketing mix.

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Globally, streaming video saw viewing grow 10% in the last quarter, but that growth occurred largely outside the two most built-out regions, North America and Europe, according to the latest State of Streaming quarterly report from service provider Conviva. The good news: viewers are getting a higher-quality experience.

"While more-saturated markets like North America and Europe are starting to stabilize, there are still plenty of growth opportunities throughout the world," the report says. "And any growth after such massive expansion over the past two years is good news for both streaming providers and streaming viewers."

The report also tracks the growing interest among brands in fast-growing social-media site TikTok, which topped 1 billion users last year. For sports franchises across all leagues measured in the report, TikTok is becoming a valuable teammate. Both teams in this year's NFL Super Bowl - the Los Angeles Rams and Cincinnati Bengals - saw their TikTok followings add more than 100,000 followers in 24 hours.

But the big screen, by living room standards at least, continues to dominate. Conviva's report says 77% of all streamed minutes viewed globally were larger screens, on either Connected or Smart TVs, where viewership jumped more than a third.

"As the world rights itself after a pandemic that threw so many media consumption patterns upside down, the streaming and social worlds will begin to settle into a new normal, one where streaming is a part of everyday life in a way it wasn't before and social media increasingly moves toward short- and long-form videos made by both users and savvy brands," Conviva's report concludes.

Viewing time grew most in Asia (other than China), up 172% compared to the same quarter the previous year. Africa and Oceania both saw viewing rise 50% or more, and South America was up 34%. Even the topped-out markets of Europe (up 9%) and North America (up 5%) still saw some growth in viewing time.

Video quality metrics by global region, as measured by Conviva for Q1 2022.
(Graphic courtesy of Conviva)

Viewing experiences generally improved in most ways except start failures, which "were up across the board." Wait times for video starts also stretched out, up 30% globally, and 56% in Asia, though the delays are measured in a handful of seconds.

Other typical streaming problems, such as low bitrates or excessive buffering actually improved. Asia saw a near-90% improvement in picture quality, for instance.

"As big screens, especially smart TVs, continue to grow in share, it follows that there might be longer wait times, but much better quality overall," the report said.

Streaming advertising is also picking up, as previously suggested by the Interactive Advertising Bureau's wrap-up of 2021 digital ad revenues, which said the market last year generated $39.5 billion, up a whopping 51%.

According to Conviva, ad impressions were up 18%, driven by big sports events in the quarter such as the Super Bowl, March Madness and the Winter Olympics.

"All and all, it was a much better quarter for streaming advertising, both in terms of impressions and quality," according to the report.

Big screens' domination of the streaming video experience is "pretty steady," the report said. One subtle shift noted in passing: viewing on connected TVs using an external dongle or Internet-capable device declined 2%, while viewing on Smart TVs with built-in capabilities rose a whopping 37%.

Even mobile-obsessed Asia saw a big jump in big screen viewing, up from 27% of time spent to 43% year over year. The big losers in view share were desktop PCs and gaming consoled, which were down 15%.

Among platforms (connected both internally and externally to the screen), Roku continued to receive the most viewing time, 31%, roughly double Amazon's Fire devices at 16%. Roku's domination was mostly due to its sturdy dominance of the United States and North America market. In other parts of the world, its market share doesn't rise above 8% (in Oceania).

Smart TVs with Alphabet-owned Android TV interfaces grew the most on the year, up almost 3 percentage points to 7.24% of viewing time, a big jump on what's still a relatively small share of a very crowded market for interfaces.

Apple TV saw its share drop a fraction of a percentage point. Samsung, LG, and Vizio OEM Smart TVs all saw their shares rise.

But quality on at least some big screens remains a challenge, according to Conviva's findings. Apple TV had a huge improvement in start failures, down "a massive 52%," while Android TV had the biggest rise in failures, up 26% to 1.6% of all its shows.

It's not just Conviva finding quality problems in the streaming experience either.

Accenture issued a report a couple of months ago, "Streaming's Next Act," that laid out several areas where streaming services need to step up their user experiences: interfaces that are hard to navigate, crummy recommendation engines that have no idea what you watched somewhere else, even bundles that don't work like bundles should in terms of single sign-on and billing, among other issues.

For all the negative Wall Street reaction around Netflix's mediocre quarter and forward guidance, the streaming industry is still generating plenty of business. Most media companies with major streaming divisions not named Netflix reported millions more adds in the quarter.

The trade organization Digital Entertainment Group estimated in its quarterly report Monday subscription streaming was up 17% year over year, "as direct- to-consumer services including AMC Plus, Disney Plus, HBO Max, Paramount Plus, Peacock and others continued to add subscribers at a healthy rate."

The report is based on sensor technology in streaming programs on devices with more than 500 million viewers worldwide, watching more than 200 billion streams, the company said. The year-over-year data is then normalized on Conviva's customer base.

The report no longer includes streaming data from the vast China market "due to global geopolitical conditions," it said.

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Online Video Increases Worldwide Even As U.S. And Europe Streaming Slows

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Viewing of streaming video grew another 10% in the 1st quarter of the year, but is flat in 'saturated' U.S. and European markets. But viewing increasingly is happening on big, smart TVs at the expense of other platforms. Quality improved too, says Conviva's latest report.

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Meanwhile, thanks to smartphones, competitive esports, and rich, Hollywood-level experiences that cast the player as the star, gaming has gone global and expanded across generations. Gaming may have started as an individual experience, but it is now highly social. And game companies have evolved to monetize many aspects of gaming, from subscriptions, in-game purchasing, and extensible games that operate more like services, to embracing the social experience of gaming with multiplayer, branded content, and virtual goods.

Although SVOD broke apart the cable bundle, since then, streamers and studios have mostly focused their innovation strategies on content delivery and licensing rights. Social media and gaming companies have been quickly evolving their business models and products, leveraging technology, and capitalizing on behaviors. This doesn't mean all digital media must become social and interactive. But SVOD services should be aware that more audiences are finding entertainment, community, and even meaning, elsewhere.

