Marketing
17 February 2023
What would a Google advertising breakup mean for brands?
Amperity's Matt Hallett walks through the implications for competition and data privacy.
Photo by Pawel Czerwinski on Unsplash
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A potential breakup of Google’s ad business is the topic of much debate in D.C. policy circles these days, but it’s also being watched closely by commerce and advertising companies.
The U.S. Department of Justice filed a lawsuit against the tech giant on Jan. 24. It aims to force Google to divest part of its $54.5 billion advertising business.
This brings to the courts longstanding criticism that Google advertising through search and YouTube gains an unfair advantage from its role as a buyer, seller and operator of an advertising exchange.
Through open bidding, compensation schemes for websites and acquisitions, Google set out to create an environment where it “would no longer have to compete on the merits; it could simply set the rules of the game to exclude rivals,” the lawsuit alleges.
While Google called the lawsuit unfounded, the potential for a breakup – whether horizontally or into vertical subcomponents – has many watching what will happen next.
Given Google’s place as one of the top two online advertising platforms, the move would have huge implications for the ad industry, and the brands that generate huge portions of revenue through digital marketing.
Matt Hallett, head of product solutions for customer data platform Amperity, recently outlined several of the changes such a move could bring.
Competition
A breakup of Google would increase competition among other platforms in the industry. That will not only extend to Meta’s juggernaut with Facebook and Instagram, but also Yahoo, Bing, The Trade Desk, Amazon and others.
“These companies would likely be able to increase their market share and profitability, and advertisers might see a reduction in costs for ads,” Hallett said.
For advertisers, the result will be lower costs and more returns, even if the market becomes more fragmented.
“With multiple companies vying for ad dollars, there would likely be more opportunities for advertisers to reach their target audiences through various channels,” Hallett said. “More competition could increase efficiency in ad spending and a better return on investment.”
The privacy factor
Shifts toward privacy that are well underway in the advertising industry may also be impacted by a breakup. While Apple and Meta have gotten the majority of the attention over the last year following the App Tracking Transparency feature of iOS 14.5, Google has power in this area, as well.
Google is one of the top collectors of consumer data. Chrome is also the last major browser provider to phase out third party cookies. A sunset date has been moved multiple times, and a breakup of Google’s advertising will only add more complexity, Hallett said.
“Google has telegraphed motion in the market to be more adherent and conscious towards consumer privacy. But navigating this need while maintaining the needs of their advertising clients is a tightrope,” Hallett said. “Google has continually kicked the can down the road on any firm progress in this space. Breaking up Google could additionally impact its movement in this area and delay progress in user privacy.”
A breakup is less likely to slow down one of the major shifts taking place in advertising: The growing use of first-party data. With these privacy-oriented moves, advertisers have gravitated toward first party data that is collected directly from consumers at purchase, and preserves privacy by keeping data within individual platforms.
“Cookies have been traditionally used in advertising to track user behavior and preferences over time and target ads based on that behavior,” Hallett said. “First-party data is an owned asset that brands have built on consent-based relationships with their customers. It is incredibly valuable and when used correctly, much more insightful and impactful than the black box of third-party data.”
In particular, this data is powering retail media networks that are proliferating as retailers recognize additional monetization opportunities, and brands see the power of targeting people at the point where they are shopping.
As a result, investment in first party data solutions is only increasing, even as Google keeps the third-party shift on hold.
“Experiences built on first-party data build trust with customers who are no longer subjected to confusing interactions,” Hallett said.
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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