“We are navigating uncertain times.” How often have you heard some variation of this phrase in the last three years? It’s been used to explain everything from layoffs to schedule changes to service disruptions, and — while it may be true — it’s getting exhausting. I think it’s fair to say that we’re all looking for more “certain times.”
Perhaps more certainty and predictability lie in the future, but they remain to be seen. Right now, everyone (especially those in marketing) needs to focus on navigating uncertainty.
Adjust Investment Strategies for Uncertain Times
In the past year, we have seen the tide shift from a general policy of “grow at all costs” to “show profitability.” This means that companies’ investment strategy needs to focus on protecting the bottom line, and if the correction is not done gradually over time, the marketing budget is the most exposed to cuts and pullbacks.
This is usually because of two reasons:
A structural adjustment like laying off part of your staff comes with expensive severance packages and therefore requires time to show an impact on the bottom line.
Because companies that need to prioritize revenue and profits in the short term are often willing to forgo a medium to long-term impact for immediate relief, favoring sales costs that can bring immediate revenue vs. marketing expenditures that bring both short, medium, and long-term benefits.
This is the reason why companies that are seeing a softening demand (i.e., topline decline) or are anticipating a market contraction, tend to cut media and marketing budgets before reducing sales costs.
The problem is that if this pullback is done too abruptly, inbound demand will soften to the point where your sales efforts become less effective and will therefore worsen the company’s need to cut costs to maintain margins. Moreover, if your disinvestment strategy is more drastic than your competitors, the market share loss will make a later recovery 2-3x more expensive than the initial savings.
At this point, people may be tempted to suggest that to prevent this tricky situation, companies should have been more conservative in bolstering costs during a growth period. Still, we need to remember that limiting spend in a moment of growth also presents the opportunity cost of losing “fair” market share with respect to the market and competition.
Since we can’t go back in time, let’s discuss how companies can navigate a worsening financial outlook and how marketing and finance departments can partner together to adjust their investment strategy to manage the current environment.
Attention is the most valuable resource in the advertising industry. It is a prerequisite for message reception, encoding, and ultimately, the ability to change perception and drive behavior. As advertising legend Bill Bernbach said, “If your advertising goes unnoticed, everything else is academic.”
While the idea of measuring and optimizing for human attention to improve advertising effectiveness is becoming more prominent in the industry, thereare still those who believe it’s a concept too ephemeral to properly be measured or too marginal to grant the investment needed to make it mainstream.
This adverse perspective is often driven by a limited understanding of the nuances around this topic or a deliberate effort to protect a business interest. While there’s little I can do about the latter, I want to help address the former. I do so here by laying out some of the foundations for a constructive conversation around this fundamental resource.
We are facing a pandemic to a degree we’ve never seen in modern times, and there is a whole range of emotions in trying to deal with this new reality. We can’t avoid being afraid. However, part of me can’t help but see the current events as a force for good.
All around the world, countries, companies, and individual people are making long-overdue changes now that we finally have the right incentive.
For the past ten years working in digital marketing, the world has been divided into Branding and Performance Marketing. Branding is full of large budgets and not much accountability for their results. Performance Marketing (or Direct Response) has ugly creatives but gets beautiful, carefully documented returns.
Advertising has not always been lik…
Great marketing is about making consumers enjoy the experience they have with your brand. Every consumer touchpoint should be a delightful brand experience, even when carrying a commercial message. This is how you positively impact everyday customer behavior and purchasing decisions. If we want people to change how they behave, we have to change their experiences. In spite of this knowledge, brand marketing is often tied to vanity metrics that don’t drive any real behavior change, and performance marketing is not much better than the cheesy infomercial you see on late-night TV.
But marketers want to do better: no one sets out to do a mediocre job. The industry is continuously innovating to deliver better brand experiences and drive impact, but the results are often inconsistent, making it difficult to know what new practices to adopt.
This post explores some of the current efforts made to provide a better brand experience. Through this careful exploration, we’ll discuss why it’s so hard to raise the bar and look to the future to see how to break out of stale marketing cycles.