This year's study expanded beyond the United States: We also included the United Kingdom, Germany, Brazil, and Japan-areas where media and entertainment companies are competing for digitally mature audiences. Overall, the trends we're seeing in the United States are echoed in these countries, with the same generational contours. Amidst a global pandemic that has constrained in-person activity, people and companies are being accelerated into digital life, setting the stage for the current excitement about the metaverse-where virtual spaces become common destinations for work and play. But these shifts were already in place before COVID-19. With millions recording themselves doing the latest viral dance moves, influencers driving sudden demand spikes for products, top musicians delivering other-worldly concert experiences to global gaming audiences, and virtual goods becoming valuable and scarce with non-fungible tokens (NFTs) and cryptocurrencies, digital life may be gaining on so-called real life.

Social media broke open the TV screen and made fame much more accessible. Gaming enables us to act in the movie. Media and entertainment executives-and especially those in SVOD-should be thinking hard about how people socialize around entertainment and how entertainment itself is becoming more personalized, interactive, and immersive. The business models that have brought them this far, and even the technologies they have relied on, may not carry them through the next wave of change.

The SVOD conundrum

The shift to streaming video has been extremely successful at disrupting television, though potentially far less profitable. Like TV and movies before them, SVOD companies have relied on the innate emotional and intellectual value of their stories to engage audiences and monetize their attention. But will people always value this kind of passive, lean-back-and-watch experience? That's the big question. As more major media providers launch their own streaming video services, competition among them has heated up, just as their value proposition to audiences may be losing some of its luster.

For top SVOD services, growth in North American subscribers has slowed. As they pursue global markets, and as those markets mature, they may be facing the same challenge. For consumers, getting their entertainment through the fragmented SVOD landscape requires more effort and, increasingly, nearly as much money. Over the past two years, US consumers have become increasingly frustrated when they lose content to other services, have to manage multiple subscriptions, and receive poor recommendations.

These conditions lead to churn: when people cancel, or both add and cancel, a paid SVOD service. In the United States, the average churn rate has remained consistent since 2020 at about 37% across all paid SVOD services (figure 1). It should be noted, however, that churn for a given service might be significantly lower than the overall average. In the United Kingdom, Germany, Brazil, and Japan, the overall churn rate is closer to 30%. (This number varies for each country, largely driven by subscription penetration and number of SVOD services.)

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2022 Digital media trends, 16th edition: Toward the metaverse

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This year's Digital media trends survey continues our exploration of media behaviors across streaming video and music services, social media, and gaming. And for the first time, we're expanding our research beyond the US into the UK, Germany, Japan, and Brazil.

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In Brief

The Change

The widespread sharing and collection of personal data online has given marketers unprecedented insight into individual consumers, enabling them to serve up solutions finely targeted to each person's needs. But there is also evidence that this practice can lead to a consumer backlash.

The Digital Dilemma

Marketers need to understand when personalized ads will be met with acceptance or annoyance. Social scientists already know a lot about what triggers privacy concerns, and these norms can inform marketers' actions online.

The Insight

Consumers dislike two techniques: using information obtained on a third-party website rather than the site on which the ad appears; and using inferred information about the consumer (for instance, about a pregnancy). Understanding their objections can help companies create ads that honor consumers' privacy expectations.

The internet has dramatically expanded the modern marketer's tool kit, in large part because of one simple but transformative development: digital data. With users regularly sharing personal data online and web cookies tracking every click, marketers have been able to gain unprecedented insight into consumers and serve up solutions tailored to their individual needs. The results have been impressive. Research has shown that digital targeting meaningfully improves the response to advertisements and that ad performance declines when marketers' access to consumer data is reduced. But there is also evidence that using online "surveillance" to sell products can lead to a consumer backlash. The research supporting ad personalization has tended to study consumers who were largely unaware that their data dictated which ads they saw. Today such naïveté is increasingly rare. Public outcry over company data breaches and the use of targeting to spread fake news and inflame political partisanship have, understandably, put consumers on alert. And personal experiences with highly specific ads (such as one for pet food that begins, "As a dog owner, you might like...") or ads that follow users across websites have made it clear that marketers often know exactly who is on the receiving end of their digital messages. Now regulators in some countries are starting to mandate that firms disclose how they gather and use consumers' personal information.

This throws a whole new dynamic into the mix: How will targeted ads fare in the face of increased consumer awareness? On one hand, awareness could increase ad performance if it makes customers feel that the products they see are personally relevant. Supporters of cookies and other surveillance tools say that more-relevant advertising leads to a more valuable, enjoyable internet experience. On the other hand, awareness could decrease ad performance if it activates concerns about privacy and provokes consumer opposition.

The latter outcome seems more likely if marketers continue with a business-as-usual approach. One study revealed that when a law that required websites to inform visitors of covert tracking started to be enforced in the Netherlands, in 2013, advertisement click-through rates dropped. Controlled experiments have found similar results.

Some firms have done better than others in anticipating how customers will react to personalization. Amazon features shopping ads throughout its site, making product recommendations based explicitly-and often conspicuously-on individual users' search data, without seeming to draw any consumer ire whatsoever. However, in a now-infamous example, when Target followed a similar practice by creating promotions that were based on individual shoppers' consumption data, the response was not so benign. The retailer sent coupons for maternity-related products to women it inferred were pregnant. They included a teenager whose father was incensed-and then abashed to discover that his daughter was, in fact, expecting. When the New York Times reported the incident, many consumers were outraged, and the chain had a PR problem on its hands. Similarly, Urban Outfitters walked back the gender-based personalization of its home page after customers complained. "We saw customer frustration at being targeted outweigh any benefit," Dmitri Siegel, the marketing executive in charge of the initiative, concluded in an interview with the Times.

