Cause Marketing: Plan Carefully to Avoid Legal and Tax Pitfalls
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The event uncovered marketing, data, and organizational strategies that will help brands, publishers and their partners compete in a world with nimble, tech-focused new market entrants and adapt their businesses to thrive in the 21st Century. The IAB Annual Leadership Meeting is a forum for the industry to set the agenda for the coming year, and this year, more than ever, it emphasized learning with many breakout sessions and insights from great speakers—such as Leonid Sudakov from Unilever, Jen Rubio from Away, Henry Davis from Glossier, Liza Landsman from Jet.
Attendees were invited to actively engage into dialogues, both from the main stage with the IAB Leadership Dialogues and in smaller room settings with the town halls and master classes. The world has shifted from an indirect brand economy to a direct brand economy with incredible growth, extraordinary innovation, and general disruption. Thousands of retail stores closed in Smaller brands are providing a new business model. Yet, some leading incumbent brands—such as Unilever and Mars Petcare—have also adopted direct-to-consumer strategies.
Schiller was one of the founding members of IAB.Ajay Anand- Marketing manager, Carzonrent(Myles), at the Brand Partnership Meet
Schiller said he was excited to take on the responsibility of the chairmanship this year. The opportunity still awaits us. We want to help our customers and ourselves grow.
IAB Annual Leadership Meeting
The media industry including web publishers and retail brands are facing increasing challenges and disruption at the same time. It was time for major changes, so here we are once again at the cross world of change and opportunity. Growing and thriving today and tomorrow requires that we tap our collective scale, expertise, and resources. Many industries have found the way to grow and evolve in the face of disruption.
Today technology and data have obscured the opportunities in front of us.
Consumers have so many ways to get content. We are forced to change in order to grow. Story telling opportunities for media companies have expanded. We are now in a world populated by influencers and branded content.
IAB Annual Leadership Meeting 2018
The supply chain has exploded — hundreds of brands work directly with technology partners and media partners. Many of them are going directly to consumers with narrative shaped in house. As an industry, we need to steer in the right direction and work together. First, we have to listen to consumers who now have the ability to have direct relationship with brands.
Innovation led growth is shifting to smaller direct-to-consumer and boutique brands — in categories like mattresses, craft beers, and most famously razors.
Growth has stopped for most Fortune companies. IAB and others have responded to so many of those challenges and it helped us improve the consumer experience. Initiatives like the Digital Advertising Alliance have helped consumers secure their privacy and learn more about how their data is being used.
Cause Marketing: Plan Carefully to Avoid Legal and Tax Pitfalls
The Coalition for Better Ads helps consumer control the unsightly assault of retargeting without having to use third-party ad blockers.
And we can do more. We have to help marketers reach their goals and ask them how they define success. Art directors, copywriters, account teams, communication specialists, and media buyers need to get back in the same room. We want to focus on the true brand growth cycle and how to make the experience easier on the marketers for the benefit of consumers. We all have to contribute and listen better, collaborate, innovate, and push the needle forward so we can contribute to growth. Brand safety must be a given and a mandate for everyone.
Ultimately the IAB exists because we believe in three things: We have to innovate and lead. When they do, out of the six major studios, we will have three super studios: That leaves three studios that, according to Cole, are not big enough—20th Century Fox, Paramount part of Viacomand Sony.
These companies will have to sell or find partnerships. Google, Facebook, Baidu, Tencent, and Alibaba are ready to move into this space. Amazon decided not to buy a studio, but to build its own studio, already an Emmy-award winning and Oscar-winning one. And Cole predicts we will see Amazon, followed by Facebook, move aggressively into a whole new space: Amazon, Apple, HBO, and Hulu all increased their spending too, and Cole estimates there will be about 19 billion dollars spent this year on original programming by non-network or studio players, almost all over-the-top OTTand projects about 24 billion next year.
And there will be one new type of player. Cole has been talking a lot about driverless cars. The automobile is about to become the second most important entertainment environment in our lives. Cole predicts that we will consume more media in our car than in other single place, with the exception of our home.
