1) Addressable TV ads open a new marketing frontier for digitally-native brands, but questions of scalability remain.

WHAT HAPPENED: Addressable ads—TV spots curated to specific households based on demographic, rather than just gender and/or age—are providing a new path for brands to diversify their marketing strategy.

Why it matters

  • In a survey, the Video Advertising Bureau saw TV ad spend among 120 direct-to-consumer brands rise from $1.1 billion in 2016 to $2 billion in 2018—70 of the brands purchased TV spots (traditional and addressable) for the first time last year. Chewy, Peloton and Purple each spent more than $100 million on TV ads in 2018. Addressable ads are often cheaper because they target smaller viewerships than national ads. As TV ads, they also round out digital brands’ marketing strategy, interacting with new audiences, which can feed back into digital and/or brick-and-mortar sales. It’s also a way for companies to stake out an advertising space independent of Facebook and Google where they not only compete with a cacophony of other brands in consumers’ newsfeeds, but must also fork over ever-rising costs.
  • However, it’s harder for digital brands to realize this ad strategy at scale, not least because companies must take both digital and cable metrics into account to maximize addressability—it also means developing various TV ads for the scope of demographics they seek to target without being able to measure its customer conversion as thoroughly as a digital ad. Further diversification in ad strategy is expected in the future—most recently, Walgreens’ pilot is testing freezer and cooler door ads that assimilate to customers based on face and gender recognition and other macro trends like weather. But it’s up to brands to find the right balance of channels that will see the highest ROI.

2) The We Company’s new spaces give visitors a taste of WeWork, but success depends on whether We’s goal is to acquire new members.

WHAT HAPPENED: Made by We and WeWork Go, two new “town hall” concepts, let non-WeWork members try out the co-working space, without committing to a long-term membership.

Why it matters

  • Made by We functions in a similar way to Casper’s The Dreamery where nappers can test out mattresses: Visitors rent out one of six conference rooms or one of 96 desks, with seats costing $6 for the first half hour and then 20 cents per minute for the rest of the rental. Upending the traditional coffee shop model, in which visitors buy a coffee in exchange for a seat and WiFi access, WeWork Go, which launched in China this week, monetizes space, but provides free coffee. Central to both concepts is on-demand availability (visitors can also pre-book a desk online). This is more important to consumers than ever, who expect products and services to be readily available and accessible.
  • We seems to be pitching Made by We as a community center, but despite an innovative model, the ability for Made by We or WeWork Go to serve as a customer acquisition funnel for longer-term WeWork memberships is questionable. If visitors view it as a trial membership, they’ll be more likely to consider moving to WeWork full time—especially if they find themselves booking space frequently the cost would make sense. But if they view it as another coffee shop-like space and use it on an ad hoc basis, they won’t be driven to graduate to WeWork. The We Company already has 556 WeWork offices across 97 cities, and its potential expansion of Made by We and/or WeWork Go will inform how the parent company is conceptualizing the on-demand locations.

3) Cos Bar Labs will feature a rotating selection of brands—a win-win for both parties.

WHAT HAPPENED: Cos Bar Labs will feature three to five brands in a dedicated space online and at six Cos Bar stores, with the potential to expand.

Why it matters

  • As the beauty industry continues its sprint, Cos Bar Labs will give cosmetics brands a new way to enter offline retail in premium real estate, but at lower cost. This is particularly helpful to digitally-native companies, which lack an owned retail footprint of their own, but want to spread their presence and meet more consumers face-to-face. At the same time, the Labs will infuse fresh faces into Cos Bar’s product offering, inciting shoppers to keep coming back to the retailer. Cos Bar will also determine a relationship with each featured brand independently, including how long they will be featured in Labs. Brands participating in Labs will have the opportunity to enter more of Cos Bar’s 20 standalone stores down the line, depending on their performance.
  • As it reels in fresh brands, Cos Bar can use them to market exclusive or semi-exclusive luxury lines. Though many cosmetics brands are pulled in the direction of either Ulta Beauty or Sephora, Cos Bar has an elevated premium, serving a core demographic of wealthy, 35-55-year-old women. Two brands that are joining Cos Bar Labs—Indie Lee and Vitruvi—are digitally-native only and lack a wholesale presence altogether. Another brand, Kosas, only sells online, direct-to-consumer, and at a few luxury retailers such as Goop, Neiman Marcus, The Detox Market and Violet Grey. Likely, Cos Bar is also hoping that the brand partnerships will drive more traffic and sales to its site and round out its channel strategy—ecommerce accounted for only 15% of 2018 sales, which, while drastically up from 2015’s meager 2%, still has room for improvement.

4) CPG companies ditch single-use packaging—a move that could strengthen repeat purchasing habits, as long as the brands can compete against Amazon.

WHAT HAPPENED: Major CPG conglomerates including Procter & Gamble, PepsiCo, Unilever and Nestlé are investing in refillable or reusable containers for their products to diminish waste.

Why it matters

  • PepsiCo will sell Tropicana orange juice in glass bottles and Nestlé’s Haagen-Dazs will arrive in steel pints—a response to calls for greater environmental sustainability, but manufacturing choices that come at a high price in the short term. Many of these companies are using a third party called TerraCycle, which will manage shipments, returns and cleaning to make reusable programs more convenient, not only to shoppers, but to the retailers themselves. While shoppers will have to pay slightly higher shipping charges and a $1-$10 deposit per container, they’ll be able to schedule pickup for empty containers or a buy a subscription that facilitates routine replenishment.
  • Now the main question for CPG conglomerates is to scale and growth the operation—something that may depend on how companies pitch reusable containers to consumers. Playing the eco-conscious card may narrow the scope of shoppers attracted to the program, so it may be better to focus on convenience. Amazon can also provide retailers with important about how to efficiently sell cumbersome products, which include many of the essentials offered in reusable containers. Amazon has refused to fulfill many heavier products from its vendors like bottled water; In December 2018, the online retailer changed its Amazon Dash Smartwater offering from a $6.99 six pack to a $37.20 24 pack, which parent company Coca Cola now ships directly, to cut costs for Amazon. More moves like this are likely imminent, so developing cost-effective, environmentally friendly packaging and shipping methods now will serve CPG companies well in the long run.