Month: April 2022

So what should marketers do now? At present, there’s very little they can do. The DMA isn’t due to arrive until October, and a draft of it won’t be ready before the end of the month. That said, it’s worth digging into what has been shared, given that European lawmakers hope to ratify the law before the end of the year. 

WTF is the DMA? 

Put simply, it’s the latest set of dos and don’ts for companies operating in the digital market across the European Union. Like the General Data Protection Regulation, these rules try to limit the market power of the big online platforms that it dubs “gatekeepers”.

Unlike the GDPR, however, the DMA won’t regulate the market broadly and disproportionately affect small to medium-sized businesses — at least that’s the plan. Instead, the DMA is aimed at tech giants with market caps of €75 billion ($82.3 billion). For context: Facebook’s market cap is around $636 billion, and Google’s value is $1.9 trillion.

This focus is clear in the DMA’s plan to force the biggest and most influential tech companies to let their users use other apps and services on their platforms. So someone with an Apple device could go somewhere other than the App Store — where developers pay a fee to the manufacturer — to download an app. With that, competition between apps from independent developers and Apple’s own is actually competitive. New entrants and underdogs will be able to make much more significant headway and play on a theoretically more even field with the tech giants.

This is the stuff of fairy tales for any company that isn’t making tens of billions of dollars per quarter from digital advertising. For years, the growth of these smaller companies has been stunted by how easy it’s been for the larger ones to combine and cross-utilize user data from disparate parts of their business to sell targeted ads.

That’s not allowed under the DMA.

Or to put it another way, a gatekeeper’s ability to use location data to determine a person’s religion based on where they go to worship could be curtailed — a bitter pill for any tech giant CEO to swallow. 

“It’s a progression,” said  Farhad Divecha, managing director of digital marketing agency AccuraCast. ”It appears to be much more broad-based regulation in terms of the impact specifically on the tech giants than what we’ve seen so far.”

Is there one bit of the legislation that will be more consequential than others for the ad industry?

It’s more about the sum of its parts, but some parts are more consequential than others. Take the fact that the DMA limits interoperability; tech companies will no longer be able to share data between services without expressed consumer consent. For example, Meta could be restricted from sharing data between Facebook and WhatsApp or Instagram.

No more using legitimate interests as a legal basis for intrusive profiling of people online.

Perhaps, the most significant part of the DMA is the bit that seeks to regulate “self-preferencing” and discriminatory search rankings, data sharing and portability. Essentially, it would block the use of non-public data by gatekeepers for both business users and end-users. It’s vaguely written (for now), and the DMA has hinted that it may assess provisions in the article on a case-by-case basis. In a nutshell, this is the DMA’s attempt to prevent the so-called gatekeepers from gathering data that other organizations can’t access.

It means advertisers don’t have to accept selective — and sometimes inaccurate  — numbers from platforms on the strength of their word alone. They get to access more marketing and performance data on their customers and campaigns. 

Is the reference to “self-preferencing” and discriminatory search rankings bad news for Google and Amazon?

It could be. Where the DMA relates to “self-preferencing”, it is creating rules that bar gatekeepers from giving preference to their products in search rankings, said Tara Dezao, product marketing director of ad tech and martech at software company Pega. For instance, if someone searches for a digital assistant on Amazon, Dezao said the tech behemoth would be prohibited from treating the Alexa product preferentially or differently than say Google Home or Apple HomePod in the search results.

Should the platforms be scared? 

The DMA’s fines will have raised a few eyebrows among big tech CEOs. It would impose penalties of 10% of global revenue and 20% for repeat offenders — a far cry from the up-to-4% cuts from worldwide annual revenue that can be enforced under the GDPR. 

So the DMA is great for anyone who isn’t facing an antitrust lawsuit? 

It’s too early to say so with any real certainty. After all, time and again regulation has been an enabler of big tech’s dominance, not an inhibitor of it. On the one hand, it’s clear already how the DMA could breathe life back into competition across digital media that has been snuffed out by consolidation. On the other hand, the DMA could do more harm than good.

Say, an iPhone owner starts downloading apps from alternative app stores; doing so could expose the device to more risk of fraud, malware and other issues that Apple’s walled garden approach has been able to prohibit.

