The next generation of converging commerce has been saved
The next generation of converging commerce
Insights from 11,500 global consumers
The world and role of marketing has dramatically shifted. Consumers are gravitating to channels that are more flexible, blurring the lines between marketing and commerce.
The lines between marketing and commerce are blurring
At the risk of oversimplifying, in the era of broadcast media and linear customer journeys, the marketers of past generations were hyper-focused on upper funnel demand-generation activities, like driving awareness and building brand equity. And for CMOs, this meant carefully choosing what to communicate and where to place media and channel investments to help ensure the most impactful messages resonated with their target audiences. With an eye toward awareness and brand building, the demarcation between the role of marketing and the role of sales was very clear.
But the world—and the role of marketing—has dramatically shifted. Now, channels that were once isolated to separate parts of the customer journey are converging into dynamic experiences where a customer can learn about, interact with, and purchase from a brand in a manner of their choosing, simultaneously compressing and expanding the journey. As a result, designing a linear customer journey that moves over time from awareness to sales conversion is inching closer to being a relic of the past.
As consumers gravitate toward the channels and experiences that offer more flexibility, the lines between marketing and commerce are blurring. Consequently, the urgency for marketers is increasing to not only reevaluate their communication, media, and promotion choices, but also rethink how marketing and sales can most effectively work together to drive awareness to purchase in today’s next-generation commerce landscape.
How is this coming to fruition? When we polled 11,500 global consumers from 19 different countries to understand how people are interacting with brands (for more information, see the sidebar, “Global Marketing Trends surveys”), we discovered two notable trends that signal just how significantly media and commerce have changed in the wake of a global pandemic:
- The next-gen channels of commerce are here – Channel strategies are transforming into multipurpose experiences. And they’re rapidly evolving. Consider social media: Once a domain for awareness and advocacy, our survey results show almost a third of respondents made a purchase on a social channel in just the last month. Further, other channels that were neither awareness nor commerce channels quickly elevated to both! For instance, over the past month, 18% said they made a purchase within a video game experience and 11% through a voice assistant.
- It’s more than competing for the “customer of the future” – The knee-jerk reaction may assume these next-gen channels are primarily driven by younger generations in more mature markets. However, we see similar engagement from those ages 26–45 as those ages 25 and under. And even more so, emerging markets, such as Brazil, Chile, Turkey, and India, are often leading the charge.
As a result, these new methods of customer engagement are turning commerce into media and media into commerce. Consumers can engage with brands impulsively or intentionally—and they may jump in or out of that interaction in a moment’s notice. And these more dynamic and consumer-driven journeys are compressing the entire marketing funnel.
Navigating the blurred lines of marketing
These trends are pushing CMOs and their marketing teams to go beyond a top-of-funnel focus and consider the entire journey when developing content and experiences. And encouragingly, it elevates the marketer into a strategic force, responsible for a customer journey that more directly ties marketing to revenue growth. With this heavy responsibility, the “media mix” choices marketers make matter even more as each investment can have significant impact on the entire customer journey.
In this spirit, we break down each of these next-generation commerce trends to understand which demographics are gravitating toward these experiences. Specifically, we explore how some of the most forward-looking countries are activating these experiences, while also digging into how generational factors influence commerce behaviors.
Global Marketing Trends surveys
To ensure a globally relevant, cross-topic understanding of marketing and the customer experience, we conducted two global surveys.
The Global Marketing Trends Consumer Survey polled 11,500 global consumers, ages 18 and above, in May 2021 across 19 countries, including the United States, Canada, Mexico, Brazil, Chile, South Africa, Sweden, United Kingdom, Italy, Ireland, France, Spain, Turkey, Switzerland, Denmark, Portugal, Japan, India, and China.
The Global Marketing Trends Executive Survey polled 1,099 C-suite executives from global companies located in the United States (62%), United Kingdom (11%), France (9%), Japan (9%), and the Netherlands (9%) in April 2021. This survey asked chief executive, marketing, information, finance, operating, learning, and human resource officers their thoughts on a variety of topics driving the evolution of the marketing function. As this report focuses on marketing and customer experience leaders, 50% of the respondents consisted of chief marketing officers or those with similar titles (e.g., chief experience officer, chief growth officer), with nearly equal distribution across the other C-suite roles.
