E-commerce

Marketing merger and acquisition activity is primed to pick back up as winners and losers from the pandemic are sorted and the reopening crystallizes. While a rebound was expected even from the health crisis' early days, the makeup of buyers and what they're buying is changing due to shifting demands around data and technology. Traditional big brands, for instance, are growing more acquisitive as mainstay ad-targeting tools are deprecated and consumer habits driven by COVID-19 — especially online shopping — are forecast to endure.

"The race for e-commerce is going to come from all angles," said Greg Paull, co-founder and principal at consulting firm R3 Worldwide. "We've been consulting with a couple of CPGs on how they can double their e-commerce business in 12 months because the supply chain structure is just not the way it used to be.

"I wouldn't be surprised to see e-commerce consultancies bought by P&G or Unilever or other companies like that," he added.

A groundswell of these "asynchronous buyers" — different buyers than expected in the category, as Paull described them — emerged in the first leg of 2021. Yum Brands, the owner of KFC, Taco Bell and Pizza Hut, in March bought the artificial intelligence (AI) business of performance marketing firm Kvantum in a bid to "scale and fast-track" its data strategy, then bought Dragontail Systems, another AI-based company, two months later. To round out its fledgling retail media network, Walmart in February acquired the technology and IP behind Thunder, an ad-tech solution focused on creative automation. And Nike soon after snapped up data integration platform Datalogue to scale its data-driven processes.

"We expect Datalogue to amplify our speed in analyzing consumer data and inform product, marketing and service recommendations, ultimately increasing member buying frequency, basket size and member retention rates," Nike Chief Financial Officer Matt Friend told analysts on an earnings call.

The scope and motivations behind these deals differ in important ways, but ultimately they speak to brands' desire to be in greater control of technology capabilities that have historically been handed off to third-party partners. That presents a challenge to traditional agencies and marketing services providers similarly racing to transform their businesses, including through M&A. Many have been hedging their bets on brand clients leaning on outside help to navigate disruptions like the death of third-party cookies, but in-housing trends could throw some cold water on those prospects.

"Marketers are still a little reluctant to hand all of their data over to the agency data companies that have been bought, whether it's Epsilon, Acxiom or Merkle," Paull said, referencing data marketing firms that ad holding groups have acquired over the years, sometimes for billions of dollars.

"You're just going to see a lot of activity in this space because everybody recognizes the importance of a great first-party data structure and they may not necessarily want to outsource all of that work," Paull said.

Writing on the wall

The pandemic had an early and clear impact on M&A activity that could create pent-up demand in 2021. Deal-making was down 19% in 2020, according to R3 estimates, with the appetite of large ad holding groups for acquisitions shrinking significantly in the wake of the health crisis.

"It was an unbelievably quiet year for agency acquisitions," Paull said. "You're definitely going to see them be more acquisitive in 2021. It has to be, because marketers' needs are changing and they just don't have the internal capabilities to solve all of their problems."

Surging interest in acquisitions could also be tied to acquisition vehicles that are gaining fresh traction under the pandemic. Special-purpose acquisition companies (SPACs) have rapidly proliferated, while private equity has encroached more on marketing. According to R3 estimates shared by Paull, private equity-backed deals accounted for about 37% of total marketing deal-making volumes in 2020.

"It's just a group of players that hadn't really been considered before," Paull said. "That kind of came through pretty significantly."

There's also a sense among analysts that some of these acquisition moves would eventually take shape regardless of COVID-19. Google announced plans to kill off third-party cookies in January 2020, months before the virus hit the U.S. in force, while e-commerce and direct-to-consumer have been on the rise for years.

"I honestly think the writing's been on the wall," Paull said. "I think [the pandemic's] just pushed something forward that was going to happen already, it's just come through at an exponential rate."

Sorting winners and losers

That said, the health crisis has enshrined certain channels and technologies as must-haves for marketers and any third parties vying for their business. Streaming video and gaming have seized the attention of homebound consumers in ways that are likely to linger even as businesses reopen. Mastering online retail and DTC tactics will similarly remain at the top of the agenda, with companies like Walmart reorienting their operations to more closely emulate Amazon.

"Ad tech does move with media; it is largely supported by media spend and media transactions," said Joanna O'Connell, vice president and principal analyst at Forrester. "I don't think it's all that surprising that [M&A is] starting to see a resurgence just as media is starting to see a resurgence, especially in digital. Things like digital video are especially hot because that is a place where brands want to be."

Magnite, the sell-side platform formed in 2020 in the wake of the Rubicon Project-Telaria merger, bought rival SpotX for $1.17 billion in cash and stock from RTL Group in February 2021. The acquisition creates the largest independent connected TV and video advertising platform in the programmatic marketplace, the companies claim. Roku, the internet-connected TV provider that saw business boom during the pandemic, in March snapped up Nielsen's Advanced Video Advertising business, which includes the firm's automatic content recognition and dynamic ad insertion technologies.