Similarly, the DMA promises stronger privacy controls for people by ensuring that the platforms must obtain explicit permission from someone to use and (or) combine their personal data for targeted advertising. That sounds great, but the flipside to it could be an unending parade of opt-ins. “We’re all tired of accepting cookies on every website we visit, this will only get worse and affect more touchpoints. We’ll be opting in over and over,” Pega’s Dezao said.

‘Sigh’ — It’s the hope that kills you. 

Indeed, it is. History shows us how these things go. Ever since Microsoft killed Netscape by bundling Internet Explorer with Windows, regulators have realized that they need to use competition and antitrust law to control large technology companies. The problem is that regulators can’t be seen to be stifling innovation, so they can’t act too quickly.  By the time they act, the technology company is earning so much revenue that it has hired a team of very expensive lobbyists to work in Brussels and Washington, D.C., to limit the effect of any legislative change or enforcement action. By this stage, the technology company is also a publicly traded company with responsibilities to its shareholders to grow revenue.

“The tech giants have a lot of incentives and the means to find loopholes that allow them to do the bare minimum to be compliant, but not enough to actually effect change,” said AccuraCast’s Divecha. 

In fact, there’s a chance the DMA stifles competition, not fosters it. If the platforms are being encouraged to open themselves up to smaller companies, then there’s a chance that they become incentivised to ensure those companies survive at all costs. This dependence is the new monopoly opportunity going forward, and it’s one with greater scale because entwines the fates of smaller companies with the fate of the platforms. Life after the DMA could look similar to life before it.  

What does this mean for advertisers?

For starters, the DMA could be a headache for any marketer bereft of a diversified media plan or data strategies beyond the largest platforms.

They will have to learn how to deal with more silos, making an already complex job even more complicated.

Granted, there are many marketers already trying to tackle this problem given how fragmented it’s getting to track and profile people at scale sans third-party data, which more often than not is contained in third-party cookies. The DMA does, however, up those stakes. 

It’s not all doom and gloom for marketers, though. Marketers for specific apps, products and services that historically have been limited by the closed ecosystems employed by the largest platforms — think the smaller messaging services, apps that compete with Google’s own productivity suite and smaller ad platforms — will have more parity with them.

The growth of their businesses will be more about the strength of the marketing than the whims of the platforms.

Creators use the hashtag to show off purchases they’ve made because of something they saw on the app. Like seemingly everything on TikTok, some of those products have gone viral. And the more this happens the likelier it is that people will want to buy them. 

Indeed, the need to keep up with current trends makes people more inclined to buy based on them — something TikTok has magnified in part because its algorithm surfaces relevant and entertaining videos that often contain items the viewer wouldn’t have even considered before they saw it.  

And if TikTok has taught marketers anything it’s not to underestimate the link between something going viral and conspicuous consumption — especially when the gap between scrolling and shopping is as close as it is there. More than one-fifth of TikTok shoppers globally said they bought goods on the app “all of the time” ahead of other platforms tracked, per the January 2022 Bazaarvoice survey cited by eMarketer. It’s a dimension to impulse buying that L’Oréal’s marketers are keen to explore. 

They’re working with TikTok to let its users shop creator curated gift boxes from brands like Garnier and Maybelline directly from the app’s TikTok Shop marketplace in the U.K. So someone could see their favorite beauty creator talking about one of these boxes as they scroll through the app, and decide at that moment they want to buy it. 

“E-commerce has generally been about replenishment — there are often functional and practical motivations behind it,” said Lex Bradshaw-Zanger, CMO of L’Oréal U.K. and Ireland. “TikTok and the creators there are all about discovery, so that shopping experience is being reinvented around that discovery element of scrolling through the app being brought together with the entertainment people get from watching creators.”

The catch for advertisers — and therefore TikTok — is that these sales opportunities are fleeting, just like everything else on the app. Once someone has posted their take on the latest dance, for example, they move on to the next.  This transience could limit commerce opportunities. Still, TikTok would be loath to change something that’s working so well now. Its arguable advertisers know this too, but see the short-term benefit of making sales work. Nevertheless, TikTok knows it must move past this issue if it is to capitalize on its current position. 