For the consumer who prefers relevant ads over irrelevant ones (an ad-free experience is not realistic in today's ad-supported web landscape), it's important that marketers get the balance right. Digital marketers need to understand when the use of consumer data to personalize ads will be met with acceptance or annoyance so that they can honor consumers' expectations about how their information should be used. The good news is that social scientists already know a lot about what triggers privacy concerns off-line, and new research that we and others have performed demonstrates that these norms can inform marketers' actions in the digital sphere. Through a series of experiments, we have begun to understand what causes consumers to object to targeting and how marketers can use personalization while respecting people's privacy.

The Privacy Paradox

People don't always behave logically when it comes to privacy. For example, we often share intimate details with total strangers while we keep secrets from loved ones. Nevertheless, social scientists have identified several factors that predict whether people will be comfortable with the use of their personal information. One of these factors is fairly straightforward-the nature of the information. Common sense holds that the more intimate it is (data on sex, health, and finances is especially sensitive), the less comfortable people are with others knowing it.

A second, more nuanced factor involves the manner in which consumers' personal information changes hands-what social scientists call "information flows." One such norm is, to put it colloquially, "Don't talk about people behind their backs." While people may be comfortable disclosing personal information directly (what scientists call "first-person sharing"), they may become uneasy when that information is passed along without their knowledge (what we term "third-party sharing"). If you learned that a friend had revealed something personal about you to another, mutual friend, you'd probably be upset-even though you might have no problem with both parties knowing the information. It can also be taboo to openly infer information about someone, even if those inferences are accurate. For example, a woman may inform a close colleague of her early-term pregnancy, but she'd likely find it unacceptable if that coworker told her he thought she was pregnant before she'd disclosed anything.

In our recent studies we learned that those norms about information also apply in the digital space. In our first study, we collected a list of common ways in which Google and Facebook use consumers' personal data to generate ads. We then asked consumers to rate how acceptable they found each method to be, and-employing a statistical technique called factor analysis-identified clusters of practices that consumers tended to dislike, which mirrored practices that made people uncomfortable off-line:

obtaining information outside the website on which an ad appears, which is akin to talking behind someone's back

deducing information about someone from analytics, which is akin to inferring information.

Next, we wanted to see what effect adherence to-or violation of-privacy norms would have on ad performance. So we divided participants in our study into three groups. In a simulation of acceptable, first-person sharing, one group first browsed a website; on that same site we later displayed an ad accompanied by the disclosure "You are seeing this ad based on the products you clicked on while browsing our website." In a simulation of unacceptable, third-party sharing, another group browsed a website and then visited a second site, where we displayed an ad accompanied by the disclosure "You are seeing this ad based on the products you clicked on while browsing a third-party website." The final group served as a control; like the other groups, these participants engaged in a browsing task and were then shown a targeted ad, but without a message. In all groups, we measured interest in purchasing the advertised product as well as the likelihood that participants would visit the advertiser's website. Additionally, to understand how these three ad scenarios affected consumers' attitudes, we asked all participants which they valued more: the personalization of ads or the privacy of their data.

We found that when unacceptable, third-party sharing had occurred, concerns about privacy outweighed people's appreciation for ad personalization. Those attitudes in turn predicted interest in purchasing, which was approximately 24% lower in the group exposed to unacceptable sharing than in both the first-party sharing and the control groups-a clear indication of backlash.

We then conducted a similar test using declared (acceptable) versus inferred (unacceptable) information. After completing an online shopper profile, one group saw an ad that was accompanied by the disclosure "You are seeing this ad based on information that you provided about yourself." After filling out the same form, a second group of subjects saw an ad but were told, "You are seeing this ad based on information that we inferred about you." A final control group saw the ad without any disclosure. The group that viewed the ad generated through inferences showed 17% less interest in purchasing than the other groups did-even though the ads were exactly the same across groups. In sum, these experiments offer evidence that when consumers realize that their personal information is flowing in ways they dislike, purchase interest declines.

Mitigating Backlash

But it's not all bad news. Three factors can increase the upside of targeted ads for both marketers and consumers. Taking them into account will help marketers provide personalized ads that inform consumers of products they want and need but in a way that feels acceptable.

Trust.

A common practice that advertisers currently use to preempt targeting backlash is to offer voluntary ad transparency. Many now display an AdChoices icon, a blue symbol indicating that the accompanying ad has been tailored to the individual recipient's characteristics. In some cases, consumers can click on the icon to find out why the ad has been displayed to them. In 2014, Facebook introduced a similar "Why am I seeing this ad?" feature on its site.

Such disclosure can be beneficial when targeting is performed in an acceptable manner-especially if the platform delivering the ad is otherwise trusted by its customers. In one experiment conducted with Facebook users, we first asked participants how much they trusted the social media company. Next, we directed them to find the first advertisement in their Facebook news feed and read its accompanying transparency message. We asked them to indicate whether the message conveyed that the ad had been generated using first- or third-party information and using declared or inferred information. Then we inquired about how interested they were in purchasing the advertised product and engaging with the advertiser in general (by, say, visiting its website or liking its Facebook page). Overall, ads from unacceptable flows performed worse than those from acceptable flows. However, trust enhanced consumers' receptiveness: People who trusted Facebook and saw ads based on acceptable flows expressed the highest interest in purchasing the product and engaging with the advertiser.

We also found that when trust was high, disclosing acceptable flows actually boosted click-through rates. In a set of field experiments, we partnered with Maritz Motivation Solutions, which runs redemption websites for loyalty programs such as airline frequent-flier programs, a context in which consumer trust tends to be high. These sites use the same technology as the large e-commerce sites, except that the currency is points instead of money. In one experiment, when we revealed first-party sharing by telling shoppers that an advertisement was based on their activity on the site, click-through rates increased by 11%, the time spent viewing the advertised product rose by 34%, and revenue from the product grew by 38%.

