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What is the doughnut problem, and why should your brand care?

November 25, 2021

Welcome to the doughnut problem. Disclaimer: this isn’t a critique of Krispy Kreme.

Coined by the good people of Carat in their 2021 trend report, the doughnut problem is having a significant impact on brand experience. But what is it, why should your brand care and how can you use it to your advantage?

What is the doughnut problem?

In short: the doughnut problem is a shift in consumer habits accelerated by Covid-19.

Where most of the population has been working from home during lockdown, fewer people are travelling into cities to work and shop. Let’s take London for example. Footfall in the centre only returned to 25% of normal levels after the 2021 spring lockdown was lifted but returned to normal in residential areas. On top of that, there’s a growing reconsideration for city life after experiencing it under pandemic conditions – PwC found that 416,00 city dwellers surveyed said they’d leave London in 12 months.

Take all these into account, and you have significantly fewer people visiting city centres (the hole) and more people spending time in the suburbs and fringes (the delicious, doughy bit).

The doughnut problem is clearly changing the way we interact with brands

For a time, bustling cities, rife with moderately priced coffee chains, beloved fashion outlets and thousands if not millions of people, were an open goal for brands to create awareness. London. Birmingham. Manchester. Truro. Billboards. Pop-ups. Experiential pitches. The list is endless, but the formula is very simple. If you want to get your brand noticed, you go where people go. Sadly (or encouragingly, depending on your disposition), that is no longer the centre of a city.

Zoom meetings to Deliveroos and beyond – the pandemic played a big part in making our lives more digital. In April 2020, UK adults spent a daily average of four hours and two minutes online – up from just under three and a half hours in September last year. Businesses relying on high footfall areas for bricks and mortar sales, advertising and activations were destined for changes. Exhibit A: fashion brands.

From Topshop’s demise (bought by online retailer, ASOS) to the loss of Debenhams – where high street brands were already feeling the competition of e-commerce, the pandemic (and the doughnut problem) only accelerated the inevitable. A Wunderman Thompson study found more than 40% of post-pandemic online spending globally is taking place on marketplaces, with online sales set to account for 51% of all retail sales in 2021.

This shift is a massive opportunity for brands and marketers to shift their approach, reach audiences in newer, more relevant ways and balance traditional tactics with digital-first elements.

So, how will you get around this giant, ring-shaped conundrum? Here are a few things we’d recommend when building brand experiences:

Trust in tech

One of the most significant disruptions of the pandemic was the impact on live music – the industry was estimated to have lost 25% globally, according to a Goldman Sachs report. There was a lifeline, though: live streaming. As the event industry continues to be a little bit rocky coming out of the pandemic, think about what elements you could add to a digital music experience. Or the other way around. For example, game developers Fortnite treated users to an in-game concert with Anderson Paak, who’d they’d spectacularly digitized for the evening.

Keep an eye on extended reality (XR), too. XR is an umbrella term used to describe immersive tech like AR, VR and those yet to be created – together, they’re expected to reach a market value of $209 billion by 2022. Individually, there’s been huge successes for brands using XR, specifically IKEA. Their AR-powered app gives customers the ability to see how furniture would look in their homes. Handy for those who don’t want to leave the house, let alone drive to an IKEA full of people.

Think local

Like we said earlier, your brand goes where people go. Which, in these times, is almost exclusively within their own home or neighbourhood. According to a Carat report, Nextdoor, a local TV network, grew user engagement by 80% in March 2020. So what drove that? Well, other than we couldn’t go anywhere, many people used local networks to find and offer support and connections. Which makes you think: if, post-pandemic, people are still getting used to being out of the house, mostly around their local neighbourhood, is that the best place to reach them?

When it comes to meeting your audience in their backyard, local marketing tactics could give you an edge. But what does that mean from an execution perspective? Moving beyond the city centre to the towns and areas where people are now, and building activations (if that’s your bag) in places you know you’ll get the footfall. We recently had a pop at this with Deliveroo, taking 100 tons of free grub to just about every town and suburb we could find. The results? 72% revenue growth. (Basically, it pays to go local.)

Localization is a chance to build connections based on the spaces your audiences inhabit. Get tactical with it. If you’re touring local areas, let’s say delivering branded kits, see how much you could weave the area’s heritage into your activation or activity. Then when it comes to content, how much could you localize? There’s targeting specific regions with your ads or going one step further and filming the content in that town or area.

Bring digital content into the mix

Your audience’s appetite for inspiration never disappeared; it just moved online. When it comes to generalized, one-to-many experiences, there’s a place for them. But, we’d advise throwing some one-to-one digital content in the mix, too. Think of it as the icing on the doughnut.

If you’re running an experiential experience, how could digital content make it even better? Take a look at Levi’s FW21 collection launch. Aside from those there in person, online visitors could interact with the physical space, which used AR to display the latest collection as interactive content. Experiential + content = offline and online engagement.

With the sheer number of people on social media, you’d be missing a trick if you didn’t work shareable content into your experiences. Right off the bat, SnapChat Geofilters are a great way to encourage engagement with your brand. Beyond that, think about how you can give people something to take away (and share), even something so simple as a photo booth.

Time to start using the doughnut problem to your advantage

This is, without doubt, a new era for brand experience. And it doesn’t look like it’s going anywhere soon. In a recent survey by the IPA, 89% of UK employees want a fully flexible approach to returning to the office, one in which they could choose how often they worked from home. A return to old commuting, shopping and working habits looks incredibly unlikely. The good news is that there’s a significant opportunity for your brand.

We’re not saying that traditional tactics won’t work. We’re saying that to reach the people that matter most (your audience), you need to balance and integrate real-world and digital-first approaches into your marketing mix.

Illustration Credit: Daniel Jarrett

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