“TikTok are in the early stages of positioning themselves as an entertainment platform, rather than a social platform,” said Andrew Serby, evp of strategy and marketing at video brand suitability platform Zefr. “One of the most successful YouTube strategies was building an infrastructure so that video investment buying teams, who used to only buy TV, started to think of YouTube the same way.”

Look hard enough and this shift is clear even in the L’Oréal deal. 

Each box is branded with the #TikTokMadeMeBuyIt hashtag — the first time the app has put its branding on a product owned by another business in this way. Which is to say this partnership is as much a chance for TikTok to promote commerce on its app as it is for L’Oréal to try and find ways to profit from it. In fact, commerce is seen as a way for TikTok to help dispel the social network moniker often foisted upon it by the ad industry. 

Not every marketer sees it as a full-funnel marketing channel the way L’Oréal does — at least not yet. 

“There isn’t a specific way to look at TikTok,” said Bradshaw-Zanger. 

At times, it’s an avenue for L’Oréal’s top of the funnel marketing, or brand building at scale thanks to the big audience and high impact formats like takeovers and challenges, he continued. Then there are times when its used at the opposite end of the funnel to drive sales as is the case with the latest partnership. But it can also help at the mid-way point of the funnel, at the consideration phase of a transaction where a credible voice of a creator is important to help convince someone to buy. But unlike on other platforms this funnel is more compressed than ever, which is a challenge to navigate in and of itself, said Bradshaw-Zanger.

“We’ve worked hard to understand the marketing funnel across all our channels so that we’re at a point where we’re clear on how we’re spending our money across our marketing objectives,” he continued.“You have to be really tight on your objectives because the channel isn’t going to tell you what it’s going to do.”

It explains why TikTok is still rooted firmly in social ad spending budgets, even if it is well on its way to becoming a permanent fixture on media plans in many instances. Many marketers are still trying to figure out what the app actually means. It is inherently social, of course. Like any other social network, people vote with their clicks on what they like to see. But its not the place to find out how uncle Joe and aunty Jill fared at last week’s 60th birthday shenanigans in Bruges. 

“Despite TikTok’s phenomenal rate of growth, some brands are still reluctant to fully commit to the platform,” Alex Manning, associate strategy sirector at creative agency Cult. “This may be due to misconceptions about the age of its user base, or its need for a bespoke content approach, or even a misunderstanding of its true nature, as it’s not a social media platform in the traditional sense.”

As the future of work picture comes into focus, ​​global CMO at R/GA and activist, Ashish Prashar, says if agencies want to keep and retain talent, they’ll have to allow employees to bring their whole selves to work. “This isn’t a numbers goal,” Prashar said. “We have a responsibility as individuals to use our privilege, whatever that might be, to advocate for people who are actively disenfranchised.”

Prashar himself is a formerly incarcerated person and credits his 15 year-career path, from corporate and creative communications to becoming R/GA’s global CMO, to employers that gave him a chance in spite of his background. Paying it forward, Prashar has worked within R/GA to push for more inclusive hiring practices and justice reform.

Currently, the company is working to launch a campaign to support the Clean Slate initiative, an effort to clear eligible criminal records across the United States, per R/GA. Digiday caught up with Prashar to talk about activism in advertising, second chance hiring and how both tie into the future of work.

This interview has been lightly edited for clarity.

Your background took you through activism and politics. It’s not your traditional route to CMO. How has that impacted what you do?

I’d just come off of the election for then-VP Biden’s campaign and I went back to my full-time job with Publicis. I’d only been in this industry for a year and a bit. I’d only ever worked in politics, campaigning, and journalism was my first career. One of the execs at R/GA reached out to me and said there was an opening for this position, and connected me to the CEO. I was struggling with our industry and whether I should stay in it. They walk the walk, so that’s why I joined. I needed a place to give a shit about people, or at least told me they did when I came into the door.

What impact has that had on how you run your department?

I’m a storyteller by trade. I’m a campaigner. I’m not a traditional CMO. I’m not a marketer at all, but what I’ve been allowed to bring is that campaign, political comms mindset to a marketing function. [I] made it more like news. We hired journalists. We’ve hired comms people from tech, who know how to operate at the same pace as the political environment. We’ve made our internal comms [more] human.

