FIVE KEY MEDIA PRINCIPLES TO NAVIGATING ECONOMIC UNCERTAINTY & THE RECESSION

by Erika Cramer, SVP Communications Strategy, Generator Media + Analytics

As prices continue to rise, consumers are making conscious cutbacks to make their dollars stretch further. Some key areas that consumers cite to save money include things like take-out meals, cutting back on food/grocery spend, purchasing less overall and putting off major purchases like home repairs, renovations, or upgrades.

Source: Visual Capitalist.com – US Inflation, What Categories have been hit the hardest, Nick  Routley -11/19/2021

This reduction in spend is putting a squeeze on clients’ bottom-lines, and clients are looking closely at budgets and wondering if they should cut what they deem unnecessary or less vital spend.  Marketing tends to fall in this camp. There is empirical evidence that when advertisers cut spend, they are much more likely to see a loss in market share. Generator Media + Analytics recognizes that in light of this, each dollar must work as hard as possible and works to ensure we generate positive outcomes for our clients and brands (our mission since day one). In addition to the critical lesson learned in the past 2 years that flexibility is imperative in every business’ marketing, we have identified areas around planning, investment, and audience science to ensure our clients are set up for the best possible outcome.

Below are five key principles to help brands navigate the uncertainty they will face through 2022 and likely into 2023.

1. Invest in Your Brand and Branding

Many brands may be looking to cut spend or focus their media efforts on lower funnel tactics to help protect their bottom lines, but this approach may be more detrimental to long-term growth without maintaining levels of brand awareness. During times of economic anxiety, some customers will turn to familiar brands while others may be looking to make a switch. Brands must be in consistent communication with prospective consumers long before they are in the market to buy.

Continue to rely on emotional priming to cut through regardless of peoples’ appetite for products in the short-term. Stay the course and reap the benefits when it comes to long-term sustained growth. Brands that increased spend during tough economic times saw a growth of 17% while brands that reduced spend saw a proportional decline.

Source WARC The Anatomy of Effectiveness 2022.

Understanding a brand’s relationship and influence between brand and performance is critical. Have a balanced approach that will support a business through near-term turbulence while also focusing on long-term growth. 2023 will likely bring continued uncertainty with cookie deprecation, privacy & data regulation, and economic uncertainty.

2. Refine Investment Strategy to Ensure Every Dollar is Maximized

As costs of most goods increase, brands not only have to continue to deliver on sales goals but increase ROI to gain or maintain profitability. Here are two approaches that can enhance media efficiency and increase conversion rates:

a. Evaluate the balance of investment from top to bottom of the path to conversion to maximize the effectiveness of high-conversion tactics. Not all media touch points are created equal, nor should they way a business measures their effectiveness.

b. Focus prospecting efforts on a refined target to fill the marketing funnel with consumers that are most likely to convert. Understanding your high-value consumers, their path to conversion, as well as what is driving awareness, interest, and action is essential to identifying opportunities to grow that high-value audience pool and to avoid serving impressions outside of this target.  In today’s data-driven age, signals that help paint a picture of what is moving the needle for your business are available and should be used to continuously optimize a campaign.

3. Mine Your Existing Customer-Base for New Opportunities

Over the past few years, the lens in which many targets have been evaluated has been pandemic-related. In 2022, media consumption trends and shopping behaviors continue to evolve in the face of economic uncertainties. As the market changes, brands must re-evaluate their target consumer and validate or identify new areas of growth. Multiple audience segments can be revealed when looking closely at your customer-base. In the case of inflation and recessionary factors, the intersection of your target with income and lifestyle qualities will be critical as these two points will lead to two sides of opportunity, those that are price sensitive and those that are not. On either side of the coin, there will be an opportunity to test messaging. Those less sensitive may be easily converted based on highlighting value (think bundles and subscriptions) while others may be more easily convinced with a discount.

By isolating the different segments and tailoring investment and messaging to each, profit margins may be protected more than if a universal discount is offered.

4. Keep Existing Customers Happy and Find More Like them

It’s more cost-effective to retain a customer than to acquire a new one, loyal customers typically spend 2x more! Reward your existing customers with a customer loyalty program that gives them access to new products, exclusive opportunities, or discounts. Customers are feeling the impacts of inflation, so providing rewards and discounts can help you keep your customers coming back.

Also leverage your loyal customers to find more like them through a referral program (provide current customers an incentive to refer your product) or identify LTV by referral source to optimize to highest value customers and build look-a-like audiences against those high value customers within prospective digital media campaigns.

5. Ensure Media Capitalizes on Both Ends of the Funnel

Continue to ensure all media is held to the KPI that reflects its primary role, while capitalizing on attribution that can tie channels historically thought of as supporting either top or bottom funnel, throughout the entire journey. Employ hard-working channels and tactics that can serve multiple roles to enhance the performance of campaigns and help earn efficiencies when needed. Here are some examples of gaining efficiency across a sample of tactics:

TV:  Sources project TV ad spend will decline by 10% in 2022 and 5% in 2023. This is further corroborated by reported minimal upfront spending gains predicted for 2022-2023. Yes, viewership is declining, but TV still remains an efficient way to drive mass reach. However, continue to look for ways to increase its accountability whether through advanced targeting (addressable or programmatic) or measurement. Lastly, be prepared to capitalize on firesale opportunities as they arise.

CTV:  The viewership growth is undeniable as some services offer scale on par with TV networks along with targetability. CTV offers interesting formats that can help tie exposure to an action, further pushing consumers down the funnel and demonstrating attributable revenue.

Digital Audio: Now more popular than radio, digital audio use continues to grow, driven primarily by podcast listening. As programmatic opportunities in this space increase, the ability to efficiently target and optimize advertising make it the perfect combination for advertisers to test and learn into this space.

OOH:  Another efficient medium is making a comeback and offers more digital options allowing for better targeting, more relevant messaging, and the ability to drive consumers to engagement. With the advancement in mobile device tracking, OOH can now more accurately tie awareness to an action.

Retail Media:  Traditionally a lower-funnel channel, there are growing opportunities to leverage retailer data to prospect against new shoppers. This, coupled with the ability to tie to a sale, helps to collapse the funnel and makes this channel an ideal opportunity to maximize spend during uncertain times.

These five principles are within a business or organization’s reach with access to relevant data and strategic guidance. Blending the lessons learned and proven ability to steer businesses who come out of challenging times in a stronger position, shines a light on the importance of identifying a path forward and applying principles such as these.