A theme spanning these deals is consolidation, with a handful of winners shoring up their leadership position and reaching for scale. It's a situation that could see smaller ad-tech players lose out as walled gardens proliferate and grow taller, while marketers become more guarded with their data.

"I do think, in general, it's probably going to be harder to be a little guy, especially if you're a little guy who was built to operate in the old world," O'Connell said. "Access to a more scaled solution is going to be a thing that marketers and publishers are going to be looking for."

Cautionary tales

On the brand side, wresting control over first-party data and scaling related solutions is increasingly critical due to the pending death of cookies, a bedrock of online ad targeting that Google expects to phase out in 2023. Acquisitions are one way to patch over gaps in marketers' knowledge while integrating tech that is otherwise costly and time-intensive to develop.

"You're acqui-hiring or you're buying tech that's complementary or competitive," Forrester's O'Connell said. "Unless you're buying for expertise, make sure you're buying something that's additive and in a proprietary way — that it's not totally commoditized."

Marketing services providers could feel like they're losing out as brands accelerate in-housing, centering more business on proprietary technology. A potential bright side of the story for agencies and other third-party partners is that acquisitions are not a catch-all solution for legacy brands with little historical tech backbone, and sometimes don't pan out in the expected fashion.

"I'm not sure if it's ever as simple as just buying a company," O'Connell said. "Getting companies to align, getting things to actually integrate — these are not insignificant questions."

Yum's Kvantum acquisition was announced the same week The Wall Street Journal reported that McDonald's was mulling selling off parts of Dynamic Yield, an AI company the burger chain acquired for more than $300 million in 2019. According to the Journal, some franchisees found the tech frustrating and a disappointment when it came to boosting sales. Dynamic Yield is more centered on the operational end of McDonald's business, but the restaurant giant's reported troubles offer a cautionary sign that other marketers should consider before jumping on a pricey acquisition in adjacent fields like data marketing.

"It's hard to have a world-class data organization internally unless it's part of your DNA and your culture," Paull said. "It's difficult to just import that and to really be a leader. It's kind of a 'be careful what you wish for' [situation]."

Once the dust has settled, it's unlikely that the marketers' chips will fall into neat categories. Only a few players have the resources to truly in-house their operations, but most will consider exerting some measures to gain greater control over their data and operational functions like e-commerce.

"[In-housing] is not a lightweight undertaking. These are multiyear kinds of endeavors, and I imagine part of the exercise ends up being the calculus around build, rent or buy," O'Connell said. "To me, we're going to end up in a world of a thousand variations of hybrid models between brands and technology companies and service partners like agencies."

Blue-chip marketers from Nike to Procter & Gamble have also made a bigger deal over how much data they wield, although whether they will be able to activate it as effectively is an open question.

"[Marc] Pritchard came out at P&G and said we've got 1.5 billion consumer IDs. It's like, well OK, how are you going to keep that fresh?" Paull said, referencing comments made by the CPG's chief brand officer in October 2019. "How are you going to use that?"

DevanOnDeck held a pair of dad jeans close to the camera to give TikTok users a detailed look of the product, all while describing which demographic this item would appeal to and how to style it.

On its first shoppable livestream on TikTok last December, Walmart tapped DevanOnDeck, who has over 3.2 million followers on the short-form video-sharing app, and other top creators to showcase different apparel products.

The event received seven times as many views as the company initially expected, and Walmart's TikTok following rose by 25%. In fact, it was so successful the retailer did a second shoppable livestream event in early 2021, this time focusing on beauty products.

Walmart's events are just a glimpse of what the livestream shopping market can offer retailers. Livestream shopping in China is already a multibillion-dollar market, and in the U.S., experts expect the industry's growth to take off, reaching up to $6 billion in 2021 and $25 billion by 2023, according to Coresight Research.

At a time when shoppers were wary of being in physical shopping centers due to the pandemic, retailers, brands and social media apps jumped on the shoppable live content playing field in some way. During the height of the pandemic, Nordstrom announced over 50 interactive livestream events, Facebook partnered with Anne Klein to debut its live in-app shopping feature and Petco hosted a live shoppable pet fashion show through Facebook Shops.

"From the consumer side of things, the appetite for that live content increased right at the same time" as when retailers were attempting to find interactive methods to put products in front of consumers, said Matt Moorut, senior principal analyst at Gartner. "It sort of makes a perfect storm where, from both sides of the equation, there's more of a reason to get involved in livestream commerce."

