In this edition of Outside In, I dig deeper into the ten 2021 Predictions (https://outsideinlens.substack.com/p/2020-in-review-10-predictions-for) – related to industry developments and consumer behaviours, for 2021 (and beyond). This post explores in the detail predictions 7 & 8 of my list – 7) Branded Entertainment Will Rise and 8) Livestreaming Will Ebb and Flow. Hope it will be a compelling read for you…
# Prediction 7) Branded Entertainment Will Rise
A) Top of Mind Concept Illustration
Prima facie the concept of “branded entertainment” is a pretty old one in practice. It is a very well recognized branding and marketing approach known by most marketers, especially in context of the Red Bull efforts since forever. One of its earliest initiatives of using entertainment to build their brand narrative – The Red Bull Flugtag – has started in 1990s and is still running successfully. When Red Bull didn’t have the resources to advertise on TV events, radio shows or billboard ads, they decided to create their own event. Roughly translated as flight day, the competition consists of “building homemade, human-powered flying machines” to jump off a three-story deck with water as landing site
Given the absurdity of the event, large crowds began gathering to witness the spectacle, and word quickly spread about the Red Bull brand. Since its inception in 1991, the Red Bull Flugtag has attracted huge masses, with a record-breaking 220K people attending in 2012
For a more formal definition of the practice, here goes: ‘Branded Entertainment’ is an umbrella term for all brand produced content where the goal is to have audiences watch or engage with the same mindset they would a film or TV series — as opposed to more traditional forms of advertising where brand messages can be placed before or during the experience of other unrelated content. In other words, the goal is to create content audiences watch because they want to, not because they can’t skip it
Red Bull has carefully created a narrative that goes much deeper beyond the Product (Energy Drink), invoking strong emotion among Customers (Gives You Wings). Sponsoring events ranging from record-breaking Orbit jumps (Red Bull Stratos) to Formula One race cars are not so much about selling drinks, but rather creating a strong brand image that is synonymous with adventure, thrill, and adrenaline. Though the end goal is obviously to sell, creating stories is what gives Red Bull an edge over competitors, allowing them to charge a premium and maintain a loyal following
Other notable top of mind ‘all-star’ example of branded entertainment is the Lego Movie
The movie came out in 2013 and was a runaway success. After watching The Lego Movie, thousands of kids and adults wanted to buy Lego products. As a result, the company improved brand awareness and increased sales by 25%. It spawned an entire ‘content franchise’ (can I say) around the same: https://en.wikipedia.org/wiki/The_Lego_Movie_(franchise)
B) Why Do We Say That Branded Entertainment Will Rise
The efficacy of the branded entertainment has been fairly established from the above few illustrations. It is my opinion that the rise of OTT Entertainment and multitude of Platforms (40+ in India: https://en.wikipedia.org/wiki/Over-the-top_media_service_in_India and 60+ BEST Ones globally: https://colorwhistle.com/best-ott-platforms/) will lead to the rise of branded entertainment going forward. According to comScore, more than 50 million households across the world today have OTT video – which they consume in the same time-of-day pattern as traditional TV viewers.They will facilitate multiple ways to incorporate branded entertainment into a marketing strategy without producing a full blown feature film (Lego Style) or sending humans into space (Red Bull Style)
These developments have already found its ‘POC (Proof of Concept)’ in these 2 examples noted below:
Netflix Series – Fabulous Lives of Bollywood Wives
Not only did the series strike a chord with the India audience with its inside view of the glitzy Bollywood lives, it also served as the right tool to showcase a series of consumer brands in great light. Check out the top ones that come to mind (it is not the complete list):
Qatar Airways
Doha Tourism: Hamad International Airport, Rolls Royce, Mondrion Doha, Galleries Lafeyette, Ritz Carlton, Anantara Banana Island Resort
Food and Cuisine Brands: Ministry of Crab, Arth, The Wine Rack, Foodhall
Dyson – Not sure if it featured in the series, but following the buzz of the series, the brand used the cast members as influencers to promote its Hair Straighteners. They uploaded pictures and videos of them using the hair straightener, expressing their newfound love towards the product in the caption