As a formerly incarcerated person, you have a background in activism, specifically when it comes to social justice reform. How does it tie to your current role? 

It was the previous generation that said politics and religion don’t belong in the workplace. I would argue that if you’re Black or brown, it has always belonged in the workplace. One of my jobs here is to make sure everyone’s dreams are possible. I’m formerly incarcerated. I’ve been blessed to have a career because someone gave me an opportunity. That proactive approach to making lives better is the foundation of how I do my work, and that comes from my activism. How we treat people in this world is really important to me because often formerly incarcerated people are treated less than. My activism is about making sure that nobody has to live with this ever, no matter what bullshit experiences they’ve had to grow up with because of the system that was created to punish them in the first place. 

Talk to me about your work with the Clean Slate Act and ‘second-chance’ hiring.

Our workplace is committed to open hiring. Our teams recognize that all people have potential. A lot of people’s lives have been impacted by things that are out of their control, like systemic racism and harassment by police and all that jazz. We have to hire an applicant based on what they’re going to bring. Not just what they’ve done and what silly awards they’ve won.

How does the work that you’re doing at R/GA matter to you personally?

Some people have challenges that we as peers will not necessarily understand and having an organization to support you through that is really important. I was arrested, charged and convicted. Today, I’m sitting in my role, in the office speaking to you. My life turned around because of people and that’s why I didn’t suffer perpetual punishment. The one thing the pandemic showed me, because we lost a lot of people, is we could all use a clean slate. 

FAST and slow

The key hits:

• Channels on free, ad-supported streaming TV services continue to be largely full of programming recycled from elsewhere, like traditional TV.
• TV networks have mostly refrained from investing in original programming for their FAST channels because their library programming is considered new for many FAST viewers.
• But the promotional upside could pull more FAST channel operators to invest in original programming.

Free, ad-supported streaming TV services bear many resemblances with traditional pay-TV. Two, in particular, stand out. The FAST services carry 24/7 streaming channels that echo linear TV networks, and those channels air a lot of re-runs.

While FAST services like Amazon’s IMDb TV and Roku’s The Roku Channel continue to load up on original shows, the original programming push is slower going for media companies operating 24/7 streaming channels on these FAST services. The pace is beginning to pick up, though. However, for FAST channel operators to really invest in original programming — particularly those that also own traditional TV networks — they will need to see that the revenue upside will offset the content costs and exceed the effectively free money they’re already making on the FAST services.

“I’ve got shows on my network or movies that we’ve created that are years old. We might have produced them anywhere from three to eight years ago, and they don’t get a lot of presence on our linear network currently because we’re trying to be fresh and satisfy our advertisers,” said one TV network executive. 

That programming may not suffice on the linear network, but it’s more than fine on FAST services. “We’re getting tons of views, and it’s not even new content. So we’re making money off old stuff. And big money,” said the executive, who declined to share specific revenue figures.

That ability to make money off old stuff lessens any urgency for FAST channel operators to invest in original programming. More to the point, for many FAST viewers, that “old stuff” may be brand new.

For example, millions of people may tune in to watch a show on one of A+E Networks’ traditional TV channels, “but there are 115, 118 million other households that haven’t seen the show,” said A+E Networks evp of global content sales and business development Mark Garner in the March 8 episode of the Digiday Podcast. That sizable remaining audience makes FASTs “an opportunity to bring new quote-unquote content to those viewers because they haven’t seen it yet. So the demand for us to have to do originals is not as urgent as it might appear on the surface.”

That urgency may have yet to arisen, but an opportunity is presenting itself for FAST channel operators to use original programming as a form of marketing to get people tuning into their FAST channels, especially as FAST services have become saturated with hundreds of different channels.

In February, Fuse debuted the first original programming on one of its FAST channels, a series of documentary music specials on artists like Dua Lipa and DJ Khaled that premiered on Fuse Backstage. The traditional TV network owner, which plans to launch two new FAST channels this year, had seen a fourfold increase in viewership and revenue for its FAST channels over the past year, according to Fuse head of digital Patrick Courtney, who declined to share specific viewership or revenue figures. 

