The last few years have proved to be a turbulent time for the average marketer, with GDPR, Covid, the rapid shift to digital media and a global cost-of-living crisis all hitting the sector in rapid succession.
This has created an uneven, unpredictable landscape across much of the UK – meaning large swathes of the marketing workforce are time and again being asked to do much more, with far less.
How then, do brands cope with such perilous times? There are usually two schools of thought – the first being to cut one’s cloth accordingly and make cutbacks where necessary (the marketing budget is often the first to go); while the second dictates that a brand should double down on its marketing investments – ploughing on through the hard times regardless.
Both have proved effective in the past, although the latter is more commonly associated with better bounceback and long-term brand health.
So how are different brands and agencies navigating these difficulties – and what do marketers fear most over the coming years?
Why are brands slashing marketing budgets?
With pennies inevitably being watched more closely, customers and businesses are rightfully being increasingly cautious with their spend. As sensible as this is, it does inevitably feed into the economic downturn in which the tightening of consumers’ belts leads to a similar reaction at boardroom level – albeit on a much larger scale.
“Consumers are rightly cautious about spending and this is impacting all businesses,” says marketing coach and industry expert Danny Denhard.
“Many brands are experiencing the ‘current normal’ – when consumers are smarter about their spending habits and where they invest their time and money.
“Companies have found their campaigns weren’t landing and either shifted their budget or cut their budgets accordingly – this will have another knock-on effect. Very few can spend like they used to.”
This is especially pertinent when we see the likes of Just Eat, ITV and WPP have all experienced significant falls in revenue amid what ITV CEO Dame Carolyn Hill has called “the worst advertising recession we’ve seen since the global financial crisis.”
Having experienced a 7% drop in overall revenue (and a concerning 13% drop in North America), Just Eat took the rather drastic step of cutting its marketing budget by a staggering 28% in the first half of 2023 in comparison with the same period last year, equating to a reduction of over £250 million.
Rankin Creative CEO, Richard Pinder, also points to a range of global socio-economic factors for the industry-wide downturn seen in the first half of 2023; not least the overtly conservative approach taken by business over this period – driven, he says, by “energy prices, Ukraine, and inflation.”
He continues: “But more recently, the series of interest rate hikes finally had their intended impact. Those who overextended during Covid had to rein that in and we saw that in H1 2023.”
Pinder does however predict a more optimistic picture for 2024, highlighting Rankin Creative’s “strong booking schedule for the back end of the year”, which he says is a “leading indicator” that spend will be returning in media from early 2024.
How to succeed during a downturn
It’s not all doom and gloom however, as many consumer brands have managed to thrive during this trying period – with marketing and advertising sitting firmly at the forefront of their success. Coca-Cola has credited the success of its “consumer-centric” marketing as pivotal to its healthy Q2 growth figures.
Amazon too has found that strong investment in that area has proved lucrative, bolstering its business despite the global recession, enabling it to grow 11% in the second quarter, with its advertising arm bringing in £9 billion alone.
“There are plenty of stories this last 50 years of brands achieving much greater market share gains in a downturn than in good times. A rising tide raises all ships, whereas a downturn leaves some beached and some able to move on,” Pinder says.
“The smart (and lucky) ones know that media is relatively cheaper, a high share of voice is more easily achieved, and effective messaging works whatever the economic climate. After all, a downturn is only relative.”
Concurring, Denhard singles out both of the US firm’s steadfast commitment to long-term, carefully considered marketing plans as opposed to the quick instant gratification that many brands resort to in order to achieve results.
Naturally, the colossal size of both brands does give them more leeway than most, but an unwavering, steady course has time and again proven effective for brands navigating turbulent waters.
“Both made long-term bets and invested in these, while many didn’t or stopped advertising or innovating,” Denhard continues.
“Amazon has opened up the advertising space by offering a solution that brands feel they have to advertise on to be part of their ecosystem.
He continues: “They’ve worked to their core strengths of offering ‘prime expectations’ a wide selection, priced about right but reliably delivered quickly while adding a competitive layer on top for merchants – advertising. While others stagnated.
“Coca-Cola knew they needed to invest in marketing and advertising in ‘22 and ‘23 and the Coca-Cola portfolio offers something we want daily, they have become connected to more experiences and advertised well.”
What does the future hold?
So just what does the future hold for marketers at such an uncertain time? After all, a recent survey has revealed that up to 71% of UK marketers fear for their long-term job security, citing budget and staff cuts as major concerns – as well as the development of AI.
Who will survive and thrive? For Pinder, it’ll be the adaptable, malleable brands who’ll come out of this in the best shape; “We are without doubt in a period of extended uncertainty. It is far easier to write down a top ten ‘reasons to be fearful’ than the more cheery kind.
“The successful will be those who thrive in change and uncertainty and can get their organisations behind them.”
Pinder concludes: “Today, I think it is even more important not to be driven by fear. As Warren Buffett says to anyone who will listen – be greedy when the market is fearful and fearful when the market is greedy.”
Concurring with Pinder’s ‘survival of the fittest’ assessment, Denhard also predicts an AI gold-rush over the coming 12 months, with many more tools being launched – whether these are of any tangible quality however, remains to be seen.
With all the uncertainty that the industry has faced over the last five years, it’s not surprise that there is growing unease among marketers over the stability of their careers. However, it wouldn’t be far-fetched to surmise that the overall situation should return to relative normality at some point in 2024, with many – like Pinder – predicting an uptick in adspend once again.
So, will AI steal your job and render you utterly redundant? You’d better hope your business can weather the raging economic storm before worrying about any of that.