What's Next, Now: March 2023
This month, our crystal ball predicts shifts in ESG discussions, the rise of premiumization, increasing mental health data concerns, and more.
DEVELOPING: Financial services turmoil sees some relief — As the world watched Silicon Valley Bank (SVB) fail unexpectedly and Signature Bank a few days later, panic overtook the industry. Customers rushed to make withdrawals and the contagion spread to Europe, with UBS acquiring Credit Suisse. In the days since, the stock market has been tumultuous while investors navigate the uncertainty. On Wednesday, Federal Reserve Chair Jerome Powell shared that the Fed views SVB as an outlier, the banking system is sound and resilient with strong capital and liquidity, and customers should consider their deposits safe.
Corporate sustainability efforts are facing increasing pressure — from both sides.
Consumers and media are becoming increasingly savvy, calling out brands for greenwashing as they tire of empty words when it comes to brands’ Environmental, Social, and Governance (ESG) commitments. A recent report from the Carbon Disclosure Project found that of the 4,100 companies claiming to have sustainability plans in alignment with the Paris Agreement, only 81 have created something actionable.
But a growing anti-ESG movement is also picking up traction. With a number of wins in the recent midterm elections, some Republicans are taking aim at what they’re calling woke capitalism with the goal to take down ESG investing policies and regulations. The American Legislative Exchange Council has been pushing a bill on state legislatures to combat ESG investors, and 17 states have either considered or enacted a version of it so far. This week, however, President Biden used his first veto to defend ESG investing.
With their hands tied, brands are attempting to walk a fine line by changing how they talk about ESG. For some, this means reframing the concept of sustainability around profitability. For others, it means repositioning ESG to live internally, rather than risk public statements being scrutinized. Coined green-hushing, an increasing number of organizations are keeping sustainability plans hush-hush. According to a recent survey of over 1,000 private companies, more than 70% have set carbon emissions targets — but nearly a quarter don't plan to publicize them.
Regardless of the current sentiments, brands will be required to start sharing their ESG efforts externally due to new governmental regulations in the pipeline. While most of these guidelines haven’t kicked in yet, some will as soon as 2024.
While today’s consumers are not afraid to vote with their wallets, they may become less selective with the brands they support due to the current economic climate. Some shoppers are paying less attention to labels and turning to store brands as a way to save money. A distracted audience may result in less consumer pressure, though we expect there will always be some degree of social media activism.
When access to in-person mental health services was unavailable during the pandemic, consumers turned to telehealth and apps for support. While many still love the convenience of these tools, they come with a price: personal data. HIPAA restricts how health entities share health data, but the law doesn’t protect the same information when it’s sent anywhere else. Translation: Apps can legally share or sell user data — including information on specific medications and disorders. Recently, telehealth start-up Cerebral revealed they had inadvertently shared the personal information of over 3.1 million patients with multiple large advertisers. As it turns out, there is a large market for this data.
According to a study published by Duke University’s Sanford School of Public Policy, some data brokers are marketing highly sensitive data on individuals’ mental health conditions on the open market. The researchers were able to contact 26 data brokers who held mental health data — 11 were willing and able to sell. What’s more, many apps and websites reserve the right to share data with advertisers or other third-parties, per their privacy policies that consumers agree to before using their services. Some states, including California and Connecticut, have regulations in place detailing how consumer data can and can’t be shared, but a lack of federal privacy regulations make it difficult for consumers to protect their sensitive information.
When Roe v. Wade was overturned, consumers flooded social media to share strategies to limit the government from tracking individuals, such as deleting feminine health trackers and turning off location services on cell phones. Data broker Placer.AI received so much backlash for selling data related to Planned Parenthood they agreed to permanently stop selling the location data of people who visit abortion clinics. As more comes out about the selling of mental health data, consumer activism and federal regulations are likely to follow, and businesses that operate in the mental health space will need to be ready to comply.
According to a new survey from the CDC, nearly three in five teenage girls feel persistent sadness — double the rate of boys. One in three girls reported seriously considering suicide. These rates of sadness are the highest reported in a decade, reflecting a long-growing trend that was only exacerbated by the isolation and stress of the pandemic.