Fuse opted to wade into original programming, in part, because “these are channels that need lots of content, and our library is limited. The overall acquisition space is competitive. And we think that we know what works now,” Courtney said.

Fuse is also managing the costs of the original programming for its FAST channel. While Courtney wouldn’t discuss specific numbers, he described the original programming costs as “definitely not linear-level production values there, but I would say we’re putting a little bit more into it than our average YouTube video.”

Airing original programs not only gives audiences a reason to continue to seek out a specific FAST channel if they’ve exhausted its recycled programming, but also it gives FAST services an incentive to help promote a FAST channel.

“The biggest driver of performance is working with the platforms. They know what works for their audience, and we work with them to provide all the materials that they need,” said Courtney. “So when it comes to the originals, we give them plenty of heads up. We work with them on a promotional plan.” Fuse has a relationship manager that works with the FAST services to create marketing materials for its programming.

Garner and the other TV network executive similarly see the opportunity to use original programming as a marketing tool for their respective FAST channels. The unnamed TV network executive said that some FAST services have even started talks with them about co-producing original programming that would be exclusive to a given FAST service.

“Being able to position things as original and coming out to the market with unique and new [programming] is always a great marketing tool. And there are advantages to original content,” said Garner. “So that said, we understand the importance of original [programming], and we’ll continue to look at what point in time does it really become necessary for us to introduce original content onto the FAST channels.”

What we’ve heard

“We’re sometimes at the mercy of the [TV] networks’ maturity in their programmatic ecosystem and tech. That’s part of the negotiation of placing your bets on whose roadmaps are going to be ready when.”

— Agency executive

3 questions with The New York Times’ Lindsay Crouse

Like many people, Lindsay Crouse will remember this year’s Academy Awards as when Will Smith slapped Chris Rock on stage. But that’s unlikely to be her biggest memory from the night. As a co-executive producer for The New York Times’ Op-Docs team, Crouse celebrated that night the publisher’s first Oscar win.

The Times took home the Oscar in the documentary short category for “The Queen of Basketball.” Directed by Ben Proudfoot of Breakwater Studios — with Crouse’s Times colleagues Regina Sobel and Andrew Blackwell as supervising editors, Yvonne Ashley Kouadjo as associate producer, Christine Kecher as senior commissioning editor and Adam Ellick as executive producer — the 22-minute film tells the story Lusia Harris who, among other acclaims, was and remains the only woman ever to be drafted by the NBA.

In an interview, Crouse talked about the Oscar-winning documentary, the Op-Docs team’s broader work and, yeah, the slap.

The interview has been edited for length and clarity.

The New York Times’s Op-Docs team had been nominated for four Academy Awards before being nominated for and then winning the Oscar for “The Queen of Basketball.” Does “The Queen of Basketball” reflect any specific evolution in the Op-Docs team’s work?

It definitely does. I’ve worked on the [Op-Docs] series for the entire decade that it’s existed, and I realized that — in order to kind of compete against the Netflixes of the world [and] other very well funded, very well staffed, frankly, enterprises — I looked very closely at what we could contribute as a competitive edge in Op-Docs.

It became clear to me that we had two things that we could do. One, being sort of a catalyst for emerging talents, identifying like-minded filmmakers who might be interested to experiment along with us. And the other thing that we could do was kind of contribute our own inclinations and interests editorially, our own strengths as storytellers and reporters at The New York Times and, in particular, our own strengths in framing stories.

Once we connected with Ben Proudfoot and his studio Breakwater, we gave them a lot more editorial input and almost collaboration in terms of having a desire for original reporting. With my own experience as a women’s sports reporter, I was also able to contribute my own expertise and inclinations. So yes, definitely a much more involved and much more engaged and much more collaborative approach with a filmmaker and a filmmaking team than we’ve taken in the past.

The pandemic impacted every type of production in some way, and some of the adjustments have been adopted as longstanding parts of the production process. Are there any ways the production process of an Op-Docs project is different today than it was prior to the pandemic?

The Oscar came out of the pandemic in a lot of ways.

