Outlook 2021: EMEA POV
How the trends mapped in Outlook 2021 will play out in Europe, Middle East, and Africa
Written by: Kate Walkom, Global Account Director & UM Labs Ambassador Lead UM Int’l
With contributions from:
- Tom Stanton, Strategy Director & UM Labs Ambassador UM Int’l
- Muzammil Hamza, Associate Media Director & UM Labs Ambassador MENA
- Caitlin Pinner, Strategy Director & UM Labs Ambassador UM Int’l
- Oli Flower, Strategy Director & UM Labs Ambassador UM Int’l
- Lawrence Dodds, Client Director & UM Labs Ambassador UM UK
We spent much of 2020 discussing the pandemic as a trend accelerator, pulling forward consumer behaviors by five or so years, particularly in areas like ecommerce, remote work, and telemedicine. And really the acceleration was one of adoption, so the behaviors of early adopters were thrust into the mainstream, and late adopters were pulled into more mainstream behaviors much earlier than they would have otherwise.
This has been none the more apparent in ecommerce growth. Early in the pandemic, shoppers were focused on buying masks, toys to keep the little ones entertained at home, and stocking up on groceries. Recent data from Statista found that food and personal care was the clear winner across Europe for ecommerce — seeing close to 30% growth y-o-y in 2020 compared to 12% in 2019. Furniture, home appliances, fashion, and toys and games also fared well with close to 20% ecommerce revenue growth y-o-y. By the end of 2020, the number of online shoppers as a percentage of the total population in the UK, Germany, The Netherlands, and France all exceed 70% respectively, and the current rapid growth of ecommerce in markets such as Spain and Italy means those countries should hit the 70% milestone in “three or four years.”
Similarly, the Middle East region has also seen significant ecommerce growth, with UAE alone accounting for 23% of overall ecommerce sales volume in the entire MENA region. In UAE and Saudi Arabia, 40% of audiences have confirmed that they have moved their shopping preferences online. Moreover, a study commissioned by Kearney M.E found that 48% of the population in the UAE and 69% of the population in Saudi Arabia are expected to continue shopping online, post-pandemic.
We predict that as we come out of the pandemic, there will be two very different reactions to the new world order: those who have embraced the changes that have been brought on by 2020 and want to push even further, and those who want things to return to the way they were before. There is no doubt that there has been a seismic shift from the center of gravity from the physical world to the digital in almost all of our daily activities.
For example, subscriptions in streaming video service increased 15.5% in Western Europe alone. In the UK, Britons spent a massive 40% of their waking hours glued to their TV at the peak of the pandemic, fuelling what to be the biggest year of growth for streaming services. Netflix viewer penetration is as high as 87% in Norway and the UK and between 80 to 85% in markets such as Sweden, France, Denmark, and the Netherlands, according to estimates by eMarketer.
What is super interesting is that there may be a divide that will start to appear as we look at innovation and trend acceleration from region to region. Looking at Google’s COVID-19 Community Mobility Reports, we can see that in places like China, Australia, and the Middle East, who have recovered more quickly, may have less established new habits, and will more quickly snap back into the way things were. In contrast, in most European countries, where we have fared less well with the pandemic and have a large population to vaccinate, we will have had more time to establish new habits and rhythms.
There will also be a greater focus on the stickiness of services through convenience, customization, and integration into everyday routines. The pandemic has allowed for ample time where consumers can form seismic shifts — particularly in terms of their online behaviors. One strong example of this in Europe is the food delivery services being the clear winners and lifeline for the dining and hospitality industries. One such example is Just Eat, which saw a 57% jump in takeout orders by consumers across Europe in the final three months of 2020 compared to the year before.
The threat to the recovery from economic scarring is self-evident. Due to the impact of the pandemic, 1 in 3 Europeans have lost income and almost half say they are more concerned about their financial situation than they have been at any other point in their life. On a regional level, the loss of income has been most pronounced in Southern Europe, with Greece, Portugal, Italy, and Spain being hit the hardest. But the effects on the financial wellbeing of Northern Europe have been less severe so far. For example, fewer than 1 in 5 Danes have lost income, and they have relatively low levels of concern about their financial wellbeing as do those in Sweden and Germany.