Control.

Central to many privacy concerns is the loss of control. Consumers may not object to information being used in a particular context, but they worry about their inability to dictate who else might get access to it and how it will be used down the line.

In a novel experiment, MIT's Catherine Tucker partnered with a nonprofit that advertised on Facebook. The nonprofit targeted 1.2 million Facebook users with calls to action such as "Help girls in East Africa change their lives through education." For half those users, the ad was also personalized, openly invoking an attribute that a user had revealed on Facebook. For example, an ad might read, "As a fan of Beyoncé, you know that strong women matter," if a user had liked the popular singer on Facebook. Midway through this experiment, Facebook instated new privacy features that gave users more control over their personal information (without changing the attributes that advertisers could use to target people). The social media platform allowed people to keep their connections private and to manage their privacy settings more easily. Before this policy change, the personalized ads did not perform particularly well; if anything, users were slightly less likely to click on them than on generic ads. After the change, however, the personalized ads were almost twice as effective as the generic ones. In other words, when consumers are given greater say over what happens with the information they've consciously shared, transparently incorporating it can actually increase ad performance.

In another experiment we showed participants a targeted advertisement, systematically varying the disclosures appearing alongside it. With one group of participants, the ad was accompanied by a message saying that (unacceptable) third-party information had been used to generate it. A second group of participants saw the same transparency message-plus a prompt reminding them that they could set their ad preferences. A third group simply saw the ad. Purchase interest was lower in the first group than in the last group. However, in the second group-consumers who were reminded that they could dictate their ad preferences-purchase interest was just as high as in the group that had seen no message. In other words, reminding consumers that they can meaningfully control their privacy settings buffered any backlash to unacceptable data collection. However, there was also a fourth group in this experiment-whose reactions unfortunately highlight the potential for consumers to be misled. This group's members also received the ad transparency message and a prompt about managing their information. This time, however, participants were merely reminded that they could choose their profile picture. Purchase interest in this group, too, was just as high as in the group that had seen no message.

Control over personal data is becoming increasingly important in today's online world, where protracted, multilayered data collection is now common. For instance, data brokers aggregate all kinds of personal information-from platforms like Facebook as well as internet shopping sites, store loyalty programs, and even credit card companies. Therefore, as targeted advertising becomes more sophisticated and specific-and consumers' awareness of the ways in which their privacy may be compromised grows-offering people meaningful control over their information will likely improve ad performance.

Justification.

Revealing why personal data has been used to generate ads can help consumers realize the upside of targeted ads. In one experiment by Tiffany Barnett White of the University of Illinois and her colleagues, a personalized ad by a movie rental company that invoked users' physical locations backfired, but its performance improved when the copy explained why the physical location was important: The consumer was eligible for a service not available in all places. A commitment to provide justification can also foster appropriate use of data. If you have difficulty coming up with a good reason for the way you use consumers' data, it should give you pause.

Guidelines for Digital Marketers

When it comes to ad personalization, there's a fine line between creepy and delightful, so it could be tempting to conclude that the safest approach is to keep people in the dark-to obscure the fact that personal information is being used to target consumers, especially when advertising products of a more sensitive nature. Indeed, that's what Target reportedly tried after its pregnancy promotion scandal: It started arbitrarily inserting coupons for random items in its mailings to expecting mothers, so the baby-products ads would look incidental and less conspicuous. It might also be tempting to manipulate consumers by giving them meaningless opportunities to feel in control that create a false sense of empowerment.

While such tactics may work in the short term, we believe they are ultimately misguided. Even setting aside the potential ethical issues, deceit erodes trust if it is discovered. And as our experiments show, trust enhances the positive effects of using personal information in ways consumers deem acceptable. Research into other areas also suggests that trust has spillover benefits. For example, with Bhavya Mohan and Ryan Buell, one of us (Leslie) has done research on pricing-another area where concealment and manipulation can boost profits in the short term-showing that when firms are transparent about the variable costs involved in producing a good, their consumers' trust grows and sales rise. Finally, it's doubtful that concealment will remain a viable tactic; consumers are becoming savvier, and regulators are pressuring companies to reveal their data-collection practices. An off-line analogue may be useful here as a guide: You might gain temporary advantage by deceiving a friend, but the damage if the deception is discovered is deep and lasting. Relationships are stronger if they are honest.

So what suggestions would we make to digital marketers looking to maximize the potential of ad targeting? We offer five:

1. Stay away from sensitive information.

In particular, try to avoid using anything about health conditions, sexual orientation, and so on. Google, for example, doesn't allow advertisers to target on the basis of sexual interests or "personal hardships." Similarly, Facebook recently updated its policies, preventing advertisers from basing their targeting on personal attributes such as race, sexual orientation, and medical conditions. This move presents challenges to companies that sell sensitive goods-which may want to avoid targeting altogether. Rather, such firms should consider finding their customers in ways that don't involve using personal data-by advertising on websites those customers are likely to visit, for example.

2. Commit to at least a minimum amount of transparency.

There is a wide spectrum between concealment and full disclosure, with many acceptable points between the two. As a general rule of thumb, we suggest that marketers at least be willing to provide information about data-use practices upon request. Such disclosures should be clear and easily accessible. This is one of the purposes of the AdChoices icon; interested consumers can click on it to learn why they are seeing an ad (or to opt out of targeted advertising), but the icon isn't disruptive to consumers who are less privacy-sensitive. Simply having it on a website can be beneficial and in and of itself can foster trust. However, if a transparency initiative fails to deliver on its promise-by, for example, offering confusing or opaque explanations for why an ad is being shown-its value to the consumer will erode. A genuine commitment to disclosure may also serve as a kind of organizational prophylactic against abuse, by ensuring that employees understand that data practices must always be customer-centric and ethical. As the saying goes, sunlight is the best disinfectant.