Living Liquidz– a liquid delivery app, was another brand that took a similar approach in its strategy. They roped in Seema and Neelam to create content around the app and promote it on their Instagram handle
And so on…
Another Netflix Series – Masaba Masaba
Similar to the above show, Masaba Masaba helped the designer brand ‘Masaba’ renew its prominence in the Luxury Fashion domain. Not only that, Masaba reckons that post the show’s release they’ve got an influx of advertising interest. The show was a big boom for them in terms of getting brands. They didn't expect the show to have such a high viewership too. Brands are now looking to pair with Masaba together and individually. They’re getting interest from brands in new categories like haircare, skin care, sports and more. Brands that are both young and old are trying to aligning with them for alliances. The show was a really big, big boost for their digital marketing interests
More Notable Examples of Branded Content Pieces
Checkout other examples here at: https://blog.placeit.net/9-examples-of-branded-content/
Hence, proved! QED!! Kindly allow me the use of the most ‘branded’ line from school Geometry. :)
# Prediction 8) Livestreaming (Live Commerce) Will Ebb and Flow
"Livestreaming is the new Tupperware party." – Ben Ball Senior Vice President, Dechert-Hampe
Unlike the above case of Branded Entertainment which has been around for nearly 3 decades (but maybe just not optimally used), Livestreaming (also referred interchangeably as Live Commerce) is a very recent phenomenon emerging from the rise of Smart Mobile Phones and Video Streaming Apps. And, it has received global prominence thanks to the likes of Chinese behemoths Alibaba and Tencent which have made it a critical piece of their E-commerce strategy. Maybe we can say that Livestreaming is the Mobile Avatar of the Home Shopping TV Networks – HSN, QVC, Shop CJ, GS Homeshop and the like – that have existed for a long time
Let’s dig deeper…
A) How and Why It Works
As Chinese consumers grow ever fonder of live streaming, brands and retailers have quickly understood the potential of this new communication channel. E-commerce is steadily integrated with these videos, regardless of whether it is via a fashion show or internet celebrities reviewing the latest cosmetic products via video. It has enabled Internet users to buy what they see on the screen in real time. The key success factors of this new format: entertaining and event-driven formats, celebrity involvement and frictionless mobile payment solutions via Alipay or WeChat Pay. The first two develop content that engages potential customers whilst payment capabilities enable the final purchase. Alibaba is said to have a live shopping conversion rate is upwards of 20% on its Tmall platform and 30% on its Taobao platform.Social Engagement – via Livestreaming – now ranks as a primary driver of customer purchases – moving the burden away from Price Discounts
The format involves a trusted influencer also referred to as KOL (key opinion leader) who is a celebrity or company hired talent, explaining a product to users over live video, trying out the product herself, responding to live questions and yes above all providing an entertaining and affinitive environment. The users can continue to shop the product once it is opened during the stream, checkout and make payments, all this while watching the live-stream. Brands or sellers themselves can also host a live-stream to reach-out to their customers directly. This is different from teleshopping over TV which does not have the interactive and social aspect of a live-stream. Also viewers do not get an e-commerce like purchase experience
Let’s checkout some of the most successful case studies that have driven the buzz around the efficacy of Live Commerce:
In 2019-2020, Viya, China’s most famous KOL, makes sales of over 3 billion Yuan ($430 million USD) on Singles Day Day alone. One of Viya’s live-stream hit audiences of more than 37 million which is more than “Game of Thrones” finale (19.3 million) or “Sunday Night Football” (20.5 million) or Oscars 2020 (23.6 million). Viya has even sold rocket launch services for $5.6 million in a single evening
In 2020, Kim Kardashian, American Media Personality, sold 15000 units of her KKW perfume within minutes of her live stream with Viya
Li Jiaqi, another famous influencer of China, popularly called the “Lipstick King” has famously sold 15000 lipsticks in 15 minutes. He now sells things ranging from skin care to chili sauce. He once introduced 39 products in a span of 5 hours on Taobao live sale with 30 million viewers tuning in
US based QVC Live’s lifestyle influencer Jill Martin earned $60 million in revenue from Today’s show in 2018
Geng Shuai, Chinese influencer once sold 1623 cars on a 2.5 hours stream. Yes, Cars!