Looking ahead, the divide between the media haves and have nots will extend to more parts of life — not just in the spheres of entertainment and information, but also may start to include quasi-public spaces like retail and events. Systems like Amazon Go will make it easy to keep people who are deemed as a risk to public health out of a store. But what happens when those rules start to extend beyond just public health concerns?
Long story short, the outlook for growth as well as continued accelerated innovation this year hinges on how long it will take until mass vaccination is complete in each region. But what is sure as day, is that to reach scale at present, it will be in most brands’ best interests to make sure that online and offline experiences are both first-class and seamlessly integrated.
We have identified four ways this forward momentum will play out globally and laid out how they will impact the EMEA markets, beginning today as well as tomorrow, and certainly in the first half of the 2020s, touching every facet of our lives and changing how consumers interact with brands.
The Anyware Economy
For any industry that was able to do so, at least part of 2020 was spent shifting to remote work. To be sure, it was not without its challenges, but with schools and offices open, it is easy to imagine how we could retain many of the benefits with none of the drawbacks. Going forward, remote working will be the norm for many white-collar workers at least some of the time, ranging from an increase in completely remote companies, but also setups that allow remote work a few days a week, or a few months a year.
Whilst more progressive companies were already practicing semi-flexible working, 2020 was the year when many businesses shifted to a fully remote model out of necessity. Going forward, remote working will continue to be the norm for many workers, ranging from being completely remote, to having setups that allow remote work a few days a week, or a few months a year. We’re now in a situation where 57% of UK workers plan to continue to work flexibly post Covid-19 — and it’s a similar situation across the EU, where around 40% of the entire workforce is currently remote working. In the Gulf Cooperation Council (GCC) countries, 35% (and counting) have already shifted or are considering shifting to a more remote operation, supporting crowd-limitation and social distancing measures within workplaces.
We’ve already seen the rise of tools designed to increase productivity for remote workers. Going forward, we expect to see a rise in “Anyware” — software designed for hybrid physical and digital presence. An obvious example of this is to think about how we’d improve our calendaring and scheduling tools to take into account our location and proximity. Currently, when we use our email platforms, we can broadly see when people have meetings so we can fit appointments around each other’s day. But if we could include location data too, we could start to understand where everyone is working, who needs to attend, and whether we should hold the meeting physically or online — ultimately allowing us to be more effective with our time.
Along with the rise of new tools and software will come a new class of digital nomads — people who work remotely in order to enjoy the benefits of traveling. This is a concept that was already gaining traction before 2020, when it was seen as an idyllic, perhaps slightly inaccessible lifestyle, enjoyed by a lucky few. But post-Covid, with the increased accessibility of remote working and more openness from businesses, we’ll see many more workers adopting this lifestyle. So as global travel becomes safe and possible once again, expect a surge in demand for remote work from exotic locations.
In line with this demand, we’ll see more countries pitching themselves as the perfect remote working hubs. Estonia has been pushing for this for a while — and they’ve proven just how effective it can be. They’re a small country of just 3 million people, but they have one of the most digitized governments in the world. They launched their E-Residency program in 2014, allowing digital access to services like banking, company formation, processing, payment as well as taxation. Since then, they’ve attracted 68,000 e-residents, who have paid more than €35 million in taxes. Recently, Madeira launched a digital nomad village in order to rejuvenate their struggling tourist market by attracting digital nomads from around the world. As the demand increases, more countries will follow, setting off a global competition for destination marketers to attract this new nomadic class — and their money — with exciting lifestyle adventures combined with fasts Wi-Fi and co-working spaces.
