Coca-Cola Goes DTC, Vero Grows In Popularity, Facebook Reach Continues to Decline [Subject-to-Change]

February 27, 2018: Coca-Cola goes DTC, Facebook reach continues to decline, Vero grows in popularity, P&G cut ad spending (again), and contrary to popular belief Kylie Jenner did not cause Snapchat’s demise

Here’s what’s worth knowing this week:

Table of Contents

Surviving A Retail Apocalypse 101

Just eight weeks into 2018 and we’ve already had store closing announcements from J.C. Penney, Toys R Us, Macy’s, Sam’s Club and Kmart, among others. CPG and other retail brands remain collateral damage as they see their distribution channels crumble month after month for a good part of the last decade. But some brands are adapting better than others. For inspo on how to survive and thrive the e-comm revolution, look no further than Coca-Cola, which shared the details of its new direct-to-consumer e-commerce strategy.

For the first time in Coke’s 100 year history, bottlers are delivering select brands directly to consumers’ doorsteps via eFullfillment. And that’s not all – in a new effort to make Coca-Cola brands ‘pop’ on the digital shelf, the company is applying the same in-store merchandising online by using high-res photos, inspirational copy and targeted marketing to inspire clicks.

What it means, IRL: Traditional supply chain distribution methods are on the outs. Retailers, QSR, convenience stores – with many brick-and-mortar entities closing, many CPG brands are losing their distribution footprint. Coke’s efforts to become customer-centric and deliver a coke whenever a consumer wants one, via the channels they’re actually engaged (h/t to Alexa-powered voice activated ordering) has provided the brand with a competitive advantage over other brands who have maintained the status quo. With the success of this model, it’s likely that other CPG brands will begin to follow suit – that is, if they’re willing to change.

Make it work: As exemplified by Coke, the changing retail landscape represents an opportunity for legacy brands to evolve by creating a consumer-led, digital-first strategy across all business units – not just marketing. Brands looking to transition their strategy should look holistically at their entire business to identify key opportunities they have to influence new consumer behaviors. This includes looking at your supply chain and current distribution partners and determine where you could ship direct, or create bespoke delivery experiences in key markets (i.e. by drone). It includes designing beyond the screen of the moment and collaborating with those influencers who impact your consumers, so your that brand pops on all feeds. It may even include building a new brand – as Pepsi has, with its new Drinkfinity experience.

I Can Be Your Vero, Baby

Step aside Instagram, there’s a new social app in town. Vero, which has been pegged by some as the new Instagram, allows users to post whatever they like – movies, TV, books, places, or photos – and share them with a social network that they can control. Unlike Instagram, Vero’s feed is chronological, contains no ads, and is subscription-based (unless you’re one of the first 1 million users, of course). Also, Vero will soon have a ‘buy now’ feature that will allow brands and influencers to sell products direct from the feed.

Vero’s rapid rise comes as Facebook’s visitors continue to plunge, Snapchat continues to receive increasing scrutiny for its app redesign and Instagram’s algorithm continues to frustrate users. Although Vero is currently not as popular as Instagram, it’s chronological and ad-free feed is an attractive offering to its users. Vero could serve as a major opportunity for brands & marketers to advertise without having to pay-to-play. With the possibility of a Vero revolution on the horizon, marketers should begin to explore and familiarize themselves with the new app. Who knows, Vero could hold the future of photo-sharing apps.

The Death of the New Studio System?

Facebook’s reach is continuing to decline and publishers are spending big bucks to distribute branded content at the same scale they once were able to achieve organically (sound familiar?). In the fourth quarter of 2017, spending on branded-content on Facebook grew 159 percent year over year. To some extent, that uptick was driven by an overall increase in branded content and ad rates, with more content studios and brands alike producing more campaigns that required paid distro.

Publisher Content Studios emerged as the go-to solution when Facebook became a pay-to-play platform for brands, but remained the primary source of referral traffic for publishers. It’s a dynamic that enabled custom content studios to be marginally profitable – creative producers better served brands’ earned and paid media needs than their agencies, while the publishers themselves continued to gain efficiencies from owned distribution to their audiences.

Fast forward to today’s era of fake news – and Facebook being burned as a result – publishers have now been played the brand hand. With that loss, publishers are the new brands, and creators are the new publishers – and content studios are mad expensive. Similar to brands, for publisher content studios to remain profitable will require building relationships with relevant creators to regain earned and paid media efficiencies.

Going Once, Going Twice, Sold

Mark Pritchard isn’t done with his ad spend purge just yet. Last week, the company announced plans to reduce ad spending by $400 million through the fiscal year ending June 30, 2021. ICYMI, since 2015, P&G has cut the number of agencies they work with by 60% and has plans to reduce them by 80%. In addition, the company is also changing how it works with agencies, with more ‘open sourcing’ of project work instead of solely relying on agencies of record. So what does this mean for agencies? Get ready to start bidding more.

Stormi’s Brewing For Snap

Last week, SNAP stock fell more than 7% after the Kylie Jenner tweeted that said she is no longer using the app. But, before you freak out, Kylie Jenner didn’t kill Snapchat – in fact, the app has been struggling for quite some time. Following its infamous redesign, Citi downgraded Snap’s stock from ‘neutral’ to ‘sell’ the day before Kylie’s tweet, which def could have influenced the stock’s sudden drop. Looks like Jenner is off the hook for this one…