3. Use data judiciously.

Data collection opens up all sorts of innovative and clever insights into customers, but again we counsel restraint. Consumers react poorly when personal information is used to generate a recommendation or an advertisement that feels intrusive or inappropriate. Conversely, they will give advertisers more leeway if they are delighted by recommendations. For example, Stitch Fix, the subscription-service clothing retailer, knows a lot about its customers, including information people typically prefer to keep private, such as their weight and bra size. But this information is extremely useful to the site's service of curating a package of clothing pieces that suit the customer, delivered to her doorstep. Because Stitch Fix's use of personal information is appropriate and helpful, it doesn't feel invasive.

Consumers may even be willing to forgive unacceptable data collection if they benefit from it in a compelling way. For example, the dating app Tinder tells a user how many Facebook friends he has in common with a given prospect, making it clear that third-party sharing is occurring, which would usually result in a backlash. However, in this case the sharing is clearly valued by users, so they seem to accept the practice.

4. Justify your data collection.

We also suggest that marketers explain why they are collecting personal information-and how it will generate more appropriate and useful ads. This is especially true when it might not be obvious to consumers why a given piece of information is necessary. LinkedIn justifies its data usage policy as follows: "We use the data that we have about you to provide, support, personalize and make our services (including ads) more relevant and useful to you and others." Such disclosures can also act as a mission statement of sorts for employees-again helping to prevent abuse.

5. Try traditional data collection first.

Marketers should not forget that they can (and should) still gather information from customers the old-fashioned way-without digital surveillance. While Stitch Fix draws a great deal of inferences about consumers' preferences from their online behavior, it also makes extensive use of surveys in which consumers can reveal at will their tastes and physical attributes. Other firms that rely heavily on making accurate recommendations to customers-such as Amazon and Netflix-also give consumers an opportunity to directly state their preferences. Supplementing less-transparent ways of using consumers' information with more-open ones can decrease feelings of invasiveness. More important, it can also provide a richer picture of the customer, facilitating even better recommendations. Of course, gathering data directly from consumers is costly and may sometimes be impractical (for one, response rates to consumer surveys are notoriously low). But if they have to resort to third-party information, marketers can give consumers meaningful control over how it will be used. For example, both Google and Facebook let users have considerable say about the ways they can be targeted.

CONCLUSION

There's still a lot we don't know about how people respond to online data collection and ad targeting, and norms around privacy may change over time as young digital natives become consumers and technology further penetrates our lives. For the time being, applying norms from the off-line world can help companies predict what practices consumers will accept. In the end, all ad targeting should be customer-centric-in the service of creating value for consumers.

A version of this article appeared in the January-February 2018 issue (pp.62-69) of Harvard Business Review.

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Targeting Ads Without Creeping Out Your Customers

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Data gathered on the web has vastly enhanced the capabilities of marketers. With people regularly sharing personal details online and internet cookies tracking every click, companies can now gain unprecedented insight into individual consumers and target them with tailored ads. But when this practice feels invasive to people, it can prompt a strong backlash.

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How AI Is Transforming The Future Of Digital Marketing

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In business today, the term AI is used to describe software that is capable of learning and getting better at doing its job without input from humans. Current predictions state AI will end up creating more jobs than it destroys.

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Artificial Intelligence And The Future Of Marketing

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Artificial intelligence is currently transforming marketing. Here, we look at the most exciting opportunities when it comes to using AI in marketing and explore where they are already being tapped.

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Founder and CEO of Gravy Analytics, a leading provider of enterprise location intelligence.
With the explosion of big data, where a staggering amount of information is being generated from numerous sources at an unprecedented rate, businesses need accurate and reliable data more than ever before.

High-quality data is essential since the decisions made based on insights derived from data can significantly impact the success of a business. This is why it is critical for any organization looking to succeed in today's business landscape to prioritize the quality of data used to make important business decisions.

How Low-Quality Data Can Lead To Skewed Results

When the quality of your data is subpar, the business decisions you make based on it may result in skewed outcomes. For example, let's say a retailer is seeking ways to personalize a new marketing campaign. The retailer conducts an analysis of its audience to get a better understanding of their interests and preferences. Based on low-quality location data, the retailer observes that a lot of its customers are visiting a sports arena and assumes that its customers are primarily sports fans.

However, this analysis fails to take into account the possibility that the customers were visiting a sports arena for a completely different event, such as a stand-up comedy show. If the data had been of a higher quality, the retailer would have been able to uncover this crucial information, allowing it to adjust its ad campaign to reach comedy fans instead of sports enthusiasts. By leveraging high-quality data, the retailer would be able to reach the right audience, resulting in better business outcomes.

The True Cost Of Low-Quality Data

Relying on low-quality data to make critical business decisions can result in costly mistakes that far outweigh the expense of using high-quality data in the first place. For example, many companies using location data might opt to purchase raw location data. This may seem compelling at a glance because it's generally less expensive than processed location data, and there is much more of it to work with. However, raw location data is typically low-quality and problematic as it's rife with fraudulent devices or signals and contains many duplicate signals.

The only way to gain valuable insights from raw data would be to process and cleanse it to remove fraudulent and duplicate signals. When raw location data is cleansed and processed, about half of the data is typically removed. Without this important step, companies would have to deal with nearly twice as much data, much of which adds no value.

Purchasing raw data that will not ultimately be used can be a wasted expense. Unnecessary expenses like these can also increase the cost of data storage, resulting in a doubled expense that could have been avoided by using high-quality, processed data from the beginning.

Moreover, processing and cleansing raw location data is a time-consuming process that adds to the overall cost, especially when dealing with large amounts of data. Not only will it cost more to process extra unneeded raw data, but the cost of hiring a team of data scientists and analysts to process and analyze the data must also be considered.