Looking further ahead, we also expect to see a rise in countries creating their own digital currencies, which will make it easier than ever for people to work and trade across borders without needing a physical presence. Here in Europe, the European Central Bank is furthest down the track, as they’re due to make a decision about launching a digital currency by the middle of 2021. The Bank of England has also reportedly made its own plans for launching a cryptocurrency. All these developments will make it easier for more people to work remotely across national borders, a phenomenon that is already not uncommon among the EU countries.
This means that our marketing and media planning will need to become equally smart, as we react to changing consumer behavior by delivering experiences that cater to people who have embraced hybrid work and a part-time digital nomad lifestyle. Location is becoming less of an indicator for consumer intent, and brands will have to work harder at figuring out the right time to reach consumers with the right messages based on contextual cues.
Gaming Eats The World
The stage is set for a gaming revolution. 10 years ago, economist Marc Andreessen wrote an article in the Wall Street Journal called “Software is Eating the World.” In October 2020, Michael Wolf, co-founder and chief executive of consulting firm Activate, wrote (coincidentally, also in the Wall Street Journal), that gaming is set to emerge as the next dominant technology platform — much the way search engines, mobile phones and social networks redefined industries in previous decades. As the virtual world expands and steals share from other categories, gaming giants will begin to challenge the likes of Amazon, Facebook, Netflix, and Google to become the most all-encompassing platforms in the world. Gaming is no longer just for gameplay; it’s ready to eat the world.
You may have heard people refer to “the metaverse,” a persistent 3D virtual world where humans and avatars interact seamlessly, accessible in VR or AR, or from computers and smartphones. Granted, the true metaverse is going to take decades to come together, but it is a world that is being crafted by the gaming giants and this new world will allow the gaming industry to eat into the value chain of industries that widely exist in the physical world.
So how can we marketers prepare for this? Brands must futureproof their identity by ensuring the tools their marketers, designers, and engineers use rival those of gaming giants. Brands need to put the creation of this new world at the core of their strategic and creative process to keep up in the race. Let’s take a closer look at some of the upcoming trends in this space.
First up is 5G and cloud gaming. The introduction of 5G in Europe means that blockbuster gaming titles are now available anytime, anywhere on mobile. The European branch of Activision Blizzard reported earnings 50% above expectations in Q4 last year, largely due to the mobile edition of Call of Duty launching across the EMEA region. The rise of cloud gaming also means that gamers can stream across devices without the need for expensive hardware. Whilst Europe is a bit behind the US in terms of cloud gaming, German Service provider Deutsche Telekom has just launched a new cloud gaming service in Europe, becoming the first major European cloud gaming provider. Moreover, the Middle East has been a hub for esports, with rapid growth since 2017, and an accelerated surge in interests during lockdowns. The GCC gaming market has followed rapid expansion is expected to grow into a USD 821 million sector, up from USD 693 million in 2017.
Another important technology emerging out of the gaming space is the digital twin technology. A digital twin is a 3D virtual replication of a physical environment, currently used a lot in the construction and oil industry to virtually construct new infrastructure, typically with the same 3D rendering technologies that video games use to create virtual worlds. In 2020, the EU finalized plans for a digital twin of planet earth, that will simulate the atmosphere, ocean, ice, and land with unrivaled precision, providing forecasts of floods, droughts, crop growth and fires from days to years in advance. Destination Earth will also attempt to capture human behavior, enabling leaders to see the impacts of weather events and climate change on society and gauge the effects of different climate policies.
In addition, gaming eating into other sectors is driving huge economic growth in many areas in EMEA. As Eastern Europe’s biggest economy, Poland has quietly developed into a leading video game exporter thanks to low labor costs, a young, educated workforce and a thriving gaming tradition rooted in the Communist era. Polish video game developer CD Projekt’s success of medieval fantasy game Witcher and Cyberpunk 2077 made them the most valuable games company in Europe. Meanwhile in Africa, RPG games — such as Aurion, an African fantasy action RPG made by Kiro’o Games by a small team from Yaoundé, Cameroon — are bringing in huge revenue for the local creators. In Kenya, the video games market is set to double by 2021 to almost $100 million.
