How much advertising in a crisis - that is the question. In today's competitive marketing environment and volatile economic climate, many businesses are looking to get the best return on their investment. Lucy Handley of CIM turns to an expert for answers.
The UK economy is expected to grow by 3.9% this year before contracting by 0.3% in 2023, according to government data released in October, while the International Monetary Fund expects a third of the world's economies to grow decline next year.
And according to market research consultancy Nielsen, rising prices combined with falling consumer demand is a "toxic combination." "As consumers adjust their spending to reflect inflation and higher interest rates, we expect advertising budgets to come under pressure again," said Jeremy Cartwright, director of the marketing performance consulting firm.
It's already happening: U.S. media spending fell 7% in the second quarter of this year compared to the same period in 2021, according to Nielsen.
If your brand has had to cut its budget, the good news is that there are ways to maximize costs, and as demand for media in general is down, there may be some media deals. Here are a few ways to get the most bang for your buck.
1. Focus on funnels
It's easy to get quick results using promotions at the bottom of the marketing funnel (next to a store or in a store), but make sure the costs here are balanced with activity further down the funnel. . Ultimately, a sale can take time and be the result of building relationships with consumers through helpful content, email marketing, and other activities such as sponsorships or public relations.
“Most [media] channels don’t work for the entire funnel, as only 36% of channels provide both revenue and brand metrics,” says Cartwright. “Brands are tempted to prioritize spending on conversion-focused tactics; However, this can lead to an erosion of consciousness and attention,” he adds.
2. Find out what works
“Avoid reckless budget cuts; Instead, optimize your media mix and keep investing in channels that are doing well and cutting off those that are underperforming or overloaded,” says Cartwright.
If your KPIs for a particular channel are not satisfying, it may be worth a complete reassessment. "It might be better to cut it out entirely and reallocate spending to more efficient channels and higher potential ROI (return on investment). Don't shut down all channels entirely," suggests Cartwright.
3. Look for opportunities
“Even a recession can have its benefits,” says Cartwright. Since demand for media space is likely to be lower, costs can be lowered, benefiting ad buyers.
“In addition to a potentially favorable environment for media spending, brands may also find that competitors have cut back on their advertising, creating an opportunity to improve campaign performance,” he adds.
It's also worth thinking carefully about who is buying your products and who will be buying them. In good times, it's tempting to go further in terms of segmentation, but tougher economic conditions may mean you need to refine your audience and then target accordingly.
4. Try and learn
In addition to traditional media buying, this could be a good time to try new channels, including podcast advertising, branded content creation and influencer partnerships, Cartwright said.
When it comes to influencer marketing, you don't have to spend huge amounts of money. The metric you should be looking at is engagement, not follower count. Influencer Marketing Hub offers some helpful tips on what to expect based on factors like content creation cost and industry exclusivity.
"Make sure the business you're testing is measurable to justify further investment," adds Cartwright.
5. Be realistic about sales
If you are revising your budget downwards, be sure to adjust your sales targets accordingly. “Setting realistic sales expectations can help avoid future budget cuts caused by misforesight,” says Cartwright.
It is also worth thinking carefully about how to cut costs. Nielsen data shows that advertisers who halve their budgets (or make such cuts) could lose 50% of their ROI.
“Recently, we found a 50-50-50 ratio: 50% media investment leaves up to 50% ROI on the table because marketers are spending less than 50%,” says Cartwright.
The general message is to keep advertising. “Without advertising, we would expect immediate impact on brands; On average, brands that go AWOL can expect to lose 2% of their long-term revenue every quarter. And if media efforts resume, it will take three to five years to recoup capital losses,” Cartwright said.
However, there is light at the end of the tunnel. A Nielsen study shows that 75% of recessions end within a year. Keep your fists.
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