All businesses (outside of the public sector) had at least $500 million in annual revenues, with 73% having more than $1 billion.
The ‘nontraditional’ marketing channel: How next-gen channels are moving to the forefront
Traditional marketing channels are evolving right before our eyes. Incredibly, as figure 1 shows, nearly a third of all consumers surveyed indicated they made a purchase on a social channel in the past month. Even a year ago, China was one of only a handful of countries where major brands used social channels as a “social” CRM system.1 Now, we are seeing this trend take hold across the entire globe.
In addition, video games, virtual reality headsets, and voice assistants are moving from end products to platforms where brands are deploying carefully crafted messages that can also lead to on-platform sales conversions.
Whether it be social media or virtual reality headsets, each next-gen channel provides a glimpse into how consumers are rapidly evolving how they engage and purchase. And as these platforms continue to compress the customer journey, executives should reassess—and evolve—their more traditional marketing strategies.
Kjetil Undhjem, head of marketing and brand strategy at Australian-based banker ANZ, explains just how much they need to “reduce activity in traditional sponsorships” to “future proof” their social media strategy and invest in new channels: “We have to take more risks in our comms and marketing in order to connect to customers and actually be relevant. We’re constantly testing and learning new channels—and trying to scale up. Currently, we are testing gaming. And as we talk about financial well-being, we know it’s all about creating habits, and we are finding out the gaming world has done this for ages. So, we can actually use it as not only a marketplace but also an arena where we can learn how we can do better.”2
Like ANZ, many brands see a growing world of opportunity to design relevant messaging and experiences that can lead directly to conversion. As Undhjem makes clear, marketers should quickly capitalize on these rapidly evolving channels to scale their marketing and next-generation commerce functions in a manner that drives growth.
Figure 1: What percentage of consumers made a purchase through a next-gen channel in the past month?
Next-gen channel purchase by age group
The innovation leap: Emerging markets are getting a jump on next-gen engagement and channel strategies
Many of the world’s emerging markets are leapfrogging more mature markets in deploying new marketing to commerce experiences. This is especially true for Brazil, Chile, Turkey, and India.
And of the more mature markets, China is at the forefront of engaging with consumers through the most innovative methods. As figure 1 shows, the consumers from these emerging markets and China routinely see next-gen channels as legitimate avenues for both learning and purchasing. Take Brazil, who we noted in the 2021 Global Marketing Trends report has some of the most active consumers interacting with brands through online reviews and social media conversations.3 It appears that same momentum is carrying over to making purchases on these social media platforms. In other words, they use these platforms to not only engage with brands and others but also translate that energy into sales conversions.
Further, we see for many, the beginning of the “metaverse” is already here, as consumers—especially in emerging markets—are blending the physical and digital to engage with brands across the full consumer journey (to learn more, see the sidebar, “The physical-digital catalyst”). For instance, the consumers in Turkey and India are pushing the envelope even further as they are both in the top-tier of making purchases across social media, video games, voice assistants, and even VR headsets. And in terms of toggling between physical and digital environments, they are also leaders in engaging in online-offline journeys and, especially in the case of India, are extremely likely to use technology as a “purchase assist” (across eight purchase categories, anywhere between 43% and 60% of consumers said they used technology to assist in making a purchase decision—highest of all countries).
The physical-digital catalyst
Next-gen channels aren’t the only dimension increasing customer autonomy and journey complexity. As more have moved to hybrid journeys, almost one in five said they tried/browsed a product in store but purchased online. Inversely, in categories such as automotive, banking products and services, and electronics, nearly a third of consumers said using technology, such as a virtual showroom, helped them make a purchase decision (figure 2).
Now, both brick-and-mortar stores and digital platforms are not only a place for commerce but oftentimes a lab for consumer research.
Figure 2: Where consumers rely on technology to help make a purchase decision
A growing customer base of next-gen channel engagement
One of the most notable challenges of setting a strategy that dynamically marries communication and commerce is picking where to invest. The proliferation of channels and customer journey options makes it incredibly difficult to determine which channels are right for the brand.