Businesses throughout the world used livestreams in 2020. Mall of America in Minnesota collaborated with shopping app Popshop Live to introduce stores to customers, and Your Mark, a Chinese mall operator based in Hunan province, hosted over 200 livestream sessions a day during COVID-related lockdowns between Feb. 10 and 14 in 2020, according to Coresight Research. Meanwhile, a shopping mall in Singapore launched the country's first-ever livestream shopping festival mid-2020.

Holding a product in front of a camera while listing its winning qualities in an attempt to convince viewers to make a purchase is not a new concept. In reality, this method of showcasing products has been on television as far back as the 1980s when the likes of HSN and QVC were founded, Moorut said.

"The way that it sort of changed more recently is that the functionality now exists in a much more robust sense on social platforms, bringing close together influencers, brands, retailers to the consumers themselves in a whole number of different platforms and channels and avenues," he said. "That just means that the pathway from discovery to actual purchase is much closer than it used to be."

Retailers look to China for answers

China's appetite for livestream shopping foreshadows what the U.S. market could be. In China, where influencers would spend hours (sometimes all day) livestreaming, KPMG and research firm AliResearch expect the industry to reach $305 billion in 2021.

"We have the two largest markets by retail sales in the world," said Bob Hoyler, consultant at Euromonitor International. "I think it's natural for retailers to look at things that worked in one country to see if they might work in the other."

While retailers may be hopeful for the industry's growth in the United States, experts from Euromonitor International said there are some key differences between the shopping environment in the U.S and China to consider.

Though mobile purchases are becoming more prevalent recently, U.S. consumers have historically preferred to place orders on their desktop, experts said. Retailers generated 42% of their online sales from mobile devices, according to a 2020 study from Quiq.    

"Livestreaming often happens on mobile phones," said Han Hu, research analyst at Euromonitor International. "China kind of skipped the process of PC-based e-commerce and just jumped to mobile commerce, and the fact that we have higher acceptance of mobile e-commerce drives the boom of livestreaming."

The live shopping market began in China by way of the gaming industry, she said. Taobao, a shopping website owned and operated by Alibaba Group, was one of the first platforms in China to crack the code on how to build a solid e-commerce livestream model, she added.

Some Chinese platforms monetized livestreaming through advertising fees or charged commissions based on virtual gifting from viewers in the past, Hu said. 

Now, livestreaming has become less of a sales tool, where shoppers come in search of products sold below retail price, and more of a marketing tool, Hu said. Influencers explain product features in an entertaining way, bringing in celebrities as guests. Livestream shopping also appeals to viewers in remote areas in China that may not have access to some brands and retailers, she added.

"China is not very evenly developed in some lower-tier markets," she said. "So consumers can't actually get [to retail stores] to touch or feel the products. Then, with livestreaming, someone can help to explain the products that's more vivid."

Though U.S. retailers can draw inspiration from China's business model, the consumer environment can be hard to replicate, Hoyler said. Unlike China, the U.S. doesn't have "super apps," where consumers shop, make payments and connect with influencers all in the same place.

"We don't really have that to that extent in the United States. I think that's also a reason why we're behind is because we have not developed these kinds of all-inclusive super apps in the same way that we see in the Chinese market," Hoyler said. "Not to say that's not coming. That probably is something that's on the horizon right, but it's definitely an obstacle that the U.S. market has to overcome."

Building livestreaming's foundation

The renewed energy around livestream shopping in the U.S. is targeted towards younger consumers, with social media influencers playing a big role as key opinion leaders in the space, experts said. 

While the shopping habits of different cultures may differ, younger consumers, regardless of where they live, are similar in how they use social media to connect. Livestreaming taps into that trait because, unlike the shopping channel model, it gives viewers the ability to have a two-way conversation with the host, said Alessandro Bogliari, co-founder and CEO of The Influencer Marketing Factory.

Gen Z and millennial cohorts had the highest livestreaming usage rate worldwide in 2020, according to data from Euromonitor. In China, millennials used livestreaming the most at 41.9%, and in the U.S., Gen Zers used it the most at 21.5%.

"Influencers, they understand their community," Bogliari said, which makes the viewing experience feel more personalized, and could then lead to higher conversion rates. He added that influencers make livestream shopping "more relatable and appear less commercial."

Influencers do, in fact, affect the purchasing decision of many Gen Zers. Almost half of them purchased something based on an influencer's recommendation, according to a 2020 study from Kantar.

Chinese livestreamer Austin Li, also known as China's "lipstick king," famously sold 15,000 lipsticks in five minutes during Alibaba's "Ten Years, Ten People" event in 2018. On Taobao, he was credited for driving $145 million in sales at the country's Singles' Day shopping event in 2019. 