The gaming industry is charting a new era for the live entertainment industry. First, Marshemello and Travis Scott performed on Fortnite, and then Lil Nas performed to 33million people on Roblox. Last year, Roblox also served as a broadcast partner for Pepsi’s One World: Together at Home concert, proving that these platforms are ready to host bigger and better live concerts on their platforms. From virtual merch to exclusive access to limited records, gaming can be an entirely new gateway to provide value to music fans. Recently, FIFA launched FIFA Sound, a new entertainment strategy designed to create connections between football and music fans with the involvement of players and artists.
For the uninitiated, Roblox is an online children’s game that has 24 million players in Europe. It’s not a single game, but rather a collection of games created by its community of players. Because anyone can make a game that anyone can play, it is the first major gaming platform to let users monetize their own creations using ‘Robux’, the game’s currency. With Robux, young teens can sell everything from aesthetic skins and objects to use in their own creations within the game. And we can see how the game is already having a huge impact on how young people interact with money. Kid’s site Newsround surveyed 240,000 kids in the UK about what they wanted for Christmas last year and Robux currency came in third. Whilst most high street banks won’t offer people under 16 an account, games like Roblox are leading a cultural shift that is disrupting the banking industry, as new online banking companies for kids as young as age six, such as Rooster, GoHenry, and Nimbl, have emerged as a result.
2020 has been the ultimate trial-run in virtual socialization. Video games are letting people chat, connect, and meet new people more than before. In the past month alone, graduations, wedding ceremonies, protests, funerals and virtual meetups with pals have been coordinated on pixelated screens, and brands are getting involved. Experts are predicting a huge rise in social-first gaming platforms. For brands, we need to provide creative solutions to help people socialize in games. For example, Just Eat in France, delivered food and promotional codes via virtual riders in Animal Crossing. Crafting a distinct role for your brand is key, whether it’s starting a social community, supporting a social community, or enhancing a social community. Our 3 top tips for brands getting involved in social gaming are as follows:
- Understand the social gamer. Social games are like any other social platform: they host communities with their own values, habits, and codes. The first step to any strategy of this kind should be to listen and observe how these communities behave and what they are talking about especially on gaming-centric social platforms like Discord, Reddit, and Twitch.
- Enhance their conversation. Players already love the game, so brands need to think practically about how interacting with your product will enhance their existing conversation. Custom content and in-game digital goods provide a way to seamlessly engage with players.
- Continue conversation out-of-game. Use your owned/other social platforms to connect with other channels, such as the First international virtual pride festival hosted in Animal Crossing, which was amplified across Twitter and Instagram.
Overall, it is well past time for brands to figure out a gaming strategy, both how to reach gamers as an audience, and increasingly how to show up in immersive virtual spaces. Time to get on board or get left behind.
Welcome To The Splinternet
In the west, our major tech platforms are facing down their first real regulatory and antitrust challenges, after the tentative steps taken by GDPR and CCPA. Over the next five or so years, the actions taken by governments will vary greatly around the world, and that variance will make for a fragmented digital media landscape, resulting in a Splinternet that will diverge in capabilities, culture, and permissions as the decade wears on.
Historically the internet had been divided up into two: the open web accessed by the majority of the world that is largely driven by the US, and the authoritarian web of countries like China. However, a third version of the internet is emerging — the European internet, which is more inclined to regulate major platforms on antitrust grounds and more keen to introduce privacy laws.
As European regulators gain a better understanding of the Wild West of the Internet, with a growing desire to tame it, we’re witnessing a slow separation between American Freedom and European privacy focus. GDPR was the first real catalyst for this, at one point banning 40% of US news sites in the EU, and has since been followed by copyright directives (Article 13), and most recently a new Digital Services Act that was introduced this past December.
