Marketing Briefing: Flexibility, contingency plans are ‘biggest ask from clients’ amid economic uncertainty
Marketers are asking for contingency plans and increased flexibility in their ad deals as fears of economic uncertainty and a looming recession continue to pick up steam.
Last week, during IPG’s earnings call, CEO Philippe Krakowsky noted that some clients are asking for “contingency plans” to deal with the uncertainty and the potential slowdown. Meanwhile, Arthur Sadoun, chairman and CEO of Publicis Groupe, noted during the holding company’s earnings call that while there haven’t been cutbacks yet, that doesn’t mean there won’t be.
The recognition of a need for contingency planning as well as more flexibility in the current economic environment is commonplace, according to marketers and agency execs. They say that, while they haven’t seen a pull back in spending for the most part, they do see a focus on planning for the need to do so. During the height of the pandemic, having contingency plans and flexibility built into media plans was par for the course and marketers are now more used to making swift changes on a dime.
“Clients in some verticals have been focused on getting ahead of the curve with addressing the changing economic conditions,” said Brendan Gahan, partner and chief social officer for Mekanism. “For some of these clients it makes sense to proactively address uncertainty head-on.”
Getting ahead of the curve means that clients are working to “ensure our media plans continue to be nimble to allow for changes in business conditions and consumer confidence,” explained Carrie Dino, head of media for Mekanism. According to agency execs and marketers, even if they aren’t actively pulling back, there’s an overall outlook of being aware of the need to do so and being ready with plans in place should that need to happen.
“The biggest ask from clients is around commitments and ways to increase flexibility as we navigate the second half of the year and beyond,” said Stacey Stewart, chief marketplace officer for UM. “We’re also starting conversations to prioritize efforts around marketing dollars in anticipation of reduced spending while minimizing impact to overall business.”
Some marketers and agency execs are prioritizing more fluid digital, social and programmatic media plans over options that are more traditional or harder to cancel. At the same time, marketers are also spending more on audience research to get a sense of consumer sentiment and behavior to help inform their decisions now.
Zambezi chief media officer Grace Teng said she hasn’t seen any cutbacks or dealt with many conversations about pulling back media investment. With that said, Teng added that there’s an outlook of being aware of the current economic landscape and looking back at plans from 2008 to reference how things were handled then — taking lessons from what to do and what not to do.
3 Questions with Matt Voda, CEO of OptiMine Software
What do you believe will happen first if the signs of the recession are beginning and what kind of dangers could affect advertisers?
The danger is there’s panic. Brands have got what we would call a multidimensional challenge. How do you invest in marketing to keep people coming into your business? How do you do it more cost effectively and efficiently? In retail, you’ve got this dual problem. You’ve got inventory that’s showing up late that you need to mark down that is a drain on profits. And if you try to market and invest to get people to come in and purchase that inventory, you’re adding to the expense. But at the same time, you’re thinking about this all the way back to school. I want shoppers to come in. And if I stop advertising now and I know that that’s going to impact traffic later this summer. So these are really complicated challenges that require very sophisticated analytics to get to good answers.
How do you think consumer behavior will change?
[Consumers are] going to buy different things. Discretionary items probably aren’t going to have as much demand. But the consumers still need to eat. They still need the basics. So you might have a bigger focus on just the essentials. So a brand has to think about what moves do I make now to give myself the best shot in an uncertain environment two months from now. From a marketing standpoint, what levers can I pull that may be more short-term so we see channels like search or social might have a more immediate effect versus TV that might have a longer effect that might be a little more expensive. And how do I adjust the media channels that I’m using against this kind of complicated backdrop of what if’s?
Are there other industries that you are connected with that are concerned about this possible recession?
Mostly in retail, in financial services. You know, we work with a lot of banks. The questions are they may be similar but might be a little different. You know, for consumers that are in the market for a mortgage or a new credit card, you know, it’s a slightly different challenge. What do we do when rates go up? Maybe fewer people are going to be shopping for a new home or a mortgage. And then how do we market differently in that kind of environment? But most of the challenge is in retail for us, those brands are dealing with this most acutely. So there is not a retailer on the planet that isn’t challenged by this. I think even Amazon would be dealing with this front and center. — Julian Cannon
By the numbers
With inflation rising and everyday costs surging, shoppers are holding their dollars a little bit tighter. Marketers too are cutting media dollars, aiming for more conservative budgets. Everything from gas to groceries have seen costs rise. But ahead of the back-to-school shopping season, new research from Rakuten Advertising reveals that shoppers are ready to spend. This means marketers should “expect a busy season and diversify their spend,” per the Rakuten report. More details from the report below:
- 38% of shoppers will look for back-to-school shopping inspiration on a retailer’s website or in social posts.
- 34% of shoppers will reportedly look for inspiration from online ads.
- 22% of back-to-school shoppers will look for TV or streaming TV ads. — Kimeko McCoy
Quote of the week
“Just like in Web2, when Myspace became obsolete, we don’t even know if the Big Four players are going to exist, or if there’s going to be another metaverse that’s developed even a few years from now.”
— said Lisa Wang, the founder of Bad Bitch Empire, an investment collective for women in Web3, when asked about the longevity of metaverse platforms.
What we’ve covered
- Inside a new venture to attract ad dollars to diverse-owned media companies
- Ad industry grapples with the prevalence of “made-for-advertising” sites
- Make sure to check out Token to Play, Digiday’s 10-piece series on the value of NFTs and crypto
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