"There is a big interest [in livestreaming] mostly because of the creator economy," Bogliari said. "I'd say, more creators and influencers are finding that they can start using livestreaming, not only to entertain others but actually driving as an additional revenue stream."

Social media platforms have expanded their livestream capabilities to give influencers and brands more options to interact with consumers. Instagram, for instance, launched a feature that lets users hold a livestream with three other people dubbed Live Rooms. In 2020, TikTok integrated shopping to their livestream for the first time with Ntwrk.

Still, the influencer landscape in the West is focused predominantly on lifestyle and less on the promotion of shopping content, Moorut said. And while consumers do like discovering products on their phone, where they often watch livestreams, they still conduct transactions on desktops because mobile shopping isn't as robust yet.

"There are also some technical integration difficulties," he said. "I'm saying that these sort of [livestreaming] platforms are becoming more mature, but this sort of technical ecosystem isn't to the same level as it is in China at the moment."

As more consumers get vaccinated and return to stores where they can see products physically before purchasing, the need for retailers to integrate livestreaming into their operations may be questioned, Moorut said. A recent survey from Kantar shows that 58% of consumers think physical stores have a better selection than online stores.

"I think that's going to be kind of an acid test for livestream commerce in terms of the rate of growth," he said. "So when those [stores] reopen, do those sorts of people still stick with livestream commerce or do they move back to what they've always preferred?"

Sponsored content

By Inmar Intelligence

Marketers are watching — often without much influence — as commerce changes before their eyes. Beyond the obvious supply chain challenges, consumers are forcing brands and retailers to rethink the way their customers are enabled to shop, whether that be through contactless solutions like pickup and delivery, or via a hygienically modified version of the legacy in-store experience. 

In response, budget-holding decision makers across the advertising spectrum are retooling to meet these changing consumer demands, and left in the wake of their transformation are many of the investment strategies once leaned upon under “normal” circumstances. In the near future it’s likely we won’t see many in-store sampling events or frequently rotating end cap displays (as they’re often filled with essential — and frequently out-of-stock — items), and action alley may be embraced for its enablement of social distancing instead of its ability to feature items along consumers’ most frequented path.

The speed at which brands and retailers are able to transform digital experiences to (at least remotely) resemble the comfortable experience of browsing vast aisles of inventory and selecting various items to complete a solution will be crucial. While there are notable conveniences of online shopping — namely the fact it’s clothing optional — it still creates anxiety for shoppers who lack confidence in their choices, fear forgetting a key item and relinquish the luxury of comparing competitive items’ price and packaging by simply seeing them side-by-side on the shelf. 

Physically shopping for items like food, beauty products and other household goods may have seemed mundane before, but this new lifestyle has taught us just how visceral even the most ordinary experiences can be.

Anticipating some permanence to these new patterns, how do stakeholders begin to replicate the in-store experience to meet the demands of migrating consumers? Here are a few ideas.

Sell a Solution, Not Just a Product

Consumers are perpetually looking for guidance — from brands, from retailers and, most importantly, from other consumers. And often they’re seeking guidance in the form of actual solutions, not just individual products. They’re rarely hoping to hear about “the best tomato paste,” but they’re often looking for the best homemade pizza recipe (for which tomato paste might be the base for the sauce). They’re not often simply looking for someone’s “favorite moisturizer,” and instead are looking for the best skin care routine that combines multiple, complimentary items into a complete regimen.

Digital solutions exist that allow consumers to add full solutions to their favorite retailer’s shopping cart with a single click. These functions can turn any recipe, regimen or project blueprint into a singular, buyable solution and, when partnering with the right providers, can even communicate inventory availability with the customer in real-time. 

Thinking of your product within its actual use cases and not as a standalone item can open a wealth of opportunities. The results not only put your item in the cart, but also increase your retailers’ basket size and give the customer a convenient, time- and energy-saving solution — a scenario where everyone wins.

Counsel Consumers’ Decisions with Virtual Store Associates

Retail associates, especially in certain categories, often serve as a helpful selling tool for their employer and its suppliers. They become product experts and share their wealth of knowledge with curious shoppers, especially regarding new items that require education. In online shopping scenarios and while shoppers are spending as little time in stores as possible, brands need to replace these opportunities with supplemental services easily accessed prior to the purchase of their items. 

Many advertisers will turn to chatbots as they attempt to guide their customers through complex decisions. Bots, as many know, have evolved from earlier, customer service-focused iterations, and have become a useful communication channel that connect brands with shoppers at all stages of their purchase journey. In a recent campaign for a technology brand releasing a new, sleep-focused audio device, we leveraged our Conversational Commerce engine to dynamically respond to opted-in users’ requests for additional product information, curate relevant content based on their unique sleep challenges, and even facilitate the ability for them to complete a purchase within the messaging window. 