These new privacy regulations, however, have not been popular among large swathes of the populous. The EU’s Article 13 was one of the more divisive new measures, an attempt to place better copyright protections against any content uploaded to the big social and digital platforms. More than 5.3 million people signed an online petition, and more than 200,000 took to the streets to protest the introduction of the law. It’s clearly a divisive topic that Europe cannot agree on.
And while the world adjusts to GDPR and article 13, the EU has gone further — introducing the new Digital Services Act at the back end of 2020. While it covers a range of security and privacy measures — interestingly the new Digital Services Act seems to also be aimed at shifting current power imbalances that ensure the big US platforms stay in power. For instance, it objects to platforms using data gathered from one service to improve the quality of other services under their umbrella. It’s quite clearly a play to improve the competitiveness of European tech platforms.
The financial implications for platforms found breaking rules are large. If Facebook were fined the maximum penalty of 6% of revenue in 2019, it would have amounted to €4.2 Billion — one of the largest tech fines in history globally. It’s therefore no surprise that Facebook has shifted UK users onto U.S. terms following Brexit, or that Google News has pulled out of Spain and threatened to leave Europe entirely on the back of new measures.
And it’s not just the EU who are making strides to regulate the internet its citizens inhabit. Some authoritarian-leaning countries within the EMEA region, such as Turkey, Belarus, and Russia, are following China’s example and increasingly exercising their power to regulate domestic access to global platforms. Similar issues exist across EMEA, most notably in Africa. In Uganda, the situation is escalating as Facebook grapples with content moderation amid an upcoming election. To add to US worries, Huawei has developed a surveillance system used to crack down on protests and online dissent, and it isn’t difficult to imagine a world where the Ugandan government shifts its dependency to China, with its systems built for authoritarian regimes, fracturing the global internet further. With at least 17 more elections scheduled in Africa in 2021, we can expect many more situations like Uganda to arise.
Meanwhile, GCC countries find themselves in the middle of a cyber competition between the US and China. Many GCC countries are working closely with Chinese companies to develop their 5G networks, and much like in Africa, the systems companies like Huawei develop are to the liking of closed political systems in the UAE, Saudi Arabia, and Qatar. While the U.S. remains the main security guarantor in the region for now, its most potent asset in negotiations may diminish as China’s foothold in internet governance grows.
That being said, the reality of the situation today is that EMEA is heavily reliant on U.S. platforms. Google has a 93% share of the search engine market in EU countries, YouTube dominates online video consumption, and Facebook and Instagram are the most popular social media platform. But if EU regulations become stricter and the dominant platforms find the conditions too difficult to operate in, then we would need a group of local champions to emerge to replace them. But as we know this isn’t an easy task. Tech businesses have success in niches or tribes, but growing platforms to the scale of Facebook or YouTube is not something that happens overnight. It’ll require substantial investment in tech and most importantly talent, plus an appetite from entrepreneurs, to enter a more and more regulated environment where the EU would have an eye on every move they make. It’s not the most inviting environment to enter.
Plus, much like in China and much of the world, VPN usage is growing across Europe and EMEA. 17% of internet users in Europe are regularly using VPN software, and European VPN usage is predicted to grow on average 9% per year between now and 2026. As we’ve seen with VPN usage in China, there will emerge a highly savvy class of EMEA consumers who will adopt and develop the tools they need to cross these digital borders. This will maintain a true global network for some, which will be small but powerful, until the cultural pendulum inevitably swings in the other direction, when they will be at the forefront of the efforts to re-unify our digital world. And as splinternet develops, they may morph into a new digital upper class who have the tools available to circumvent rules and gain more access to information and services that won’t be available to common users or businesses.
The outcome is likely to go one of two ways. For one, we could see much stricter regulations, where big U.S. players pull out of EMEA markets under increasingly restrictive operating environments, digital borders emerge between nations or blocs, and Europe is either left technologically behind the more open web or with its own leading platforms to join the region together. If that came true, brands will need to manage different, separate ecosystems, sharing of data across borders becomes much more complicated and companies are ever more liable. Decentralization is likely the next step as it becomes too difficult to manage digital media and investment centrally.
