TECHNOLOGY

Study: The least trusted among top media channels is…

BY By Marianne Wilson

Social media networks may be a popular platform for ad delivery, but that doesn't mean they are the most trusted.

Despite listing social media as the source of the second-highest volume of ad messages they receive — behind television — consumers ranked such platforms last among their most trusted channels, according to a study by the Chief Marketing Officer Council. Web sites ranked as the most trusted, followed by search engines, television, and newspapers.

In the study, "How Brands Annoy Fans," respondents made it clear that they will no longer give brands a pass for even inadvertent display of ads near objectionable digital and video content. Nearly half of all consumers indicate they would rethink purchasing from brands or would boycott products if they encountered brand ads alongside digital content that offends them.

A large majority of consumers said they responded differently to the same ad, depending on its context, with 63% saying they responded more positively to ads run in trusted media channels. Some 60% said offensive context has already caused them to consume more content from trusted, well-known news sources and established media channels.

“CMOs and brand advertisers are increasingly concerned about various aspects of digital and programmatic advertising, including concerns about their ads showing up next to offensive content,” said Donovan Neale-May, executive director of the CMO Council. “This consumer survey demonstrates that those concerns are well founded. Advertising placed next to objectionable content is damaging to a brand while ads that accompany more trusted content and media are more accepted.”

The CMO Council research asked consumers about their response to the experience of finding brand ads in proximity to objectionable content or fake news sites—and their warning to advertisers was brutal. Some 37% said it would change the way they think of a brand when making a decision to buy. Another 11% said they would flat-out not do business with that brand. Another 9% said they would become vocal critics of the brand.

In other survey findings:

*The most annoying digital advertising formats, even when appearing on trusted media channels, were intrusive pop-up ads (22%) and auto-playing video ads (17%).

*Eighty-six percent (86%) of consumers are either extremely concerned, very concerned or moderately worried about how easily they are directed or redirected to hateful or offensive content.

*Attention to digital advertising overall was notably low, with only 14% always engaged and 58% saying they pay attention only when ads either interest them or are really interesting.

*Just over 40% of consumers have already installed ad-blocking software on their devices while another 14% said they planned to add these features.

The survey, which was conducted using the Pollfish platform, is part of a broader study of digital brand safety being conducted by the CMO Council, in partnership with Dow Jones, entitled “Brand Protection From Digital Content Infection.”

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TECHNOLOGY

Online retailers fight state sales tax directive

BY By Deena M. Amato-McCoy

Out-of-state Web-based retailers are taking a stand against paying sales tax in the state of Massachusetts.

According to a directive from the Department of Revenue, any online retailer vendor headquartered outside of the state is required to register, collect and remit sales tax. In Massachusetts, this is 6.25%. The directive applies to companies that sold more than $500,000 annually in the state and made sales for in-state delivery in 100 or more transactions.

The rule, called Department of Revenue Directive 17-1, will take hold on July 1. However, retailers are not going down without a fight.

Enlisting the help of NetChoice, a national trade association that represents online retailers, and the American Catalog Mailers Association, retailers are working to block the directive. Specifically, the team, which represents companies including PayPal and eBay, filed a motion in Massachusetts Superior Court stating that the directive is unconstitutional and violates the Internet Tax Freedom Act (ITFA), a federal ban on Internet access taxes; the commerce clause, and the state’s own procedure for implementing regulations.

“The Massachusetts regulation blatantly violates Supreme Court precedent and the Internet Tax Freedom Act, a law Congress enacted specifically to stop states from imposing sales that discriminate against the Internet,” Steve DelBianco, executive director of NetChoice.

The groups also argue that the directive violates the ITFA because it “imposes an obligation on certain Internet vendors to collect and remit sales or use tax on electronic commerce that are not imposed on other vendors who do not or might make sales of similar goods and services” through other means, such as catalog or mail order, according to the filing.

The Department of Revenue upholds that the rule intends to provide a level playing field for Massachusetts retailers."Challenges are not unexpected, and the Department will work with the Attorney General’s Office to defend the directive,” said DOR spokeswoman Nicole St. Peter Mac Dermott.

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TECHNOLOGY

Survey: Lidl poses big competitive threat

BY By Marianne Wilson

Consumers are very excited about shopping at German discount grocer Lidl — even though they have never set foot inside one of the company's stores before.

Lidl's upcoming entry into North Carolina, South Carolina, and Virginia could remove $1 billion in local sales in the medium term, according to a report by global consulting firm Oliver Wyman which surveyed consumers in the three states cited above. It reveals that consumers are overwhelmingly excited about trying Lidl.

Sixty-seven percent (67%) of respondents say it is very likely that they will try shopping at Lidl, and 52% are very excited about shopping there. What's more, 39% say they would shop at Lidl once a week or more in the future. The high levels of trial and intent to return as a regular shopper were driven by their expectations of high quality and innovative new products, according to the report.

"Incumbent grocers need to take notice," said George Faigen, partner in the retail and consumer foods practice of Oliver Wyman. "The threat from Lidl is real and will only get clearer as their stores generate trial and repeat sales."

Grocers who believe my customers would not shop at Lidl or Aldi will likely be surprised, Faigen added. "The U.S. and European trends we have measured over the past five years tell a clear story of consumers moving portions of their weekly shopping from incumbent grocers to these private brand retailers," he said.

Key findings from the survey include:

*Even though none of the survey respondents had ever been to a Lidl store in the U.S.

*Contrary to commonly held industry wisdom, households at all ends of the income spectrum are excited about Lidl’s store openings. In fact, 49% of households with an annual income over $75,000 are excited about Lidl compared with an almost identical 48% of households earning less than $25,000 last year.

*There was particularly high excitement from consumers around Lidl’s new product offering and their highly awarded private brands. However, being unfamiliar with Lidl’s private brands was also one of the top concerns among respondents too.

*Whether consumers shopped at traditional, specialty, or regional grocers in the past, there is a very high interest in shopping at Lidl in the future.

*Consumers who already shop at Aldi are overall more excited and likely to try Lidl than non-Aldi shoppers.

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