We anticipate these types of interactions will become more prevalent, and encourage brands to consider the possibilities presented by one-to-one conversations with customers during critical moments in their decision making process. 

Reinvent the Product Sampling Experience

Many marketers can be regularly overheard saying, “if I could just get my product in a customer’s hands, they would never buy another brand again.” That level of confidence in their product habitually leads them towards trial-driving activities, such as in-store sampling, experiential marketing and events, in which they give away free product (sometimes accompanied by an offer) to shoppers and bystanders willing to give it a try. People, coincidentally, also enjoy receiving something for nothing — nearly three in four consumers (73 percent) said a sample would persuade them to buy a new product — so the marriage makes sense.

These experiences can be recreated outside of these brick-and-mortar and event-related scenarios, and the actual sample can be consumed or used in consumers’ own homes. Through a variety of communication channels and sophisticated targeting techniques, brands can acquire opt-ins from intrigued prospects and send them thoughtful packages in the mail. These sample boxes can also include additional promotional items and easily redeemable offers, should the recipient decide to become a paying customer in their next trip to the store or online shopping adventure.

It’s important for brands using these tactics to focus on the efficiency of their outreach efforts and effectiveness of their remarketing techniques. Work with providers who focus on the end-to-end user experience (vs. fulfillment alone) — prescribing the appropriate targeting strategy and ideal channels for communicating the opportunity to consumers, and placing necessary emphasis on subsequently reengaging sample recipients.

Navigating this new world will be difficult, and marketers will be forced to adjust their traditional thinking and meet demand in different ways. Tangible experiences will never be fully replaced — as people are freed from isolation and many resume shopping in similar ways they did pre-pandemic. This period has, however, accelerated the migration to and adoption of digital shopping for everyday items. Marketers who facilitate more intuitive interactions in online environments are geared to win long-term. 

To learn more about these solutions and others, visit inmar.com.

Brands are vulnerable to losing younger consumers who are less tolerant of poor digital shopping experiences and will quickly move on from brands. Eighty percent of Gen Zers said they're more willing to try new brands online than before the pandemic, while 57% said they're less loyal to brands than before the crisis, digital experience management software company Sitecore found in a study.

Gen Z has become more sophisticated about e-commerce since the beginning of the pandemic, before which 31% of the group had never bought anything online. Nearly two-thirds (64%) of Gen Z said they want to keep buying almost everything online, which could have ramifications for brands and their direct-to-consumer and e-commerce strategies.

The cohort is known for being "digital natives" who were born after the internet was commercialized and who grew up using smartphones, making them fluent in messaging, social media and other apps. As they reach adulthood, gain spending power and start shopping online, they're demanding instant gratification from their digital experiences. Retailers and brands need to make a good and lasting impression on Gen Zers, or risk losing them to competitors, Sitecore's study suggests.

More than one-third (38%) of Gen Zers said they allow a brand just one second chance to fix a mistake before switching to a rival. About three quarters (74%) of survey respondents said they'll find another retailer if an online store is out of stock, while 37% have abandoned a purchase or posted a negative review because of a poor digital shopping experience.

Sixty-three percent of younger consumers said they find online shopping to be more enjoyable than in-person, making digital platforms an essential part of a branded experience. After the health crisis began, 87% of Gen Z said their online shopping skills improved, with 26% saying they had used a mobile device to make a purchase for the first time, the survey found. With a large percentage of Gen Z wanting to keep buying almost everything online, shopping is more associated with using an app or website than setting foot in a store, the study suggests.

"Brands can't ignore the power of poor digital experiences when it comes to Gen Z and its shopping habits," Paige O'Neill, CMO of Sitecore, said in a statement. "This group has quickly shifted its significant spending power online, and pressure will continue to mount on retailers until they can deliver an experience that delights."

Eighty-three percent of Gen Zers said they view online shopping as an experience rather than a mere transaction. They have high expectations, with three quarters wanting new and exciting experiences when they shop online. Seventy-one percent of respondents said they wanted the experience to be personalized, and 76% said their favorite brands should reward them for their business, the survey found.

Gen Z also expects fast service, with 80% having said retailers that can deliver in fewer than 24 hours are more appealing. More than a third (37%) said free delivery was the most important consideration for shopping online. Gen Z also wants websites that work well on mobile devices (53%), remember users' shopping preferences (46%) and offer personalized suggestions (43%) on products, the study found.

Sitecore's research was conducted by Advanis, and is based on a survey of more than 1,000 Gen Z consumers, aged 18 to 24, in the U.S. The study was conducted from March 31 to April 7, 2021.