Tiger Ai, CEO of multimedia company Hifan quotes: “Fans like their idols to share their own insights, all of which are conducive to ‘raising’ the temperatures of an online shop to create a welcoming atmosphere that entices followers to spend their money. In other words, it’s the ‘ambassador-like’ service of KOLs that pushes the sales. It is like injecting life into the products to make shopping an authentic, personal and exciting experience”
B) Potential and Plans of the Livestreaming (Influencer) Economy
Other geographies also seem to be experimenting with this growth channel themselves:
Lazada, which is present in multiple SE Asian countries, has started integrating live-streaming. Similarly Shoppe, another SE Asian ecommerce company has launched live-streaming ‘Shopee Live’ promising to connect brands and micro-influencers with their fans via live streaming and live commerce. Tokopedia – Indonesia’s largest ecommerce firm – has launched Tokopedia Play, its live-streaming platform. Japanese giant Rakuten has launched Rakuten Live for video streaming, and combining it with commerce seems inevitable
Taiwan's M17 has taken a crack at the Taiwan and Japan markets. M17, known for livestreaming app 17Live, last year launched HandsUP, which offers live commerce services to merchants for a monthly fee as well as a cut of their sales
Moving to the west, Amazon has launched Amazon live creator, an app which helps brands Amazon incubated or outside influencers to create live-streaming to sell a product. The streams are shown on Amazon live platform on amazon.com/live where users can browse and watch live-streams. Facebook already has Facebook live features and announced Facebook Shops and also Instagram Shops to drive its social commerce agenda. Google’s latest experiment Shoploop is also a video shopping portal redirecting to third party ecommerce websites. Twitch is another US example with over 5.8 million active streamers a month
Even in India, there are early signs of the trend with start-ups like Bulbul and SimSim offering pure live-streaming ecommerce. They seem to be using it as a strategy to reach Tier-2 and Tier-3 cities but they do not have noticeable market share as of yet
C) Ok, So the Flow Part is Clear. Where is the Ebb Part?
If we read the narrative from the above 2 sections, it seems a given that Livestreaming/Live Commerce is the next big thing and the concept has been proven as a winner already. Maybe not just yet. Let’s look at some contrary observations that have emerged – via some experiments – already which may compel us to deliberate deeper if it is indeed a long-term thing
Japan’s Struggles to replicate Live Commerce: According to Tatsunori Kuniyoshi, an analyst at Euromonitor International – Japan's lack of a "one-stop app" for shopping makes it difficult for sellers to attract a large number of shoppers in a live commerce event – thereby showcasing a cautionary tale for global players that it won’t necessary work everywhere
Interviews with market participants indicate that live commerce has fallen short of becoming a must-have function for sellers, buyers and the e-commerce operators
Yahoo Japan, which runs a shopping site, announced in May 2020 that it will end its live commerce function by June 2020 (although it has since extended that deadline)
Base, where users set up e-commerce sites, ended its live commerce service in March 2020
Mercari, a popular marketplace for secondhand goods, shut down the function last year. One of their sellers Akira Takeuchi also encountered technical glitches during some streaming sessions and worried that the issues left a bad impression on shoppers. He believes that e-commerce companies ultimately chose to end the functions instead of investing in additional server capacity
Rakuten, which runs one of Japan's largest e-commerce sites, still offers the service through its livestreaming app. But the app remains far less popular than its core online shopping site, with most broadcasters having only a few dozen viewers
