The cost-of-living crisis presents marketers with perhaps an even bigger challenge than the pandemic. They will need to optimise media investment, writes Azerion’s Paul Lowrey.
Marketers have certainly had their work cut out negotiating the ups and downs of the past two years, but arguably we’re now entering the biggest challenge the industry has faced.
During COVID, many employees who may otherwise have been out of work were protected by furlough schemes. Of those whose jobs remained solid, many found themselves able to save money thanks to the absence of substantial expenditure on commuting and socialising. Ultimately, this meant money was still being spent; it was just being spent in different ways. Of course, some industries suffered heavily, but by and large, they were the ones consumers couldn’t spend in anyway, such as travel, entertainment, and in-store retail.
The current cost-of-living crisis is something wholly and completely different. Everyone is looking hard at the brands, products, and services they buy. With the rising cost of electricity, gas, petrol, and groceries largely to blame, recent figures suggest that more than three-quarters (76%) of consumers are concerned about the impact of the rising cost of living, and therefore household consumer spending is likely to be inhibited.
There is already a shift in shopping habits, particularly with grocery stores, with budget brands benefitting. On top of this entertainment brands like Netflix are losing subscribers, as people look to cut back on non-essentials. And this is very likely just the start. It’s projected that household real disposable income isn’t likely to begin rising again until Q3 2023. Britain is projected to see its spending power cut by an average £3,000 by the end of next year. With winter coming, things for most households are looking pretty bleak.
In the face of this change in consumer behaviour, brands need to reappraise how they portray the value they offer their customers. In the current economic context, value no longer refers to the ‘cheaper option’, the definition of value has evolved and now represents going above and beyond the transactional investment. In the current climate brands need to double down on developing and strengthening their relationships with their buyers.
Of course, it’s not like the industry hasn’t faced squeezes and recessions before, and one thing it has learned is that this doesn’t mean that brands should be looking at cutting marketing spend. As the IPA is reminding the industry, evidence shows that NOW is exactly when brands invest to keep reminding people of their market presence.
What marketers do need to do however, is focus on optimising media investment. This means honing messaging within campaigns, and refining data. Marketers need to know who they’re talking to, what the market is thinking and feeling, and have a very clear vision of the value they’re bringing to consumers and how it can be reflected in marketing activity. This all needs to feed into the three pillars of ‘brand’, ‘performance’, and ‘value’ that should be at the heart of every campaign.
But what does this mean in practice? For “brand”, this in turn can be broken down further into insight and creativity.
Doubling down on insight
Insight can help brands to create a stronger campaign foundation. The reality is that in times of turmoil, everything that is known about audience behaviour changes, which is why data is critical to help support marketers in their endeavours to strengthen consumer connections. Marketers need to be on top of industry trends, consumer and brand sentiment, and other key metrics that will help them to ensure that they know what their target customer is thinking, feeling, and looking for. Marketers then need to reflect this in their targeting and through their brand values so that they remain relevant. But a big part of that is about going the extra mile.
This might sound obvious, but a worrying statistic found that one in three marketers aren’t fully confident in who their target customer is (Azerion Consumer insights 2022). And that was at a time when markets were not facing such a tight squeeze. So brands need to be laser-focused on data and insights. Media activity can’t be effectively optimised if the audience isn’t known.
Don’t cut corners on creative
It’s well-known that creativity drives attention – and attention is what is needed in a competitive market. Research conducted by Nielsen as far back as 2017, clearly shows that creativity accounts for 47% of any sales uplift achieved from a campaign. So faced with having to work harder to reach target customers, brands definitely don’t need to be cutting corners on their creative.
When quality creative is achieved, it’s vital that it cuts through. This means continuing to focus on high-quality ad placement. Placing creative in relevant premium environments has proven to drive brand awareness and consumer recall by achieving 20 (Azerion Attention insights – 2022) times the attention of standard display ads. Essentially quality plus high impact equals high attention.
Even with the uncertainty around cookies, there are still plenty of opportunities to effectively target audiences. Accessing publisher first-party data will continue to represent one of the most potent ways to target customers, but contextual advertising also offers powerful opportunities. This can be capitalised on through things such as page-level semantic targeting and sentiment targeting, which will allow marketers to target genres as well as aligning campaigns with content written to elicit a particular feeling from the reader, such as positive, negative, happy, sad, love, curiousness, or numerous other categories.
Clear and credible performance measurement
Credible, independent measurement of campaigns is always important to marketers, but at a time when everything is going to be tightly squeezed, this becomes critical. Brands should ensure they’re working with independent third parties, instead of relying on a media owner’s in-house tools where they are in effect ‘marking their own homework’. In this way, every pound spent will be scrutinised, so it’s vital that measurement metrics and processes are in place so that it’s possible to show a demonstrable effect on brand performance. If something is not working it needs to be isolated, analysed, and potentially switched off – budget wastage is not an option.
If it is not possible to do this alone, marketers should look to their ad partners to support them.
Of course, all of this is likely to be in vain if value is not expressed in the way a customer can relate to – listening instead of shouting is the most desirable marketing quality in the face of tough times. Focus on this as well as the key areas of insight, creativity and performance will put a brand in the best possible place to not only negotiate its way through the current market challenges but to be stronger once the economy comes out the other side.