M&M's runs the best-in-class direct-to-consumer (DTC) website among consumer packaged goods brands, according to an analysis of 29 companies conducted by Forrester and shared with Marketing Dive. The Mars candy brand's leading position stems from its large social media following and a website that offers a mix of product customization, loyalty rewards and interactivity, such as a 3D render of its Disney Springs store location.

Developing a successful DTC strategy has become essential for CPGs as more consumers shopped online during the coronavirus pandemic — a habit that could have longevity — and as demands grow around owning the point of sale in the race to acquire more first-party data. The researcher's Go-To-Market Review evaluated brands based on five criteria: DTC strength, discoverability, distribution and level of digital control, organic consumer enthusiasm and product innovation. Clif Bar, Kind, Enfamil, Gerber and Hint round out Forrester's top rankings.

CPGs have historically relied on third-party distributors to reach consumers, but more brands are trying to take ownership of the point of sale as shopping habits have gone digital and acquiring first-party data has become critical to marketing functions. Retailers are chasing similar goals, setting up media networks that could expand into walled gardens that make true data ownership more difficult for individual CPGs. The pandemic rapidly accelerated the leap to e-commerce, but many CPGs are ultimately not capitalizing on the DTC opportunity, Forrester said.

In May of 2020, 16% of adults in the U.S. claimed they ordered groceries online for the first time due to the health crisis, marking a "significant addition" to the group of online shoppers, according to Forrester. Digital sales of edible, nonperishable and general food products, including CPG offerings, grew from 38% of online grocery subcategories prior to the pandemic to 76% in the midst of the crisis, Forrester and IRI data revealed.

Even CPG marketers that performed well in Forrester's analysis have gaps they could fill. Coca-Cola, for instance, has strong discoverability, evident in its appearance near the top of search results on both retailer sites and in search engines. Like M&M's, the soft drink brand is able to tap into a massive social media following to drive consumer interest. But Coke was also invisible in places where it "should be," per the report, suggesting scale could be getting in the way of more targeted opportunities.

"By attracting organic traffic, brands activate word-of-mouth marketing as well as other discovery sources beyond search engines or marketplaces," Forrester said. "M&M's and Coca-Cola had large followings across a variety of social networks. They achieved this loyalty, in part, with professionally curated content and relationships with influencers."

Colgate, the toothpaste brand, scored accolades on the distribution and e-control front for its warnings about "gray market" products on other sites that may be imitation or counterfeit goods — a significant problem with which CPGs increasingly contend. Forrester called Colgate out, however, for having higher pricing on its DTC platform than elsewhere.

CPGs will continue to invest in proprietary DTC platforms with the looming death of the third-party cookie and as habits driven by the pandemic stay relevant. In May 2020, PepsiCo introduced two new DTC sites, PantryShop.com and Snacks.com, to seize on pantry-loading trends, and other blue-chip marketers have followed suit. The broader realignment toward digital sales channels could result in changes to internal operations.

Forrester previously recommended that brands investing in DTC should more closely integrate their digital commerce and wholesale partner teams, while focusing on being more of a partner to retailers than a supplier.

Right on the heels of announcing new additions to its Shopping platform, Google again bolstered its e-commerce efforts, along with unveiling expansions to its Ads toolbox, according to a trio of company blog posts penned by Google executives. 

The tech giant emphasized that marketers will have increased access to many Google Ads tools, including targeting model Customer Match, automated program Smart Bidding and performance tracking platform Performance Max. Google also said it intends to integrate YouTube and Display ads into these platforms to enhance data-driven measurement. This menu of new offerings saw Google expanding data alternatives for marketers as third-party cookies phase out of its platforms.

Google intends to make Customer Match, which uses first-party data to target ads, available to virtually all advertisers, and integrate YouTube and Display into all attribution models, making ads on those platforms easier to keep track of. With YouTube having experienced a 49% lift in ad revenue in the first quarter of 2021, advertisers continue to pay close attention to the channel when fulfilling their digital video needs.

Google also said it intends to open up Performance Max to thousands of more advertisers, a move that signals the way ads are bought on its platforms is changing. Performance Max, still currently in beta, is Google's fully automated mechanism to purchase ads from its inventory, and will be opened up to general availability later in 2021, per the blog post. The company announced three new location-based ad formats: Auto Suggest ads, which display an advertiser's location to users searching for businesses; Navigational ads, which are shown to users in Google Maps; and Similar Places ads, which show an advertiser's location in Maps to users searching for a business that is closed during the time of search.

The expansion of Google's Ads tools saw the tech giant offering marketers more data alternatives to target and track their ads. With the deprecation of third-party cookies approaching, marketers will have less data to inform their advertising, which has left many uncertain about their futures on Google's platforms. This is why Google has widened the availability of first-party tools to more marketers, as well as added new location-based options to enhance engagement. Together, these announcements could help marketers transition to Google's new requirements.