According to Hirofumi Ono, CEO of 17 Media Japan, the M17 unit that operates HandsUP in Japan: A typical user visits e-commerce sites looking for a specific product, not a specific shop, whereas Live commerce is about being interested in the flow of information. The consumer behavior between the two services is clearly different. Those who have logistics, inventory, knowledge about their products and fans of those products have an advantage in live commerce
No Sales Utility in Global Markets Yet:
In the Global Markets, live streaming is mostly used by consumers in gaming, entertainment and social media. They watch live news broadcasting on YouTube Live, fitness fans follow work out videos in real time on Instagram Live, and beauty bloggers answer questions from their followers as they stream a skincare tutorial on Facebook Live. Twitch has normalized whiling away the hours watching strangers play video games
However, unlike China, it has not been developed into a Sales Tool yet. ‘See this shade of eyeshadow I’m wearing?’ A live stream host in China might ask. ‘It’s 40% off today only. Just click the link and it’s yours.’ During specific sale periods, they’ll actually call out their followers by name, and say, “You need to take advantage of this deal now.”And it will indeed convert into a Sale. This consumer behavior is yet to be seen in global markets. In Europe, for instance, (according to the feedback from many live streamers) the user loyalty and habits are totally different from the traditional e-commerce. It seems like most people just come and see the fun, but with less intention to find something (to buy)
In terms of outright sales realizations even, within ecommerce, analysts estimate that livestreaming-driven sales only account for between 2% to 10% of sales so far. And, the players themselves are yet to learn how to entertain and sell at the same time
Difficulties in Execution:
Investments for Entertainment: Live Commerce is a form of entertainment. Live-streamers are micro-influencers, and they engage very, very heavily with the audience. There is a heavy, heavy focus on making shopping fun. However, in a post-pandemic world, brands are struggling or have the appetite to invest, to really turn shopping into entertainment
Investments for Content: Players must invest in hosts and in consistent and regular content: Alibaba’s ecommerce platform, Taobao, boasts 4,000 livestream hosts, who generate 150,000 hours of content each day
Training and Development: Being a celebrity or online influencer is not a prerequisite to become a live stream host, but as a brand mouthpiece-cum-ambassador-cum-salesperson, hosts are under pressure to deliver results. So much so that there are now companies dedicated to training them. Multimedia network Hifan is one such company, creating the next generation of live streaming celebrities, or KOLS (key opinion leaders)
Low Perception of Goods and Many Market Types (in European Markets): Consumers refuse to buy from livestreamers are concerned that some of the influencers overplay the functions or quality of some products. While star livestreamers bring in huge sales and are paid commissions on those numbers, sometimes the return and refund rate can be as high as 60 percent. Some influencers have also been called out for reporting fake stats to their brand sponsors. This comes on the back of more picky, less loyal and more tech savvy consumers. Besides, Europe is not one market, but 27, with as many consumption cultures and strong local competitors
Higher Returns (and Inventory Issues): Despite the popularity of livestreaming sessions, the product return rate is 2-3 times higher than the brands’ official e-commerce purchase (channels), according to said Bob Wang, VP at Ogilvy Shanghai. He also notes that much of the purchases are impulse buys, and that generally people still enjoy going to physical stores much more than shopping online. In some instances, hosts are unable to sell the prepared inventory, or the stock runs out, according to Gao Huan, a senior director from Alvarez & Marsal Beijing. “It’s just really hard to predict and a lot of people have established a business model to calculate a (return on investment) for this one”
