What are marketers concerned about right now? Recent discussions I’ve had with CMOs from a range of industries have revealed three consistent themes:
- The business environment remains uncertain amid rising interest rates and fears over recession.
- Inflation is real for everyone, but its influences vary widely depending on the consumer segment you are targeting.
- Marketing is almost always the first budget to get cut when a firm is facing financial pressures.
Let’s go a bit deeper into each of these in turn and look at what they mean for marketers.
Central banks around the world are continuing to raise interest rates to tame inflation. In May 2023, the U.S. Federal Reserve, the Bank of England, and the European Central Bank all raised interest rates.
But, alongside ongoing geopolitical and supply chain challenges, the likely result of these rises is a recession in many parts of the world. Global growth is forecast to slow to 1.7 percent in 2023, according to the World Bank, down from 3 percent just six months ago.
Consequently, there is no getting away from the fact that this puts central bankers, who are enabling demand destruction, at odds with marketers, who are in the business of demand creation.
Different strokes for different folks
Inflation is a challenge for marketers because it is very visible to all consumers. Goods and services that are purchased often, such as food and healthcare, are particularly vulnerable to it because the price that consumers pay is a recent memory. As a result, consumers on a tight budget may try other brands or reduce consumption.
However, it is important to remember that not all consumers are the same. Some sectors do benefit despite high inflation – luxury car manufacturers Bentley and Rolls Royce both recorded record sales in 2022.
Defense versus offense
CMOs know from experience that marketing budgets are often under threat in challenging, uncertain environments like the one we’re in. Over two-thirds, 69 percent, said budgets would either shrink or remain at 2022 levels, according to this World Federation of Advertisers report.
But they also know that you can’t go dark for long periods and give competitors the opportunity to increase their market share. There is a balance to be struck between defense and offense – the question is: Do you know what is the best approach for your business?
To build resilience, get deeper insights, and ensure you have the budget you need to succeed when marketing in uncertainty, there are three things you should consider.
- Use foresight to improve decision-making. One of the most effective ways to build resilience is to have a more accurate picture of what will happen in the future. If you know that certain consumers are going to be squeezed financially, then using simulation to analyze what would happen if you were to cut your prices by 5 percent, or demand signals to get a better understanding of future sales opportunities can give you an edge over your competitors.
- Get more granular audience insights. Understanding where, when and to what extent different audience groups are interacting with campaigns across all channels, creatives, and partners in near time is another differentiator. Knowing that a brand-focused creative works on a particular social media channel with, for example, gen Zs in a specific city or region can significantly boost effectiveness. To deliver this, you need the right measurement system in place.
- Give the c-suite data-informed marketing insights. Marketing metrics often struggle when moved out of marketing department presentations and into the boardroom. Linking marketing performance to sales and profits or showing what would happen to sales and profits if advertising budgets were to be cut are approaches that marketers need to ensure they resonate with senior leadership.
Contact James to learn more about how you can thrive while marketing in uncertainty.
This article was originally published on the ANA’s website. Click here to view.