In the pandemic, I realized that maybe we had an opportunity to break through because of the time-honored traditions that have led to Oscar victory in the Short [Documentary] category of late weren’t really available to us. Money was less of a factor. The way that we chose to do that was working with unexpected filmmakers who weren’t as established. They were younger, which meant they were willing to experiment with us. Ben Proudfoot was obviously one of those. And then the other [way] was to commission and give editorial input in a way that was very unusual for how we’d worked before. And then the third type of risk editorially was our Oscar slate. I suspected people might be interested in what we called at the time counter-programming. So not a COVID story.

You listen to Lusia Harris’s story and you’re inspired by her: She was an underdog, but she accomplished so much. And I think that resonated in this time. Obviously this is a story about race and opportunity and gender, and it does not sugarcoat any of the barriers that can come with those things. But at the end of the day, it’s also a story about excellence. And I think that’s what helped it break through in this time.

Short-form documentary producers often talk about the financial challenges they face since short-form docs typically don’t receive the same level of attention or the distribution deals of feature-length documentaries. How does the Op-Docs team deal with this to ensure the sustainability of its work?

That’s a major challenge that we still face. We, of course, paid fees for each film, but we’re not able to fully fund them. We do have a number of partnerships that we have explored and put in place to commission and fully fund films. More in the future. But it is an obstacle right now in the field and one that we are hopeful that we can play a role in helping to fix.

Bonus question: What was your experience when Will Smith got on stage and slapped Chris Rock?

I was in the in the auditorium. We were all pretty confused. I looked at the guy next to me, and I was like, What did I miss? Because I heard Chris Rock’s joke, but I didn’t fully understand how it connected to the slap. Because of course it seems staged. And then I couldn’t see who slapped him because the guy’s back was to me. So that was a little unclear. And then it was only when Will Smith started yelling pretty aggressively, pretty angrily and Chris Rock started stumbling over his words [while] presenting Best Documentary that it was clear something has gone wrong.

Numbers to know

1.29: Average number of people in a household who watch programming on a connected TV together, exceeding traditional TV’s co-viewing average.

20%: Percentage share of 9,000 U.S. survey respondents who said they subscribe to too many streaming services.

8.9 million: Number of people who tuned into the Grammy Awards this year across CBS and Paramount+, slightly higher than last year’s count.

25%: Percentage share increase in new viewers for Apple TV+ following the Oscar win for “CODA.”

>50%: Percentage share of Netflix’s subscribers who watched an anime show or movie on the service last year.

What we’ve covered

TikTok’s share of dollars grows the further it goes down the marketing funnel:

• TikTok accounts for 10% to 20% of ad agency Mechanism’s social ad spending.
• Much of the money going to TikTok is coming from brand advertisers.

Read more about TikTok here.

Why marketers are giving streaming a bigger piece of the advertising pie:

• Advertisers are continuing to move more money into connected TV and streaming.
• Lately the spending shift has been motivated by Apple’s anti-tracking update making social platforms like Facebook less cost-effective.

Read more about digital video advertising here.

What we’re reading

YouTube’s podcast push:
YouTube plans to raise the profile of podcasts on its platform, including adding a dedicated podcast page, making it easier for podcast makers to upload their shows and introducing audio ads, according to Podnews.

Reels’ raison d’être:
Meta’s TikTok clone accounted for more than half of the 20 most-viewed posts on Facebook in the U.S. in the fourth quarter of 2021, according to Recode. However, most of those Reels were recycled videos, and Meta still needs to incentivize creators to post original short-form videos to its platform.

CNN+’s Quibi comparison:
Programming is ultimately what makes or breaks a streaming service, and CNN+ so far lacks the shows, including live news streams, to make the subscription-based news streamer worth paying for, according to Vulture.

Apple TV+’s growing pains:
Despite becoming the first streamer to win the Best Picture Oscar, Apple TV+ has struggled to set up a successful marketing operation to promote its shows and movies, according to Insider.

Netflix’s cost consciousness:
Netflix is looking to check its spending and curb its hiring as the dominant streamer deals with a slowdown in subscriber growth, according to The Information.

