A great many “unknown unknowns” have marketers second-guessing their 2022 strategy but despite the uncertainty, Hatched’s Stephen Fisher and Adrian Roeling say now is the time to stay the course.
A perfect storm is brewing in the Australian economy, one that’s set to make landfall in early to mid-2022 and impact the advertising sector. It’s a storm created by a precise combination of economic factors, borne from the pandemic but separate to the broader health implications.
Right now, business confidence is high, as is consumer confidence with Australians sitting on $400 billion in pandemic-induced savings.
Despite the emergence of Omicron, we’re mostly feeling buoyant and embracing our newfound freedom. But as history shows, it takes just one thing to change that. It could be rising interest rates. With a federal election looming, it could be a change in government.
Reportedly, Aussies are already spending big, splurging an astounding $1 million per minute across Black Friday sales so these conditions won’t last forever.
And as we’ve seen this week, COVID isn’t done with us yet. Whether it’s a new variant or a change of seasons, we need only look to Europe to the potential challenges ahead. Quite possibly, by May next year, we’ll be in a similar position to Europe, just as consumer spending, shifting interest rates and inflation crash into a federal election.
The problem we all face heading into 2022, in the parlance of former US secretary of defence Donald Rumsfeld, is the unknown unknowns. There are things we know, things we know we don’t know and then there’s the unknown unknowns.
As 2022 shapes up to be the year of unknown unknowns, how best to navigate this period?
Build a strategy, make a plan and stick to it
According to PWC, the Australian advertising industry is on track to be worth $19.6 billion by 2025. How are we going to get there? Increased investment and rising costs are both going to play a role. That makes for an extraordinarily competitive sector and in 2022, especially in the front half where all that pent-up advertising spend is being tipped into the market, it's going to be like nothing we've seen.
Inflation is going to be a major factor to contend with in the general economy and the media industry. The US just reported the fastest inflation in 31 years with the country’s consumer price index (CPI) rising 6.2% in October compared to a year earlier and experts predict we’re headed in a similar direction as squeezed supply chains and exorbitant property prices continue.
Given all that, now is the time to figure out your strategy.
Despite the unknowns, the very worse place to be next year is at the wrong end of a surging market; procrastinating and delaying decisions are only going to add costs to your marketing efforts and radically diminish efficiencies.
Make a plan and stick to it because you need to be ahead of what’s coming.
Understand your category’s high-value audiences
COVID created a two-speed economy with categories such as grocery, liquor and homewares going gangbusters, while others including clothing, hospitality and travel took a hit. As 2022 unfolds, there’s no question we’ll see a similar divide but this time, with categories in decline seeing radical acceleration as spending starts to shift from the internal to the external.
Regardless of your category, it has never been more important to understand your high-value and high-opportunity audiences.
Australians are not going to weather this storm equitably. Some will be unaffected by the coming headwinds because they've got money in the bank or are not as highly leveraged should interest rates shift. But there are others that will be in rough seas. Understanding which boat your core audience is in is critical and you’ll need to account for that in your plan.
As life returns to the long promised “new normal”, attention is going to be more important than ever before because we’re going to be more distracted than we’ve been for a long, long time. For example, we’re already seeing signs the renaissance in linear TV viewing may be short-lived.
As spending shifts across categories and disposable income takes a hit, as confidence rides the roller-coaster of more COVID variants, travel restrictions and – God forbid – more lockdowns, planning to where a customer is paying attention will pay a dividend. There is no need to simply shout louder than others.
Media that reaches people who are genuinely paying attention will give you an unfair share of attention as well as more effective outcomes.
E-commerce is key
During COVID, e-commerce has come into its own and is expected to see a sustained rise in adoption. That means marketers will need to continue to focus on e-commerce marketing such as data-driven and personalisation strategies.
The beauty of e-commerce is that it gives you the ability to target accurately and to transact.
As people start to tighten the purse strings again, they’ll be looking for deals, so e-commerce will be a more efficient way for people to buy, further accelerating the channel.
Trust over purpose
There’s been a big focus on values over the last two years, with consumers expecting more from brands than ever before. But companies should be careful in how they approach this.
Marketing science guru Byron Sharp is already warning that a strategy based purely on values could lead to “the sort of advertising a 12-year-old kid would come up with in a high school assignment – d ‘Buy this brand because it will help children in Africa’.”
Speaking at the Festival of Marketing in October, Sharp advised this approach is too easily replicable, leaving brands vulnerable to challengers and ultimately, may even be the death of them.
Instead, marketers are better off focusing on trust. According to KPMG, net trust has declined to -4% during the pandemic, with a vast range of categories taking a hit including FMCG and insurance.
Consumers want to deal with brands that are trustworthy, honest and transparent – brands that can be relied on to do the right thing for the world. A great example is retailers Officeworks, Ikea and Kmart joining the campaign to bring retail emission to net-zero. If you can get the balance right, 2022 is the year to make this play.
In short, it’s time to get your blinkers on. We know there’s money in the economy. To grab more than your fair share, build your plan, put your head down and go.