The real truth of marketing effectiveness in a cost-of-living crisis
Opinion: Strategy Leaders
Effectiveness data collected quickly during a crisis can soon become obsolete when the markets are volatile to change.
We are facing the highest level of inflation in 30 years, a cost-of-living crisis, rising energy and fuel prices, and post-lockdown/Brexit-induced supply chain collapses. Naturally, brands are experiencing increasing amounts of budgetary pressure and there’s even more of a focus for the organisation on protecting the bottom line. As a result, marketing investment can often be the first on the chopping block
In response, those in the world of advertising and marketing who have experienced previous recessions and economic downturns i.e., 2008 are reviving the much-evidenced argument of (and case for) brand building and continued marketing spend in a downturn.
Continuing to spend during lean times has previously been shown to yield dividends in the long term, on account of creating excess share of voice.
But it can be difficult to make brand leadership teams jump headfirst into a higher spend strategy. Therefore, demonstrating effectiveness in this crisis will require a change of thinking. It’s less of a budget question and more of a measurement one. Of course, that’s easier said than done — marketing measurement is a complicated beast.
Ultimately, the most important metric is the one which will shift business outcomes. In other words, we need to answer the supposedly simple question, “why does the business advertise in the first place?”. Is the point of advertising top-line revenue growth, new customer acquisition, or driving repeat purchases?
Then, rather than look for a single source of the truth, the right portfolio of different measurement techniques, such as econometrics (media mix modelling), brand tracking, in-channel engagement and digital attribution, must be assembled to tell different parts of the story. It’s essential to be clear on the function that each piece of analysis plays — what it is being used to tell us and, as importantly, what it’s not there to tell us.
It’s also critical to understand the limitations of different methodologies to identify where they’ll benefit from calibration to make them more useful in driving the right decisions. For example, applying weighting factors to digital attribution tools using MMM to account for the offline effect of digital media.
According to a recent DMA study a mere 6% of effectiveness measures relate to business effects. But, understanding the metrics and how to measure our effect on impacting them will be vital to navigating the bumpy road ahead – especially in quantifying the impact against the key business outcome we need to drive.
Still, regardless of how sophisticated a brand’s measurement set up is, we still need to be aware of a fundamental truth. And we need to remember that collected data quickly becomes obsolete when the markets are volatile to change.
That doesn’t mean some learnings on media effectiveness don’t hold true in a disrupted market. There are calibrations that every brand can — and should — make to their understanding of effectiveness.
Be aware of your response curve
Media has not been exempt from inflationary pressure. For example, inflation is hitting television particularly hard, according to WARC advertising costs increasing by 31.2% from pre-pandemic levels — the biggest jump in two decades.
This does not mean marketers should abandon TV. However, it will have an impact on the budget. Brands need to factor the shifting prices into their response curves because, without caution, it could easily eat into profitable headroom and move the point of diminishing returns. That also comes with understanding the right marketing mix — or scaling back investments in less impactful touchpoints and focusing budget on the touchpoints that deliver the most impact against business objectives.
Adapt your strategy against your supply chain
The ongoing challenges of supply chains are causing many brands to struggle with managing customer expectations and maintaining consistent product availability. Having fewer products to sell will impact ROI and likely require a shift in strategy. One that doesn’t focus on sales-driving but long-term brand-building tactics that ensure the brand is still top of mind when stocks start to replenish.
However, these considerations require a strategy backed by strong insights from market research and economic analysis. For example, a travel brand may need to focus its budget on the short-term (as opposed to brand-building strategies). Because quite simply, if they don’t focus on getting bums on seats, the main worry won’t be marketing spend, it will be whether the brand exists once we emerge from the crisis.
Know the impact on your target consumer
Understanding the consumer, and their mindset, will also support this. The difference with this cost-of-living crisis is that different audience groups are affected in vastly different ways. For example, according to a BritainThinks survey, around 10% have been “deeply affected” and are pessimistic about affording the essentials. A similar number (6%) are not considering any behaviour changes. They are very optimistic about affording the luxuries and the basics.
This uneven impact may flow through the effectiveness of different parts of the marketing plan. Brands will need to reconsider the products they are advertising and how they will resonate if it feels unrealistic or unaffordable to their usual cohort.
It’s a reality that brands will pull back on their spend and that will be the correct decision for some. On the whole, though, research and modelling suggest that won’t be the right decision for the majority. If it must be done, we must ensure we track the effect that pulling back has. It will inform next steps when future budget reductions arise, or, more positively, it may provoke a change to ‘business as usual’, helping to redefine the value of media environments and reprioritising spending when budgets return to normal.
No doubt, it will still be a cautious and challenging time for brands and consumers alike. But we will pull out of this downturn. Understanding the business in its totality can offer a lot more than survival, but future value and optimum marketing effectiveness.
Dominic Charles is head of effectiveness at Wavemaker UK
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