Top Tips For Ensuring Data Integrity And Quality

Ensuring high data quality is essential for making accurate business decisions. Here are some best practices to follow.

1. Determine use case.

Begin by clearly defining the business problem and insights you're looking to achieve by leveraging data. This will help you identify the data you need and ensure that you are using data that is relevant to your needs.

2. Use reliable data sources.

When selecting data sources, choose ones that are reputable and have a track record of providing accurate and high-quality data. Avoid data sources that are known for low-quality or unreliable data.

3. Cleanse and validate data.

To ensure high-quality data, it's important to use data that has been cleansed and validated. These processes involve removing or correcting any incorrect, incomplete or irrelevant data, as well as checking its accuracy and relevance.

4. Monitor data quality.

Regularly monitor data quality by performing periodic audits of your data, checking for errors and inconsistencies and assessing the accuracy and relevance of your data over time.

High-Quality Data And Improved Business Outcomes

In today's fast-paced business world, high-quality and relevant data has become a vital asset. Poor-quality data can lead to inaccurate conclusions and flawed strategies, resulting in subpar business outcomes that can impact a company's success. That's why businesses must prioritize the quality of their data to ensure reliable and accurate insights that guide decision making.

By leveraging the power of quality data, businesses can make informed decisions, identify new opportunities and stay ahead of the competition. From optimizing marketing campaigns to improving business operations, high-quality and relevant data is a critical component of a successful business strategy.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

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Council Post: Why High-Quality And Relevant Data Is Essential In Today's Business Landscape

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With the explosion of big data, businesses need accurate and reliable data more than ever before.

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Executive Summary

Over the last decade, e-commerce has imposed a painful profit squeeze on big-box retailers, resulting in layoffs, store closings, mall reconfigurations, and even bankruptcies. The online world is poised to do the same to brand-name consumer products companies. One of the core reasons that this is happening is that in addition to providing always-on, on-demand convenience, online retailers know so much more about their customers than their offline counterparts do. This is a call to action for consumer staples CEOs, who, like the big-box retailers before them, are ill-prepared to compete with Amazon Prime and the one-to-one personal assistant and customer engagement engines it employs, like digital assistant Alexa. But it's not all doom and gloom for consumer brands: The U.S. Census Bureau recently reported that 80% of retail sales still happen in the offline realm. The tools exist now to enable consumer brands to act quickly to develop their own direct, sustained relationships with consumers to foster continued loyalty. But if they don't act soon, they risk being the next set of offline businesses to fade in relevance.

Kulka/Getty Images

Over the last decade, e-commerce has imposed a painful profit squeeze on big-box retailers, resulting in layoffs, store closings, mall reconfigurations, and even bankruptcies. With no reprieve in sight for retailers, the online world is poised to do the same to brand-name consumer products companies.

One of the core reasons that this is happening is that in addition to providing always-on, on-demand convenience, online retailers know so much more about their customers than their offline counterparts do. In fact, they have mastered the art of creating a direct connection to their customers, which in turn allows them to collect massive amounts of data about them. Then, by applying tools like artificial intelligence, the online retailers are able to create more-personalized customer experiences, fostering levels of satisfaction, connection, and customer loyalty that traditional retailers just can't compete with.

And when it comes to consumer goods companies, that same artificial intelligence is also capable of serving up recommendations for a white-labeled product versus a name-brand one, putting greater pressure on branded consumer staples companies. In fact, the stock market already recognizes this; the sector has declined 13% year-to-date (in comparison, the S&P 500 has seen a 2% gain). Further illustrating this point, Procter & Gamble (P&G) just posted another lackluster earnings report - which, not coincidentally, was blamed partly on declining sales and margin pressure from those same big-box retailers. While rising costs also seem to be eating into margins, the growing market share of online retail with more-sophisticated customer engagement digital models is still a threat the consumer staples companies haven't dealt with effectively.

Amazon Prime is now the gold standard for one-to-one customer marketing at scale, thanks to innovations in machine learning and an undeterred commitment to service. At the same time, Alexa, Amazon's digital assistant, is rapidly becoming an arbiter of brand choice, with half of searches on the web projected to be done with voice in the next five years (according to Sebastien Szczepaniak, a former Amazon executive who now heads e-commerce for Nestlé). As another channel for direct communication with customers, Alexa not only makes the shopping experience easier but also serves as another vehicle for data collection, creating an endless feedback loop of customer service, ever-better recommendations, and on-demand purchases.

While it used to be the case that Amazon's customers did buy on price, and often compared prices, the retailer now delivers such great customer engagement that it's extremely difficult for offline players to even attempt to match the magnitude and depth of Amazon's always-on, personalized experience, and the judicious use of AI to make it come alive. It should come as no surprise that P&G has cut $200 million from its digital advertising budget this year when it became clear that the ads were not resonating with consumers - in fact, the average view time for a mobile ad appearing in a news feed on platforms such as Facebook was only 1.7 seconds.

What digital marketing claimed to provide - real-time visibility into the customer, plus better conversion rates - isn't on offer from any agency or brand, but Amazon has it mastered. The company has effectively created a new model for what digital marketing should actually look like: a one-on-one relationship with the customer, informed by data collection, optimized with machine learning, and nurtured with other forms of AI.

How does an offline player, in this case a consumer packaged goods company, hope to catch up? It's possible, but it requires a difficult journey.

The first decision for branded companies looking to emulate Amazon Prime is creating an on-demand, always-on direct connection with their customers with a conversational interface. Amazon has always had this by virtue of being online (like Uber, Lyft, and Netflix), but the offline world needs that as a necessary lynchpin for creating a customer-focused, data-driven, real-time business. Tools that allow this now exist, fostering a direct connection for brands through messaging and two-way conversational AI. Consider Pypestream, a customer engagement solution that enables direct-to-consumer, two-way persistent connection (through a dedicated platform, built only for your customers and employees to engage with you), as well as AI-backed conversational experiences. And Gravy Analytics, which augments data to provide real-world, location-based intelligence, using verified consumer attendance at places and events across the U.S. (Disclosure: I am an investor in both of these companies), as well as other advanced AI tools provided by IBM's Watson, Google, and Microsoft.