The Sustainable Products Initiative, or SPI, will be a key part of the continent’s climate-neutral goals. The initiative is focused on redesigning how products are made and stopping the destruction of unsold goods, while also reducing energy consumption and greenhouse gas emissions. That includes exploring ways to limit microfiber production and implementing digital passports for all products. It also addresses greenwashing, which has become a big issue in Europe and the U.K., by encouraging brands to adopt E.U.-recognized labels, among other measures. The E.U. Ecolabel has been used to signify products meeting specific ecological standards since 1992. 

The U.K.’s Competition and Markets Authority (CMA) is in the process of investigating fashion brands that have been accused of greenwashing within their marketing in the last year. In a recent study, the Changing Markets Foundation found that almost 60% of green claims made by 12 major brands across industries in the U.K. and Europe were unsubstantiated or misleading. 

The SPI legislation has implications for the international market, too.

According to Kristen Fanarakis, who founded slow L.A.-based fashion brand Senza Tempo in 2017, the legislation will affect international brands that sell products in the U.K. and E.U. “If California implemented a sustainable standard, brands selling into California would have to [meet the new standard] across the board,” Fanarakis said, offering an example. 

With ultra-fast-fashion brand Shein raising funding for a $100 billion valuation in its reported pre-IPO round, the move cannot come sooner. Worldwide, fast fashion is distributing low-quality, trend-driven garments with obsolescence built-in. 

Philippa Grogan, sustainability consultant at sustainable business strategy company Eco Age, said the new legislation doesn’t go far enough. She said that the E.U. should quantify the legislation more and have steps in place allowing brands to strategically address the overproduction of clothing. “Brands are producing too many clothes for any of the recycling systems to deal with,” she said. “It makes consumers think that clothing can be viewed as disposable, like a Kleenex. That really fits into the Shein model.” According to the European Environment Agency, in Europe, clothing use has the fourth-highest impact on the environment and climate, beaten only by food, housing and transport. 

But the legislation could also affect parts of the supply chain under strain, as fashion brands are battling soaring energy prices in the bloc and challenges driven by the war in Ukraine. The proposal could limit the dependency on Russian energy imports by relying on products that are already in production and limiting additional processing. 

The E.U. also published its strategy for a more sustainable textiles industry and its new anti-greenwashing measures. According to Kerry Bannigan, executive director at the social entrepreneur organization Fashion Impact Fund, brands will now need to implement measures ensuring responsibility along the value chain, including sorting and recycling products. They must also create an eco-design framework that prioritizes durability and recyclability.

“They will need to ensure the infrastructure is in place for this transition. A transition is critical, in order to reskill workers where needed and ensure no worker is left behind,” she said. The green deal is prioritizing the creation of jobs, including in fashion, where additional roles will be needed to help brands keep to the legislation.

The legislation will put the onus of responsibility for production and durability on brands. However, the exact requirements for each product group have not been set yet and could be diluted if brands are consulted in its development. Fanarakis, who has seen product thickness and quality go down even with Senza Tempo’s own suppliers, said fast-fashion brands should take fiscal responsibility for their products, similarly to how the cigarette industry and the chemicals industry are heavily taxed for their impact on the environment. 

“This legislation has the potential to finally address the roots of fashion’s environmental offenses: declining quality and overproduction,” she said. “No one is paying for the externalities of the fast-fashion business model or the high volume, high use of fossil fuel-based fashion. The potential for extended producer responsibility requirements would increase prices, making companies liable for their cheap clothing in the manner that a toxic plant is responsible for the waste or pollution they emit.”

This could be addressed via future legislation. The E.U. is set to extend the responsibility of textile production to manufacturers, under the revision of the Waste Framework Directive, set for 2023. In addition, the European Commission is currently conducting a study to pinpoint targets for the re-use and recycling of textile waste — it’s set to define the standard for E.U. clothing operations.

The Sustainable Products Initiative also focuses on forwarding new circular business models, like renting, and developing related services like refurbishment and repair. High-end retailers have launched such services, which provide a new revenue stream. 

Neiman Marcus recently announced such refurbishment and repair programs, and brands including Burberry have also launched repair services. Crucially, this would be something fast fashion brands would not be able to offer as the cost of the repair would outweigh the low cost of the garment.