Google has also made moves to grow the number of retailers in its marketplace. Merchants on WooCommerce, GoDaddy and Square will all experience the same free and streamlined integration that Google offered to those on Shopify earlier in May, demonstrating that building inventory continues to be one of the tech company's highest priorities for its marketplace.

As Google continues to stake a claim in online retail, its competitors are looking for new ways to engage shoppers and marketers. In December 2020, Walmart and TikTok conducted a livestream with shoppable content that resulted in a 25% lift to the video platform's following, leading to a second livestream in March. A couple months later, in May, Facebook launched its own shoppable livestream, a summer series with content from beauty and fashion brands.

Walmart announced a cooking competition in May developed in partnership with So Yummy, a recipe brand owned by First Media that specializes in short how-to videos, according to a press release. The show was scheduled to run for 10 episodes on So Yummy TV, its cable and over-the-top (OTT) network that reaches 40 million homes, as well as the food brand's social channels. 

The "Unbox'd" series features food influencers using ingredients from a mystery box to craft themed dishes. Judges select the winning recipes, which are being made fully shoppable to viewers via links to Walmart's online grocery store. Through "Unbox'd," Walmart is hoping to consolidate its shopping experience into a fully digital pathway from content consumption to purchase — a move that signals the retailer further investing in its e-commerce capabilities.

Walmart's tie-up with So Yummy is an effort to more closely unite content and commerce, streamlining the purchasing process for consumers. By showing food influencers cook meals with ingredients available at Walmart alongside links to those recipes and ingredients, the retail giant can shorten the marketing funnel and eliminate steps that could cause friction and lose shoppers. To entice budget-conscious viewers, Walmart also offers a savings tool that ensures quantities of items match those needed for specific recipes, as well as a system that recommends recipes requiring the same ingredients.

The tactic underpinning the show's content is to combine the fan-favorite element of competition-style TV with the growing popularity of unboxing videos in an effort to retain viewers. Walmart has jumped on cultural trends in the past, activating a beauty-focused livestream on TikTok in March 2021.

"Unbox'd" arrived at a promising time for Walmart's e-commerce business. After experiencing 79% annual growth in online sales over 2020, the retail giant rebranded its media network and continued to expand its partners program. The retailer announced a 37% growth in e-commerce for Q1 2021 that speaks to its sustained efforts.

The partnership with So Yummy also sees Walmart targeting younger audiences with influencer marketing. "Unbox'd" features three well-known members of a food influencer community that racks up millions of views on TikTok, many of which come from Gen Z and millennial viewers who are spending more time on the platform. So Yummy also boasts a 350 million monthly viewership on its own social media channels, including Facebook and Instagram, according to the press release, which Walmart seeks to draw from as it expands its consumer base.

TikTok, often regarded as a video-sharing app most popular among teens, is trying to evolve past that image as it chases more brand dollars and attempts to sustain user growth that has exploded amid the pandemic.

During its second appearance at the Interactive Advertising Bureau's NewFronts in early 2021, the ByteDance-owned company pitched advertisers and media buyers on an audience that extends well beyond Gen Z to encompass more than 100 million monthly active users in the U.S. and one whose interests are more eclectic than lip-syncing and dance videos.

"You can't get to the scale that we've reached without reaching almost everybody and having content for everybody," said Nick Tran, TikTok's head of global marketing, during a pre-recorded panel discussion. "[Brands] always talk about trying to reach this younger audience. Even if you're trying to reach an older audience, they're all on the platform, they're all engaging and being entertained by the diversity of content and the diversity of creators that we have."

Executives emphasized that TikTok's video content is not only a form of entertainment, but also a driver of sales. TikTok has invested more heavily in commerce capabilities, recently introducing tie-ups with retailers including Walmart that allow consumers to purchase products without leaving the app. Beyond touting direct sales channels, TikTok has positioned itself as a cultural trendsetter that can create a broader impact on the bottom line.

Over the course of the pandemic, products ranging from American Eagle leggings to Ocean Spray cranberry juice and feta cheese experienced a surge in sales thanks, in part, to viral TikTok videos. During the NewFronts, TikTok said other brands could capture that buzz — encapsulated in an #TikTokMadeMeBuyIt hashtag — by partnering with the creators that prop up its powerful recommendation algorithm.

"TikTok has become home to a new generation of commerce disruptors, collapsing the funnel as we know it by bringing discovery and purchase closer together," said Sandie Hawkins, head of TikTok's U.S. advertising business. "We are diligently building the tools in 2021 to further enable and drive community-based commerce."