And it will create lots of new opportunities for software, content, hardware, etc. We are seeing years of business model being completely disrupted — very old industries as well. Cole thinks it is good because there is almost no other alternative for local newspapers.
Jeff Bezos bought the Washington Post because he liked it and wanted to save it. And the Post has been the most improved newspaper in the country over the last couple of years, hiring journalists and winning Pulitzer prizes. Rupert Murdoch also split NewsCorp in half to save the newspapers, said Cole. The movie theaters, which were most threatened of not surviving, have also moved to a new business model.
Last year, summer box office was at a year low. The major reason was the cost of going to the movie theater compared to a monthly subscription like Netflix providing TV, theatricals, and original programming. Where those dollars go is completely different than where they went 20 years ago—e.
Spotify and Pandora—but this has become a bigger business with more people listening to more music. Netflix and Amazon Video are part of this change. Netflix has evolved from a red envelope business seven years ago to a successful digital streaming business with quality original programming.
Glossier disrupted the beauty industry with core insights into its consumers, building a loyal following even before its launch. Davis talked about how the shopping paradigm driving the change in brands now. Retail is not what it once was. This is challenging brands because their products are becoming the collateral damage in the battle royal for retail: So, many brands are looking to e-commerce as the future, where they need to be. E-commerce in the U. InAmazon did one third of all the U.
Amazon defines e-commerce as fewer clicks, fewer dollars, and fewer delivery days as possible. They want to remove any friction. This threatens brand loyalty. Amazon is an infinite shelf and algorithms tell you what you need which challenges brands who have been surviving on product loyalty and shelf hegemony for so long. People still want brands. But they also want to feel part of something and feel good about their purchase. Millennials are at the vanguard of this shift.
They just want to be listened to. Millennials are rejecting that.
They want brands as peers — they are choosing inclusive, nice, and real. The brands of the future will be based on belonging and community, a place where people go to share belief and lifestyle. And digital is what allows brands to make meaningful connections with people at scale. These communities are international, they transcend borders, demographics, psychographics, and people can opt into them.
To tap into this new way of thinking and to foster this environment, look to start a conversation. Davis recommends brands engage, listen, and continue the conversation to make consumers become stakeholders.
They include their customers with user generated content UGC — from development to marketing to selling. Then, customers want to evangelize the products they have been part of creating.
- Publication 538 (12/2016), Accounting Periods and Methods
- Publication 535 (2017), Business Expenses
Customer engagement is the antidote to the commoditization of brands and will solve all the problems the brands face. According to Davis, the brands of the future will understand three things: Millennials expect more from brands.
They want to feel a part of something, that they are friends with the brand. Brands that include customers in everything they do will be the most successful. They uncovered that Glossier first thinks about helping customers find their own beauty style and routine — hoping Glossier will be part of it eventually.
Davis said they measure engagement and everything they do is content. There is a silent conversation. That all requires conversation. They want people more than they want sales — how to engage them and make them to understand who they are and what they are buying. Glossier wants to have as many conversations as possible. Data is important, and good at providing feedback and improving your product. But, to innovate, you need to reach beyond data to intuitive reasoning. Glossier has only a single physical retail store in NYC, and this store has more sales per square foot than Apple.
Inthe life of the digital seller is filled with disruption. In a market as precarious as ours, inertia and incrementalism may be the riskiest options of all.
Weaver started by saying that to your sales teams the world looks like they are in the shadow of a death star. Sellers feel increasingly unconsidered, they are starting to feel invisible, and the natural reaction is to disengage, or to start to become desperate.
But, the answer to making the change as a sales leader is in the answers to two core questions: How will we live and thrive in a consolidated world of giants?
Consolidation is a part of every industry and media channel. How do we succeed when the systems and practices we once relied on no longer serve us? The system seems rigged. You can help them do it: Start to let go of things: They are the very things holding your sales people back.
Start at a different place. At the agencies, we need to reach higher with a new set of motivations and incentives. Change the access point and get in to see the C-Suite and account owners within the agency. Help them find new kinds of budgets, incremental client spending, opportunities for brand leadership, capability extenders and workforce multipliers.