Creating the right use case to motivate customers to then engage with the brand with these tools is the second step. Automation of mundane inquiries ("Would you like to order more diapers?"), a new loyalty program that rewards usage in some meaningful way (two-way messaging to immediately recognize a customer's purchase and then share an offer for the next one), and even making complex tasks easier (such as filing an insurance claim through a conversational interface) are just a few examples of high-value offers designed to prompt a deeper customer relationship. Others include paying a bill, changing a password, choosing seats for an opera performance, or changing a flight.

Then, the name of the game is to accumulate more and more relevant data on target customers - but this must be done with privacy and trust at the forefront. Recent regulations like the EU's General Data Protection Regulation (GDPR) are now bringing making this issue top of mind for marketers, and the importance of compliance will be requisite. Some data will come from marketers' growing knowledge of their customers' consumption patterns, but there are also significant new data sources never before available in the offline world. For instance, opt-in customer behavior for hundreds of millions of mobile phones covering locations and events worldwide is now available offline. There exist services that compile data based on location that can then be layered on top of the brand's existing data.

Finally there is the application of advanced AI-like machine learning to complete the journey toward the type of deep customer engagement and insights that Amazon Prime has pioneered today.

This is a call to action for consumer staples CEOs, who, like the big-box retailers before them, are ill-prepared to compete with Amazon Prime and the one-to-one personal assistant and customer engagement engines it employs, like Alexa. But it's not all doom and gloom for consumer brands: The U.S. Census Bureau recently reported that 80% of retail sales still happen in the offline realm. The tools exist to enable them to act quickly to develop their own direct, sustained relationships with their consumers to foster continued customer loyalty. But if consumer brands don't act soon, they risk being the next set of offline businesses to fade in relevance.

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To Compete with Amazon, Big-Name Consumer Brands Have to Become More Like It

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Executive Summary Over the last decade, e-commerce has imposed a painful profit squeeze on big-box retailers, resulting in layoffs, store closings, mall reconfigurations, and even bankruptcies. The online world is poised to do the same to brand-name consumer products companies.

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Marketers know that digital marketing represents the future of their business. That's why, according to the February 2022 edition of The CMO Survey, they're happy to allocate 57% of their budgets to digital marketing activities and are planning to increase spending by another 16% in 2023.

However, the survey also found that this contribution has weakened over the past year. More than 30% of marketers who participated said that they are experiencing average-to-no returns on their investments, which could create funding difficulties in the future if they are not able to overcome this gap.

What's Driving the Digital Marketing Performance Gap?

So, why are returns softening, and what can marketers do about it? Our research and experience has identified six reasons behind the digital marketing performance gap.

Companies haven't developed a fully integrated digital marketing organization.

More than 60% of marketing leaders reported in the August 2021 edition of The CMO Survey that their companies were either in the nascent stage (i.e., visualizing and designing their digital transformation) or the emerging stage (i.e., building non-integrated digital elements) of this journey.

Having a digital marketing arm simply isn't enough. Digital marketing should be fully integrated across the company and used to drive and evaluate marketing decisions to reach its full potential. Unfortunately, that is not currently the case for most companies.

Marketing teams face a steep learning curve when it comes to data analytics...

When asked about digital marketing investments, marketing leaders historically have focused on optimizing their companies' websites. However, in 2022 those investments shifted dramatically, with a 37% increase in the number of companies investing in data analytics, making this the largest investment reported by marketing leaders.

The challenge is that marketing tech stacks are becoming increasingly complex. While companies are investing in the technologies necessary to keep up with their tech-savvy competitors, there is a learning curve associated with enhanced data analytics, so it will likely take time marketers to realize strong returns for their companies.

... and they have to master the challenge of converting data analytics to actionable metrics.

Marketers are missing out when they are unable to convert the overwhelming amount of raw data into key metrics - and the strategic actions they would then inform. They need new dashboards to help them interpret and visualize what their new data analytics mean for their current business, as well as formulate actionable recommendations to improve their future business.

It will take time for companies to identify the metrics that are the most important to their business. They must test, iterate, and ultimately agree on reasonable thresholds for metrics that can guide subsequent actions.

Mapping the digital customer journey has become increasingly complex.

Today's companies engage with customers across a growing landscape of apps, social platforms, websites, blogs, third-party sites, and more, meaning the job of mapping the customer journey continues to get more complex.

In fact, only 40% of marketers report having systems in place to track customer engagement in a way that informs their marketing roadmaps. And when asked "how effectively does your company integrate customer information across purchasing, communication, and social media channels" (where 1=not at all and 7=very highly), The CMO Survey has witnessed a flat score of between 3.4 and 3.8 for more than a decade!

While it's possible that the investment in digital touchpoints is making an increasingly large impact, companies' inability to track their customers' end-to-end journeys and accurately attribute sales to touchpoints is negatively affecting their ability to effectively quantify digital-specific contributions.

Changing privacy rules mean the loss of third-party data.

In response to growing demand for consumer privacy and in the wake of phasing out support of third-party cookies, the use of third-party data is changing. In fact, 61% of marketers predict consistent or decreased use of third-party data in the coming year.

Marketers see the challenge and report a 24% increase in investments to manage consumer privacy concerns while also working to increase their understanding of consumers outside of their companies' own websites and apps. This understanding is important to learning about customers, seeing new opportunities, and effectively segmenting and targeting customers - key steps for creating value and converting digital investments into returns.

Many firms outsource their digital marketing activities.