The prominence of social media in the lives of teenagers is playing a major role in the declining mental health of girls. The harmful effects of social media should come as no surprise — many girls face cyberbullying, exploitation, and an image-focused culture that fosters body image issues and eating disorders. Studies done by Instagram itself have confirmed the damaging power of social media over girls’ mental health, despite efforts from the platform to downplay it.
And girls are being exposed to this content constantly. According to Morning Consult, 54% of Gen Zers spend at least four hours daily on social media, and 38% spend even more than that. That’s nearly double the rate of all U.S. adults (28%). The survey also showed a significant gap in which apps girls and boys are using, with male respondents more likely to use text-based apps like Discord, Twitter, and Reddit, while female respondents reported greater usage of photo-centric ones, like Instagram and Snapchat.
Some platforms are working to make a healthier experience for younger users on social media. TikTok, for example, recently introduced a new one-hour time limit on its app for users under 18 (though it’s worth noting the setting could easily be turned off). Trends are also pointing in a healthier direction, as many Gen Z users are looking for less polish and perfection on social media, and spending more time in the DMs rather than posting publicly. Due to this, Gen Z is optimistic about how social media is evolving compared to older generations — 62% of Gen Zers believe social apps are heading in the right direction, compared with just 38% of baby boomers.
Inspired by Twitter’s launch of Twitter Blue, a paid subscription and verification service, Meta has also hopped on the pay-to-play social media ride. The new premium plan, Meta Verified, will get you the famous (or infamous) blue check, as well as other exclusive features. Twitter and Meta are not the only social media platforms asking you to trade cash for an improved experience on their site — paying for Snapchat+ gives you customization power over your story content, and Reddit and Tumblr introduced ad-free plans.
The pay-to-play wave is not confined to social media. Streaming subscription prices continue to increase, and a number of platforms are introducing ad-supported plans. Restaurant loyalty programs are upping prices and adjusting rewards. Delivery apps and dating apps are adding paid plans. Paywalls continue to block off much of online news media. More and more, consumers are being asked to shell out for services they’ve never had to pay for before.
The increase in prices across sectors has introduced a new buzzword: premiumization. According to The New York Times, the concept of premiumization was raised in nearly 60 earnings calls and investor meetings over the past few weeks. Instead of offering discounts, brands are looking to premium offerings as a way of generating excitement (and ultimately revenue).
For many consumers, the increased spending across the board will be a significant weight on their wallets, especially in light of murky economic conditions. Once they hit their breaking point, consumers will be forced to scale back somewhere — and brands are hoping their premium offerings will be the thing keeping them off the chopping block.
You’ve heard of greenwashing, you’ve heard of whitewashing. Now, get ready for small washing — a term newly coined to describe when companies, especially DTC (direct-to-consumer) brands, market themselves as a small business to get their product on the shelves in boutique stores and markets. This phenomenon is becoming more common amongst indie brands and companies with a strong following on social media, like Graza olive oil. While in reality, many of the brands actually have quite a lot of funding and high valuations.
While positioning yourself as a small business may be problematic for consumers down the line, the true value of being on retail shelves has proved to be high for DTC brands that originally were available only online. Take Glossier, for example, whose recent comeback has very much been thanks to its debut on shelves at Sephora, as well as its brand new flagship location in SoHo. Consumers are looking for unique, tangible items, and small washing has enabled bigger brands to appear more indie or niche.
As more consumers catch on, the authenticity of some brands and their size may be called into question. There was decent pushback when greenwashing was first called out. With cancel culture still running rampant and social media being at the forefront of many investigations into brand transparency, businesses should be careful about how they position themselves, especially when moving into a retail space.
After the success of “Drive to Survive” transformed the Formula 1 fandom, Netflix is looking to expand its impact in the sports world without getting into live sports. The streamer recently announced a second season of its golf docuseries “Full Swing” and the release of a new NFL series, “Quarterback.”
If streaming is taking over cable TV, then YouTube is taking over streaming. The latest Nielsen Gauge Report shows YouTube leading watchtime on connected TVs, ahead of Netflix, Hulu, and all other players.
The latest skill to add to your resume: AI prompt writing.
This year’s Edelman Trust Barometer showcased a lack of faith in societal institutions (including government, business, and media) triggered by economic anxiety, disinformation, class divide, and a failure of leadership. According to the Knight Foundation, Americans are increasingly turning to local news as a source of trusted information.
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