Global Marketing Monitor: Weekly Market Trends (May 08, 2021)

Television advertising has been one of the most important vehicles used to build brands however change is occurring rapidly as illustrated by this week39s results from Roku and other data related to declining conventional paytv subscriptions Whatever vehicles marketers choose to use what matters is that they continue to invest in their brands to better position themselves to earn the price increases they will increasingly needVirtually all packaged goods companies have now reported their first quarter 2021 results and input cost inflation remains a key trend Costs will inevitably be passed along to consumers as the year progresses Addressing how to deal with this phenomenon on its earnings call this week Kellogg39s CEO said quotwe have to earn that price in the marketplace through investing in our brands and through innovatingquot It may seem paradoxical to suggest incurring more cost to offset other costs yet it certainly can work In an article from Kantar published last year titled quotWhy pricing power is a brand39s greatest assetquot they stated quotto justify paying more for a brand people must feel that they are getting something from buying that brand that they cannot get elsewhere In other words they have to perceive it as different in some wayamp8230Brands that command a higher price point in their category are typically seen as meaningful and differentquot While the primary drivers of growth for advertising this year and beyond are smaller businesses app developers and others who will not have particularly strong brands in the conventional sense for larger traditional marketers to invest more heavily in their brands to justify the higher prices they plan to seek would be a source of upside growth for the media industryIn addition to Kellogg39s we have compiled results from the largest publicly listed packaged goods segments at Nestle PampampG Unilever PepsiCo CocaCola L39Oramp233al Mondelez Kraft Heinz Danone Reckitt Colgate General Mills KimberlyClark JampampJ Henkel Hershey and Clorox On a combined basis this group of global packaged goods companies grew 45 on an organic basis during the first quarter of 2021 This followed on what was a relatively strong 2020 all things considered of 36 organic growth The growth rate was also notable as the sector faced relatively difficult comparables against the early phases of the pandemic last year which led to a similar 46 growth rate in 1Q20 North American growth was only slightly softer vs other markets but then the yearago period was slightly stronger in North America vs the rest of the world last year On a twoyear basis growth rates were similarLooking at individual groups of business segments by their core products food businesses grew organically by 52 in 1Q21 ahead of the 40 growth rate posted in each of the full year 2020 and 1Q20 Beverages were still relatively soft and were close to flat similar to what we saw in the fourth quarter but well ahead of the year39s average Outofhome consumption serves as a significant drag for these companies Petcare was up 89 sustaining the rapid growth we have seen for an extended period of time above midsingle digits since the beginning of 2019 Personal care businesses were also relatively soft growing by 11 or below the pace of growth observed in the fourth quarter and fullyear 2020 levels both because of pantry loading during the first quarter of 2020 but also because consumers are still not consuming all personal care products as they used to Despite similar pantry loading trends for home care products growth is still elevated at high singledigit levels with a gain of 80 on our calculationsUnsurprisingly ecommerce continues to grow rapidly a subset of companies among this group which disclosed ecommerce growth or share of revenue attributable to ecommerce indicates that growth was around 48 in the first quarter only slightly slower than 202039s 55 pace of expansion Ecommerce now accounts for around 14 of total revenue up from 10 in the yearago quarter and 8 in the calendar year 2019 Of course some segments remain relatively less dependent than others as foodcentric marketers generally have been able to rely on retailers staying open over the course of the past years while others whose goods primarily sold through quotnonessentialquot channels were more dependent on investing in directtoconsumer or other ecommerce based sales channelsThe week was also punctuated by reporting from Roku which posted its results for the quarter as well Roku39s results showed 35 more active accounts and 49 more time spent on the platform which in total resulted in 183 billion hours of streaming content vs 123 billion in the yearago quarter Per account we can calculate a 9 increase in streaming hours yearoveryearFor reference total TV consumption in the US amounted to 102 billion household viewing hours in the most recent quarter with 224 billion hours originating from internetconnected devices according to Nielsen Yearoveryear household growth in internetconnected devicebased consumption amounted to 15 because of the very difficult comparison with last year39s first quarterWe are mindful that Roku has a relatively small but growing international presence which will account for a share of the 183 billion hours The company claims that now more than one in three smart TVs sold in Canada feature Roku and that it has the 2 operating system for Smart TVs sold in MexicoGrowth in Roku accounts coincides with and probably partially contributes to the decline in paytv subscriptions as well On our calculations during the first quarter of 2021 traditional satellite and cable services and incremental vMVPD virtual MVPDs or internetbased paytv distributors households tracked by Nielsen declined by approximately 4 on a combined basis during this period This compares with a decline that ran below 4 in each quarter of 2020 In total Nielsen estimates that there are now 87 million households or 72 of the country39s total with paytv services 12 of total households a subset of the 72 figure are solely served by vMVPDs well below the historic peaks exceeding 90 as recently as 2013 Similar trends are occurring in many other markets around the world albeit from lower levels of peak paytv penetration this past week Liberty Global also reported results and while paytv is growing in some newer markets such as Poland it is declining in other more valuable ones such as the UK where Roku among others are investing for their future growthAll of these overlapping trends contribute to the increased availability of addressable and connected TV inventory and the increased scarcity of traditional linear television inventory Inflationary conditions for likeforlike units of inventory inevitably will follow Fortunately for marketers and media owners television remains a medium that is a key contributor to brandbuilding efforts although its ongoing erosion means that marketers need to continually invest in finding ways to build their brands without relying as much on television in the future as they did in the past Whatever vehicles marketers choose to use what matters is that they continue to invest in their brands so that they can be better positioned to earn the prices they plan to seek from consumers in the years aheadCopyright and Republished with permissionPhoto courtesy of GroupMClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Global Marketing Monitor: Weekly Market Trends (May 08, 2021)

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Brian Wieser

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