Managing the KOL Relationships: A key challenge for brands looking at livestreaming is managing their relationship with personalities known as key opinion leaders — or KOLs, and agencies known as multi-channel networks (MCNs). “If there’s a livestream without a (key opinion leader), then it can’t really last,” according to Xu Lei, from Xiaohongshu, a social media site popular with the fashion crowd. But it’s very expensive to hire an internet personality for a livestream, and consumers tend to be more loyal to the KOL than a brand. Relationships with stars like Li Jiaqi can also tend to be expensive one-offs, rather than longer-term partnerships
Combining all these insights, Live-streaming/Live commerce is effectively providing a mechanism to combine live, social and entertainment in online shopping experience. It is surely going to be experimented in all markets globally. However, it is too early to predict it to be a game changer or just a trend in ecommerce. Also, the consumer behavior, capabilities and product stack of major players globally are quite different from China – which may thereby evolve in unique new ways. Ebb and Flow…
In Conclusion
On Branded Entertainment: The James Bond movies have profited from product placement for years. Approximately one-third of the production budget for “Skyfall” was funded by Heineken — and the beer only appeared in the film twice (with multiple short-form derivative pieces surrounding the film’s launch). Down the road, expect to see companies like Heineken, Procter & Gamble and Geico sponsoring entire movies while incorporating their products throughout the content. The content is the star of the show now — and the advertising is just a happy byproduct. Today’s brands can best reach their audiences by building relationships with entertainers who seek to reach that same audience
On Live Streaming:
To quite Guowei Zhang, JD.com’s Head of Livestreaming: “I think this market has just begun and ecommerce livestreaming will certainly generate greater value for commerce. Not 10% or 20%, it could be much higher. But I dare not predict as it’s developing too fast”
According to director of Taobao Live, Chen Lei, the future of live shopping is virtual reality, which has potential to make the live interaction with the products feel more real than ever
References and Sources:
1) Red Bull Story: https://medium.com/better-marketing/lessons-from-red-bulls-marketing-b8e44aeb2856
2) Defining Branded Entertainment: https://medium.com/ketchupcreative/what-is-branded-entertainment-9d753cf81683
3) Lego Movie Impact: https://blog.placeit.net/9-examples-of-branded-content/
4) OTT Entertainment – India and Global: https://en.wikipedia.org/wiki/Over-the-top_media_service_in_India; https://colorwhistle.com/best-ott-platforms/
5) Bollywood Wives Brand Influencers: https://www.socialsamosa.com/2020/12/bollywood-wives-influencers/
6) Places in Bollywood Wives: https://www.luxebook.in/places-featured-in-netflixs-fabulous-lives-of-bollywood-wives/
7) Masaba Masaba: https://www.campaignindia.in/article/masaba-masaba-has-been-a-big-boost-for-our-digital-marketing-interest-masaba-g/464130
8) Branded Entertainment instead of Advertising: https://www.chiefmarketer.com/how-branded-entertainment-can-save-advertising/
9) Live Shopping is hit in China: https://innovationiseverywhere.com/live-shopping-hit-china/
10) Live Streaming Conversion Rates and Potential: https://medium.com/@mukulagarwal19/live-streaming-in-ecommerce-complete-information-bee8c9ffedc0
11) Japan’s Struggles to replicate Live Commerce: https://asia.nikkei.com/Business/Companies/Japan-struggles-to-replicate-China-s-live-commerce-boom
12) Livestreaming in Western Markets: https://www.contagious.com/news-and-views/Live-commerce-where-shopping-meets-entertainment
13) Livestreaming Execution Difficulty: https://www.valtech.com/insights/will-livestream-shopping-take-off-outside-of-china/
14) On European Markets: https://www.livemint.com/companies/news/alibaba-s-shopping-culture-fails-to-lure-europe-s-binge-buyers-11607427760151.html; https://news.cgtn.com/news/2020-05-08/Livestream-e-commerce-gains-traction-in-China-Is-it-worth-the-hype--QjRRqc2kIo/index.html
15) Fractional Sales by Livestreaming, Managing KOL Relationships: https://www.cnbc.com/2020/04/29/livestreaming-drives-fraction-of-sales-in-coronavirus-hit-china-market.html