Hygiene is the new superpower. The issue matters, and we need to press it today. The idea that an advertiser should get what they paid for should not be in dispute. And the idea that fraud has no place in our business should be beyond question.
We have mistaken the idea of storytelling with telling our story better and more effectively — we have become a nation of describers, said Weaver. We need more betas: The incoming IAB Chairman shared insights about where the industry is headed in and then recognized IAB members who have demonstrated strong leadership and contributed exceptional service over the last year with the IAB Sales and Service Excellence Awards.
The leaders shared some of their secrets to success and some stories about how diversity has increased productivity in their teams and for their bottom line. The Rise of the 21st Century Brand Economy focused on growth and how to crack the code of the new consumer economy.
Rothenberg started by claiming that new direct-to-consumer companies such as Warby Parker in eyewear, Glossier in cosmetics, Casper in mattresses, and Away Travel in luggage are not interesting curiosities. They represent an enduring shift in the way the consumer economy operates. Legacy brands in most consumer categories are now in crisis.
We have lived for almost years inside what we call the Indirect Brand Economy. Indirect brands created value through their high-barrier-to-entry, capital-intensive, owned-and-operated supply chains, and extracted that value through indirect, one-way relationships with their end consumers, mediated by a series of independent third parties, ending with fulfillment in a physical retail store. Now, we have entered the Direct Brand Economy.
We date its origin tothe year Warby Parker was founded. In this new economy, 21st Century Brands create value by tapping into a low-barrier-to-entry, capital-flexible, leased or rented supply chains. And they extract that value through a number of fulfillment models, all of which have a single thing in common: Non-store retailers grew from 4 percent in to According to Nielsen, dollar sales in brick-and-mortar stores increased just 0.
Rothenberg laid out a new framework for understanding the direct consumer economy and assured the audience that IAB is committing to this framework — and to helping you navigate this exciting, transcendental evolution in the way brands and consumers interrelate.
IAB is going to bring the brands into the room. Our members have a lot to learn from them and their evolution. We also have a lot to teach them — about the best content marketing, risks to their data in the global public policy environment, best practices and technical developments in attribution modeling, and many other things. This conference will become an annual fixture on the IAB calendar. Rothenberg left the audience with four main takeaways: The world is awash in capacity for producing, marketing, and delivering goods and services to consumers — and drawing first-party data from those interactions.
Cause marketing deals must not result in an unfair or unreasonably disproportionate use of charitable assets for commercial purposes. For more information, watch this video. This is a material benefit to the business co-venturer, beyond the sales income realized through the cause marketing arrangement. The consumer participant in a cause marketing campaign is typically a purchaser and not a donor.
Negotiate a Written Contract To protect themselves, charities planning to enter into a cause marketing effort with a business need to seek competent guidance from legal and tax advisors, ideally professionals with expertise in the cause marketing area.
This is not an exhaustive checklist and should not be taken as legal advice. Seek qualified legal counsel in order to draw up an appropriate written contract. Charity boards of directors must be informed about the terms of significant fundraising contracts including cause marketing deals in order to meet Standard 1 of the BBB Standards for Charity Accountability.
Watch Out for UBIT and Charitable Solicitor Registration Issues Depending on how a cause marketing deal is structured and how marketing claims are made, a commercial co-venture project might result in unrelated business income tax UBIT consequences for a charity. If not structured with care, a deal might also require that the business or charity co-venturer register for charitable solicitation purposes in one or more states.
Skilled advisers can help avoid such undesirable problems. Some issues to watch include the following: Additional state regulatory requirements for disclosures might apply to any actual charity solicitation; be sure you are in full compliance if using such an appeal for cause marketing purposes.
Seek professional advice when evaluating tax and regulatory consequences that could result from a specific cause marketing deal. Consumers Must Not Be Misled Regulatory authorities are particularly interested in ensuring that cause marketers do not use claims or tactics that might mislead consumers about the charitable impact of their purchases. Cause marketers can stumble in this area and consequently risk drawing scrutiny or even regulatory action. At the point of solicitation, all the terms and conditions that might affect a cause marketing purchase — the who, what, when, where, and how terms of the transaction - must be disclosed to the consumer in a clear and conspicuous way.