Marketing Briefing: The far from ‘straightforward’ Q1 economy makes Q2 forecast especially murky for brand spend

“There’s been a ton of downsizing, restructuring in some of our client organizations,” said Nichelle Sanders, managing director, Mojo Supermarket. “The effects of that have not been straightforward. We’ve had everything from increasing projects to decreasing projects to delayed work or accelerated work. It’s been really changeable.”

The first quarter was “on the balance more positive than negative,” noted Sanders, adding that agencies usually reduce budgets and focus on projects when there’s a tumultuous economy. But client responses to the economic situation (the current climate is more closely tied to how a specific sector is doing rather than the industry as a whole) varied, explained ad execs.

“We anticipated a softer quarter,” said Andrew O’Dell, founder and CEO of Pereira O’Dell, adding that the quarter wasn’t as difficult as the shop expected. “We knew ahead of time companies were starting to pull back a bit. But at the same time, we also saw a lot of new business activity.”

Per O’Dell, some clients pulled back on spending while others didn’t as “there was no consistent, across the board pattern. It’s industry by industry.” 

Clients are asking for more rigor and specificity in the new business pitches and briefs, according to execs, who say that the pointed briefs make it clear that they expect more scrutiny on marketing in the coming months.

With that being the case, marketers and agency execs say that they expect budgets to continue to be tight going into the second quarter as marketers will remain conservative and push for flexibility. It’s difficult to know what’s to come in the next quarter though, noted Sanders as “seeing quarters into the future is not the reality anymore” with the current economic climate.

Chatter of the looming recession remains, marketers and agency execs say, with some noting it could be during the second half of the year now but there’s also skepticism among marketers and agency execs too. 

“We’ve been talking about this looming recession for so long, the last 15-18 months,” said O’Dell. “It doesn’t feel like we’re in a recession. People say the second half of the year. That’s what people said last year. Everyone is doing their best to protect their businesses.”

3 Questions With Aliza Freud, CEO of influencer marketing agency, SheSpeaks

Why does organic marketing matter so much to Gen Z? 
In general, if you’re going to market to Gen Z you need to be on the platforms where they spend their time. They grew up as digital natives and have been exposed to ads for so long that they’re skeptical of traditional advertising so brands have to be authentic if they’re going to appeal to this generation.

How can brands capture this audience without coming off as inauthentic?
One of the key things we’ve observed about Gen Z is that the message has to be benefit driven. Tell me how your product or service is going to make my life easier or more interesting or better etc. versus focusing solely on the features of the product. That is why when working with influencers, it’s crucial that the brand and messaging is a fit for the creator and feels authentic to their personal brand. 

Could there be a thought of over saturation in both the influencer and marketer space?
With the proliferation of influencers and influencer marketing, what is most likely to be changing is the ratio of sponsored to unsponsored or organic content an influencer has on their channel. Overall, creators are accelerating the amount of content, which helps balance their sponsored brand messaging. Gen Z tends to be more understanding of sponsored content because they recognize influencer as a legitimate profession more than other generations. — Julian Cannon

By the numbers

Compared to other generations, Gen Z consumers have the least tendency to acknowledge that inflation has affected their spending and the least likelihood to reduce their spending as a result of inflation. With the shifting buying power of each generation, Jungle Scout, an e-commerce sellers’ all-in-one platform, has published its Q1 2023 Consumer Trends Report, a study that looks at spending and e-commerce trends among U.S. consumers at the beginning of the year.  Find more details from the report below on Gen Z shopping habits now:

• 43% of Gen Z consumers start their online product searches on TikTok.

• Despite inflation, 32% of Gen Z consumers shop online at least once daily compared to 25% of millennials, 15% of Gen X, and 7% of baby boomers. 

• Gen Z consumers are the most likely to shop secondhand online to save money, with 42% purchasing a pre-owned item online in the past year. — Julian Cannon

Quote of the week

“Given the rise of Reels and Shorts, the cross-platform relevance of TikTok-style content is higher than ever, making the concern over the ban less intense than it would have been before Meta and YouTube introduced those content formats.”

— Keith Bendes, vp of strategy at Linqia, when asked about the ripple effects of TikTok’s uncertain future and the potential ban for advertisers

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• Why DOOH is a big draw for startups and direct response marketers