Thirty-two percent of digital marketing activities are performed by external agencies and partners, with this number reaching as high as 45% for B2C product companies. Companies historically have not created digital teams in house, given the dearth of talent and the costs of doing so.

But it may be time to rethink this. As digital plays a larger role in companies' marketing strategies, it becomes increasingly challenging to maintain brand consistency and build out a fully integrated brand strategy if an external agency is driving most, if not all, digital activity.

In addition, marketers are feeling the pressure of accelerating results, just like other business functions. In-house staff are typically able to move faster than agency partners, who have multiple clients. So, if marketers are not at the helm of developing strategy and managing their customer data, they may be losing out on an invaluable piece of the puzzle in their customers' journey, as well as delivering slower gains back to the business.

How Marketers Can Drive Digital Marketing Returns

These are formidable challenges. But there are proven steps marketing leaders can take to close the digital marketing gap. Based on our experience studying companies and working with clients, we outline six strategies that offer a broad view of how leaders can manage strategies, organization, and data to make progress toward that objective.

Double down on strategic experimentation.

Some 67% of marketers report that they use digital platforms to test, iterate, and efficiently determine what is or isn't working in their marketing materials. At the same time, only 47% report increasing investments in online experimentation and A/B testing.

We recommend companies increase these investments with an eye toward more strategic-level experimentation that can offer opportunities for breakthrough growth. Too often marketers get bogged down in tactical experiments, such as whether customers like green or yellow, instead of testing the relevance of new offerings, innovations, or customer segments.

Understanding new challenges and opportunities is business critical, especially in unpredictable times. This makes testing an ongoing, necessary process that requires sufficient budget guided by three key principles. First, budget with current data, not historical projections, by leveraging forecasting tools that take dynamic market changes into account. Second, establish that marketing experiments are an investment, not an expense, by testing to identifiable business-wide goals or outcomes. Third, allow flexibility in any test-and-learn budget. Market trends and consumer behaviors can change, and experiments allow companies to understand and respond to any new challenges or opportunities.

Deepen cross-functional collaborations.

Marketers report reasonable success in working with leaders and groups important to the success of digital marketing. Forty-three percent of senior marketing leaders report that their CTO/CIO (or equivalent technology leader) is aware of and aligned with their objectives and path to activate key performance indicators (KPIs) in digital marketing, and 40% report that the same can be said of the CFO (or equivalent financial leader).

These figures are reassuring. However, it still follows that roughly 60% of marketing leaders are flying solo - meaning they are not yet collaborating with these important leaders and groups. Cross-functional collaboration and alignment is essential to not only gain approval/support for marketing investments, but also to accurately understand their impact/contribution. In addition, working directly with the C-suite elevates the marketing function, ensuring that it is a strategic contributor to the business strategy and ideally, protecting it from future cost-cutting initiatives.

Embrace a culture of innovation.

Marketing leaders can further digital transformation by helping build several organizational characteristics: a culture of rapid learning, strategic partnerships, specialist skills, and agile structures. We find that collective strength, rather than individual talent, is how organizations should reframe their thinking.

What does this mean in practice? Companies that align their C-suite leaders across the business and focus on shared goals are better positioned for digital transformation. More specifically, organizations execute three key priorities to realize digital marketing transformation. First, they establish a common set of KPIs that ideally are aligned to business objectives, such as revenue, profit, or sales. Second, these organizations prioritize the customer first. And third, marketers truly understand how their customer makes decisions, and they upskill and reskill their teams to ensure that they can accomplish ever-more complex work.

Focus on driving growth.

When asked how they evaluate digital marketing's contribution to their companies, marketing leaders prioritized driving business outcomes (e.g., increased revenue, sales, volume, profits), followed by shaping marketing communications, helping deliver interactive customer experiences, and improving internal efficiencies.

We urge marketers to keep their sights on how digital marketing delivers growth because this objective gets to the core of what they are hired to accomplish and is the strongest statement marketers can make to validate their worth. In other words, all other objectives (e.g., customer experience, internal efficiencies, and marketing communications) should ladder up to increasing sales/revenue/volume, decreasing costs, and ultimately driving the business forward.

Leverage first-party data.

Effective first-party data use in marketing delivers more relevant experiences for customers and can generate 2x incremental revenue from a single engagement and 1.5x improvement in efficiency.

Growth comes from incorporating customer data, because only then can marketers truly understand their customer base, including types of customers, their needs, and how their behavior is changing. This understanding allows marketers to find more users like the ones they already have; personalize based on the needs of their customers; and optimize their marketing when looking to find the most profitable customers.

Invest in AI and machine learning.

Companies currently use artificial intelligence (AI) or machine learning (ML) only 12% of the time, according to The CMO Survey. Respondents predict that AI/ML use will triple to 38% over the next three years, with 28% of companies investing in this space in the past 12 months.

We think this use and investment level should increase if companies are going to make the most of their data analytics investments to build personalized connections with their customers. Marketers who integrate their first-party data with ML-driven marketing tech can optimize interactions with their most valued customers, rather than all customers, to drive the most valuable outcomes at the most efficient cost.

. . .

Marketers have used digital marketing to navigate through incredibly difficult business conditions, connecting with customers stuck at home during the pandemic, digitizing products and services, and driving revenues. Now, it's time to build on those gains by redoubling their commitment to deepening data and digital mastery, building a culture of continuous learning and experimentation, and using insights to deliver personalized services to customers for higher ROI. Those willing to do so will outpace competitors, notching greater revenues and working more closely with the C-suite to drive business expansion.

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Closing the Gap Between Digital Marketing Spending and Performance

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Marketers have used digital marketing to navigate through incredibly difficult business conditions, connecting with customers stuck at home during the pandemic, digitizing products and services, and driving revenues. Now, it's time to build on those gains by redoubling their commitment to deepening data and digital mastery, building a culture of continuous learning and experimentation, and using insights to deliver personalized services to customers for higher ROI.