Separating from the pack

TikTok went to great lengths to separate itself from the social-media pack at the NewFronts, stating its model — a scrolling feed of full-screen, sound-enabled videos — is more closely aligned with Netflix than rivals like Facebook or Twitter, which executives said users merely "check" in on rather than watch. Facebook introduced a TikTok lookalike to Instagram called Reels last August.

Similarly, executives championed a marketing strategy that blends paid and organic media in a way that feels akin to non-sponsored content users would normally come across in their TikTok feed.

"There's an art and a science to advertising, and over the past decade, the industry has really started to move further and further toward the science with more programmatic and data-driven ads. We kind of forgot about the art," Sofia Hernandez, TikTok's head of North American business marketing, said as part of a fireside chat with Hawkins. "TikTok allows brands to lean back into creativity and engagement and they can finally be storytellers again."

While TikTok's bets on shopping are fledgling, the app claims it's already ahead of key rivals in terms of delivering results, including during a holiday shopping period that saw more consumers gravitate to online channels due to the pandemic. Commerce was a major theme at the 2021 NewFronts, with other platforms like Amazon and YouTube promoting their ability to link eyeballs to shopping carts.

"Community commerce is very much alive on TikTok," said Hernandez. "Even as a young platform, we far outpaced other platforms in unplanned and impulse purchases during the holidays."

Walmart ran a first-of-its-kind shoppable livestream on TikTok in December 2020 as part of its holiday marketing campaign, and re-upped the concept for a beauty category-focused promotion in March. The retailer has expressed interest in acquiring a stake in TikTok, valuing the app's ability to blend content and commerce.

Tuned in

Even as the economy reopens, TikTok expressed confidence that it could preserve pandemic levels of engagement. It cited Kantar survey data that found 88% of U.S. TikTok users intend to spend the same amount or more time on the app over the ensuing six months. Thirty percent of users reported watching TV and other streaming outlets less since joining the platform, per Kantar.

As TikTok attracts a wider range of regular advertisers — McDonald's, Chevy, Gatorade, Disney and L'Oréal were name-checked during the talk — it cautioned partners to change their thinking when developing campaigns for the app.

"Don't make ads, make TikToks" became a mantra for TikTok when it introduced its global marketing platform at the NewFronts in 2020, and the theme was reinforced at the 2021 show. The mentality extends to commerce, which Hernandez said is a "flywheel" where TikTok's community sits at the center — a break from the traditional path to purchase. 

"When brands create content that looks and feels like a TikTok, people tune in and take action," Hernandez said.

Netflix launched an e-commerce shop that will sell limited-edition merchandise based on its shows and brand, per a blog post. Netflix.shop is available in the U.S. and will roll out to other countries in the coming months. The debut collection includes streetwear and action figures based on anime series "Yasuke" and "Eden," along with apparel and decorative items inspired by "Lupin" made with the Louvre in France. It also includes anime-inspired collectibles from emerging designers, with products based on "Stranger Things" and "The Witcher" to come.

Launching an online shop for branded merchandise is one way the streaming platform can build on the gains in brand value it saw during the pandemic, as consumers spent more time with digital video. It's also the company's first foray into connecting content with e-commerce, a trend that has affected the entire marketing landscape as brands attempt to shrink the sales funnel across a variety of digital platforms.

Video platforms including YouTube and TikTok have beefed up their respective commerce offerings, and shoppable livestreams became a go-to tactic as brick-and-mortar stores were closed during the pandemic and consumers increasingly shifted to online shopping. Walmart has teamed with TikTok for shoppable livestreams as it seeks to compete with e-commerce leader Amazon, which has made its own content plays.

While Netflix.shop will not be integrated into the streaming giant's actual shows, it does offer a new revenue opportunity for the company. Netflix reported a 24% lift in revenue in Q1 2021, but its subscriber number came in below a previous guidance — a slowdown the company attributed to the continuing effects of COVID-19 on production. However, Netflix is also facing more competition across the streaming landscape, from fellow subscription services like Disney+ and HBO Max and ad-supported video-on-demand platforms that surged during the pandemic.

While it already offers consumer products through partners like Target, Netflix opening an e-commerce shop will give it greater control over revenue opportunities. Additional sources of revenue like Netflix.shop could help the company push back on calls from investors to bring advertising to its platform, which it has steadfastly refused to do. CEO Reed Hastings said in a 2020 earnings call that "there's not easy money" in competing with Google, Facebook and Amazon in the online advertising market. Its e-commerce offering could create a new revenue stream without the costs associated with establishing an ad business.

While Netflix seems unlikely to add advertising to its content, it often flexes its marketing muscle to promote its original shows and films. The platform teamed with water brand Liquid Death to promote "Army of the Dead" with a campaign that included a late-night infomercial. However, an effort in support of the show "Sweet Tooth" that included a front-page advertorial in USA Today drew criticism for blurring the line between advertising and news.