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Marketing in the Nordics

As with most global markets, there is a massive and rapid swing in expenditure from offline to online. Even in the online arena, new technologies are changing spending patterns and investment priorities. For example, social media is of growing importance while user generated content and programmatic advertising are playing key roles in getting brand messages out to consumers. As with all investments however, it is important to ensure a positive ROI and this is no different when targeting the Nordics. Deloitte published a report in 2014 highlighting marketing costs, margin and other KPIs experienced by Swedish online merchants.

Figure 21: Typical Nordics e-retailer key performance indicators. Source: Deloitte "Omni-Channel retail; A Deloitte point of view" and Redeye - 2014

Key insights include how average conversion rates increase with the sophistication of the business. For a merchant trading into the Nordics, an average conversion rate of 2.3% and checkout abandonment rate of circa 50% sounds reasonable until brand awareness is built up; even big global brands struggle with local traction when first launching. The data also highlighted the importance of repeat customers, particularly where costs for maintaining the relationship are lower than acquiring as they typically spend more annually.

With acquisition costs increasing, marketing managers need to understand how shoppers react to different marketing channels – in order to overcome low brand awareness in new markets initially as well as the challenges around how to communicate with consumers who are becoming increasingly distracted by more stimuli.

Data from Strategy Analytics in 2015 shows the Nordic countries all appearing in the global top 10 of advertising spend per capita. Additionally, in terms of market size, the constituent countries all appear in the bottom 10.

This indicates a number of factors, including the market’s openness to advertising practices, the challenges that brands have in getting heard and the overall costs of advertising in these territories.

Figure 22: Average advertising spend per capita in 2014. Source: Strategy Analytics 2015 Global Advertising Forecast.

From a digital perspective, information from Adcolony indicates that a larger proportion of ad-spendgoes to digital channels while Finland still sees the majority of spend going through traditional channels. The longer-term trend is for more spend to go through digital and, compared to other territories, these estimates look a little conservative.

Table 1: Digital ad-spend as a percentage of total ad media spend per country. Source: Adcolony.com February 2016

So, where to spend the budget? Digital ad-spend can sometimes be found to be more efficient than other channels. However, this will depend on the merchant’s proposition and, for some, a hybrid of online and offline spend would be most appropriate. For the purposes of this report, the focus will be on digital channels. So – through which technologies and channels should it be implemented?

A 2014 marketing survey in the Nordics by Salesforce.com looked at a number of factors. One interesting insight is the first digital touchpoint of the day for Nordic consumers. Email ranked as first for all territories followed by news and Facebook.

Figure 23: First digital touchpoint of the day for Nordic consumers. Source: Salesforce.com state of marketing survey, Nordics 2014

When assigning budgets and priorities for marketing into the Nordics, it is also useful to understand consumer engagement with the various communication channels. The Salesforce.com marketing survey highlighted penetration rates on three of the main marketing platforms.

Email ranked highly across the region in terms of number of online consumers who have subscribed to at least one company’s email list. An average of 83% of the online population of the Nordics had subscribed. 59% of the same user-base are fans of a brand on Facebook and 16% follow them on Twitter.

Figure 24: Subscribers, fans and followers in the Nordic countries. Source: Salesforce.com state of marketing survey, Nordics 2014

Understanding how to connect with different generations of consumers at various times throughout the day is key to building a solid marketing strategy. Knowing which devices each audience uses and building your communication to optimise for these experiences is essential to keeping your customers engaged.

Targeting younger consumers through mobile-optimised content and Facebook offers the highest potential for getting good returns on marketing investment, while for consumers aged 45 and over email and news channels provide a more effective choice.

Social media

Overall, social media covers a wide range of channels, often differing in terms of target audiences and levels of interaction. Nearly a quarter of Nordic retailers are seeing a good ROI from social media activities and advertising. A further 43% of merchants are expecting to see ROI at some point in the future.

Facebook is the most popular social media platform in the Nordics. YouTube however, also has a strong user-base and represents some interesting opportunities for brand communication; either directly or via video bloggers (vloggers).

Figure 25: Nordic e-retailer expectations for social media ROI. Source: Salesforce.com state of marketing survey, Nordics 2014

Figure 26: Daily visits to social media websites in Scandinavia.Source: mvfglobal.com 2015

Research from Buzzador supports this. From their community, Buzzador report that Facebook is by-far the most popular social media channel with 90% of the Norwegians surveyed using it at least once a day, if not more regularly. 42% of Swedish respondents are using Instagram daily.

Each of the channels offer their own core benefits. Facebook is about fairly private communities where personal recommendation is at its most powerful. Twitter and blogs are more like broadcast mediums, useful for brand building and influencing, rather than directly impacting sales. Twitter reports that users in Finland currently prefer using laptops and PCs rather than mobile devices while 69% of Swedish Twitter users watch videos on the platform.

Figure 27: Nordic consumers who use social media at least once per day. Source: Buzzador user survey 2014

Figure 28: Share of mobile teen internet users in selected countries who are active Snapchat users as of Q1 2015. Source: Statista.com

Sweden has the second-highest penetration of teen snapchat users, behind Ireland. This doesn’t suggest that there are more users in this demographic than in the US, merely that a higher proportion of ‘mobile’ teens use the app. According to a 2015 report by DR Medieforskning, nearly half of all 12-19 year-old Danes are using Snapchat daily while nearly a quarter of 20-29 year-olds are doing the same; a total user-base of over 800,000.