The other route is one likely closer to reality. EMEA is an important growth region for big platforms, with big ad revenues and new user bases to lose, so they will likely ensure they comply with the legislature to keep their services running with happy users who aren’t resigned to inferior services. There will probably be greater red tape for brands when setting up campaigns and sharing data, but a lot of the responsibility will fall to the user — likely through a consent form that they accept without much thought.
The Reinvention of Social Context
With so many global social platforms, it turns out we do not all want to be part of the same conversation. The pandemic has driven significant changes in behavior and a re-evaluation of what is important for consumers. More of us are sharing content privately and we have been using smaller networks and groups to do so, often organized around specific topics or shared interests.
Consumers have been using more private groups to re-establish social context online. We have seen a 43% increase in the usage of alternative social platforms group messaging services. Examples include a community of neighbors gathering on NextDoor, a local cycling group on Strava, and Cocoon, a new social network for those you hold dearest. All these platforms offer us shelter and a safe environment to show ourselves to others that align with our views and share our values. One specific London-based private social network app for families, Kin, launched in the UK in March 2021. The platform aims to help family members keep in touch, share memories, images and record future messages in a safe and secure closed group, without having to navigate newsfeeds, influencers, or unwanted comments.
While all this is going on, it is becoming clear that we are moving into the next phase of the internet with restrictions on data and less access to data. Advertisers should see this reinvention of social context as an opportunity that can be exploited to effectively target consumers. Essentially, we are going to see the availability of data lessen, driven by the likes of GDPR and fallout from Cambridge Analytica. In some ways, we are going back to how we used to target consumers online. If you wanted to buy an audience, you had to align yourself with the most interesting contextually relevant environment rather than buying into scraped data. Advertisers can use context as a powerful way to understand the passions and current mindset of their audiences.
A school in Manchester, England has created a virtual tour on Minecraft, allowing prospective students to look around the school built in the game they love. Aston Martin has long understood the value of esports as a media channel, especially the aspirational aspects of driving games. Last year, the company produced a 69,000 gaming chair, whose value is not only measured in the sales numbers, but also in the earned media generated within the esports community, enabling them to reach a large audience via organic, contextual opportunities. Of course, not all brands need to build an expensive chair to tap into micro-communities online. Opportunities to target audiences contextually are already supercharged by keyword targeting, allowing us to programmatically find the right communities or Twitch streams where a well-placed message will resonate with that audience group.
Value-driven campaigns are also an important tactic for brands looking to earn an entry point into the niche communities and intimate contexts. While most brands may prefer to align with escapism, the context and timing of an escapist message will be important, and increasingly at odds with all of the other distractions that media can provide. Meanwhile, the most trusted brands will be the ones who do engage with the larger world. 63% of global consumers say they prefer to purchase products and services from companies that stand for a purpose that reflects their own beliefs.
A good example of this is Mattel’s “The Dream Gap Project” by Barbie. The toy brand established the Dream Gap Project Fund in March 2019 to start the work of removing barriers that prevent girls from reaching their full potential. As part of this project, Barbie also celebrates female role models, with Samantha Cristoforetti, the only active female astronaut in Europe, meeting young girls from Germany, UK, France and Italy at the European Space Agency Astronaut center in Cologne, Germany. Similarly, Coca-Cola also launched their ‘Open Like Never Before’ campaign in Europe, with award-winning spoken word artist, George “The Poet” Mpanga, who wrote an inspirational poem for the campaign specifically in this time of social and cultural change in a world forever changed by the global pandemic. The campaign encourages all people to think differently, embrace change, and better appreciate what was previously taken for granted.
Fusing content and context and delivering significant value exchange is the real lever that brands can pull. Marketers can achieve this by effectively using dynamic creatives or even producing branded content to reach consumers in increasingly niche and intimate online contexts. As we move into 2021, this fractured digital landscape will present more challenges to advertisers, and brands should look to social context as a way of reconnecting with consumers in new places.