However, there are notable generational patterns that can guide brands where to play. And while we inherently understand Gen Z grew up in a digitally native environment, we see similar commerce behaviors for millennials and Gen X. Figure 1 shows how those between the ages of 26 and 45 use next-gen purchasing channels at rates similar to those ages 25 and under.
Many brands should bifurcate their engagement strategies to meet their customers in the environment—and manner—they want to be met. This may mean changing how you interact with—and message—customers in their environment.
Paving your own journey: Lessons from the field for marketers
Marketers can redeploy some of these learnings in designing their own marketing and commerce strategies. Together, we recommend three courses of action for designing for the next generation of converging commerce:
Adopting new methods for new markets. In India, a number of companies have circumvented the expansive storefront in favor of next-gen digitally driven means to reach both rural and urban audiences.4 This often means converging awareness and purchase activities into a single platform. For example, one community-based platform, Trell, leans on an extensive video blogging community (vloggers) to cover all aspects of the customer journey: discover, create, share, and even shop.5
Rather than trying to compete head-to-head with more established competitors, brands can leverage these more dynamic platforms to simultaneously embed their messages and shopping experiences into the communities where their customers (or prospective customers) already interact.
Changing the approach to earn credibility. Of course, a brand can’t just jump into a platform and expect to seamlessly fit in. Rather, it requires marketers to shift from a “top of funnel” to “full funnel” mindset that integrates communication and engagement. For instance, brands are well-accustomed to leaning into “paid search” as a means to garnering awareness from customers looking to learn more about brands and products. However, as more people—of multiple generations—shift their behavior to seeking information through next-gen platforms and channels, brands should evolve in step. Take TikTok’s “For You” page, where earned media is the primary means to driving traffic and cultivating awareness. With over one billion monthly users and “algorithmic search” capabilities that match users to interests, brands are turning messaging into a form of entertainment.6 Users interact with this space to share product experiences and even provide tutorials. And as a result—major brands are able to circumvent paid search to get noticed and sell more products.
In essence, marketers may have to develop new capabilities, like cultivating communities—and influencers within those communities—to develop content that fuels traffic-driving algorithms.
Scaling through partnerships. It’s clear the next generation of commerce will likely require brands to do more. Brands can lighten the burden and extend their influence through carefully crafted partnerships. Given the speed of changing consumer behavior, we surveyed nearly 1,100 global executives to better understand how they are navigating this increasingly complex environment. And interestingly, the results of our executive survey reveal high-growth brands (defined as those who achieved 10% annual growth or greater) are entering into new partnerships at a higher rate than their lower-growth peers (62% versus 50% for negative growth brands). While the pandemic may have been the catalyst, these high-growth brands indicated numerous benefits, including more holistically delivering products and services to current customers (54%), gaining operational efficiencies (49%), and enhancing the organization’s ability to innovate (48%).
Recently, Nike partnered with the gaming company, Roblox to create virtual products. This partnership even manifested in a digital showroom to allow people’s avatars to wear Nike apparel. In addition, they’ve added an augmented reality component that brings this “Roblox world to life at Nike’s House of Innovation in NYC,” transforming the kids’ floor into an “augmented reality version of Nikeland” through a Snapchat lens.7
Blurring the funnel can be intimidating, but it can simultaneously elevate the marketer—and create a more dynamic customer relationship with the brand. Marketers have an opportunity to take their unique place as the customer leader and expand that influence through this new era of commerce and experience.
1 Peter Sedivy and Michael Barrett, “Changing the playbook: Agile marketing for our increasingly digital world,” Deloitte Insights, October 15, 2020.
2 Sourced from Global Marketing Trends interview throughout May and August of 2021.
3 Jennifer Lacks Kaplan, “Participation: A two-way street,” Deloitte Insights, October 15, 2020.
4 Vijay Mahajan, “How Indian companies are using technology to reach new customers,” Harvard Business Review, October 15, 2020.
5 Great Learning, “5 new social media platforms in India to look out for in 2021,” September 24, 2020.
6 Sapna Maheshwari, “That fun TikTok video? It’s actually an ad.,” New York Times, December 21, 2021.
7 Erika Wheless, “Nike teams up with Roblox as metaverse interest grows,” AdAge, November 18, 2021.