Social media usage in Norway follows a similar pattern, with Facebook the biggest network with 3.3 million users. Snapchat, Instagram and Google+ also have substantial user-bases, with most users having accounts across multiple platforms.

Figure 29: Norwegian social media usage 2015. Source: emarketer / Ipsos Norway 2015

While most commentators report on the younger user-base of Snapchat, Norway and Denmark have seen a marked increase in older subscribers; opening up wider possibilities for marketers.

Figure 30: Profile of Snapchat users in Norway as a percentage if internet users. Source: emarketer / Ipsos Norway 2015

With a range of communication channels available to brands, it is interesting to explore what motivates Nordic consumers to follow a brand, either through email subscriptions or social channels. Keeping abreast of developments at the brand is the most popular and obvious reason for a consumer to follow a brand. In Norway however, it is about keeping in-touch with product offerings and services.

Figure 31: Why consumers follow a brand, by country. Norwegian social media usage 2015. Source: salesforce.com State of marketing report - Nordics 2014

For social media communications, brands should remember the core benefits of each channel or platform and combine that information with the preferences shown by consumers in each of the territories. For example, Snapchat in Sweden is showing interesting promise for brands looking to engage with a younger audience while Facebook works across all of the Nordics for an older audience. Twitter is a good way of broadcasting to ambassadors and influencers while YouTube shows increasing promise for vloggers and brand engagement.

Consumers in Sweden, Norway and Denmark seem to be ahead of their Finnish cousins in terms of social uptake, but they are catching up fast.

Search

As with most other western markets, Google dominates the search market with the only other search player of note being Bing.

Figure 32: Search market share in NordicsSource: mvfglobal and *statsmonkey.com 2015

While this means that most global merchants will be used to using the tools and techniques required for this search landscape, key differences should be noted and localisation is key. Local market insight should be sought, probably on a country-by-country basis. This should also extend to natural speakers being sought to help with adword campaigns, translation and SEO.

E-mail marketing

Successful email marketing is based on having a quality database of customer contact information. The next step is to better understand their motivators to purchase and ideally a customer relationship management system (CRM) which includes other data points such as purchase history or browsing history.

Typically, the most successful ‘call to action’ in a campaign to gather email addresses is usually around providing access to offers, such as discounts or free delivery. In the Nordic countries however, this does not appear to be the case.

According to a Salesforce.com survey in 2014, the main reason for providing a company with an email address is to keep up-to-date with developments at the organisation. The survey also showed that 83% of online Nordic consumers are subscribed to the email list of at least one company.

While Norwegian, Danish and Finnish subscribers all suggest that the motivation for signing up to an email list isn’t to access ‘free stuff’, it is the primary reason that they will remain subscribed. Swedish subscribers however rate receiving information about the brand as their number one reason for remaining subscribed.

58% of Swedish and Norwegian subscribers have made a purchase from a promotional email – as well as 57% of Finnish and 49% of Danish consumers. Interestingly, the top reasons for Swedish consumers to read emails are all about information. This might give some clues as to the tone and content of promotional emails aimed at this customer base.

Figure 33: Why consumers subscribe to a brand’s email list, by country. Norwegian social media usage 2015. Source: salesforce.com State of marketing report - Nordics 2014

Direct mail

An area often missed by digital-enabled merchants is the effectiveness of a well-constructed direct mail campaign. As a region, the Nordics are no different. PostNord reported in their 2016 Direct Mail report, DR-monitorn 2016, that:

  1. 65% are actively looking at the advertising they find in their mail box
  2. 39% says that the mail box is the best channel for grabbing their attention. (highest rating of all channels, Newspaper ads, TV, radio, sms and so on)
  3. 57% are saving Direct Mail that they feel are interesting for an average period of 6 days.
  4. 54% feel that the biggest advantage with physical DM is that they can decide themselves when to look at it.
  5. 57% are bringing offers from the mail box to a physical store.
  6. 45% are using offers from the mail box when they are shopping online.

Loyalty, vouchers and affiliates

In common with other markets, Nordic consumers value the ability to get a ‘good’ deal and, while this may involve direct communication with a brand, often the discovery part of the journey starts elsewhere. For example, the advertising network Tradedoubler has 30,000 bloggers on its network in the Nordics. Much of these are focused on the fashion vertical. The value of sales through these advertising channels has seen 19% growth across the region in 2015 while Sweden on its own has witnessed slightly lower growth at 13%.

This marketing channel utilises affiliates to communicate offers, such as vouchers and discount codes alongside more in-depth content. Advertisers are seeing ROI in the order of 8.4x and in Sweden, an average order value of €82.76 in the fashion sector.

Other insight from Tradedoubler indicates that mid to high end fashion is particularly popular in the Nordics and luxury is growing in importance.

Vouchers, used in the right way, can drive loyalty but care should be taken that this doesn’t create a fleeting relationship with a customer. Where possible, price sensitivity should be replaced with a loyalty based on other areas of the proposition, such as customer service, range and selection.

Affiliates are a good way to drive traffic to a merchant’s website and a local network can assist an international brand looking to develop market awareness. Creating the right affiliate proposition can ensure that quality traffic is driven to the merchant, thereby maximising the ROI.

 

 

Demographics

Political and socioeconomic environment

Online and mobile usage

Online shopping behaviour

Optimising customer experience

Trust and dispute resolution

Legal framework and regulation

Logistics and delivery

Finance and payment