The ripple effects of inflation are nothing new. Throughout much of this past summer, the nervousness among marketers and ad agency execs’ about the uncertain economy led them to prioritize efficiency when choosing where to spend ad dollars.
Marketers and agency execs say purse strings will continue to tighten this fall as they seek more performance marketing efforts. At the same time, with consumer spending more difficult to predict, planning windows are shorter as some marketers have yet to sort out Q4 plans — something they’d typically be well on their way to hammering out.
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“There is belt-tightening across the board,” said one agency exec who asked for anonymity. “Brands are being very conservative with their dollars right now. There’s more paused campaigns than usual and a lot of the ad spends are very conservative and performance-focused. There’s a lot of concern that consumer spending is going to continue to pull back.”
That focus on performance has led some marketers to lean more heavily on influencer marketing, particularly on TikTok as it is often cheaper than the more established Instagram influencer marketing landscape.
“There’s definitely a dollar shift we see from display ads into influencers, especially mid-tier and micro on TikTok,” said Noah Mallin, chief strategy officer to IMGN Media. “Obviously it depends on the advertiser but we are seeing about 2X the number of creator campaigns.”
That’s not to say it’s altogether cheap — costs for influencer marketing are on the rise on TikTok, according to agency execs who say that rates have risen across the platform — but that it can be cheaper than more established influencer marketing platforms like Instagram.
Marketers are also eyeing influencer marketing as they look to cut production costs — working with influencers allows them to get content creation and media.
“There’s definitely more influencer work this year than last and it shows no signs of slowing,” said Brendan Gahan, partner and chief social officer at Mekanism. “Creators are being tapped as production partners more than ever. The economic uncertainty plus the volume of social content we often need to create means we need to be efficient with how we allocate dollars. Creators are often a great option to help scale production efforts. They’re platform experts.”
Danielle Wiley, founder of influencer marketing shop Sway Group echoed that sentiment: “Influencer budgets have been increasing while traditional media spends are going down. Influencer spends are also a lot more flexible. Messaging can be adjusted quickly, content can be repurposed/used multiple places. I’m obviously biased, but in an uncertain economy, I’d much rather put budget towards influencer than a traditional media spend.”
3 Questions with Andrew Warden, CMO of digital marketing and online visibility platform for small businesses Semrush
How will inflation continue to affect small businesses and what have you seen on your end of this trend?
Inflation will drive small businesses to invest their time and money into efforts that will grow them during the medium-term. Right now it’s hard out there for everyone. But we know that economies move in cyclical patterns — there will be better days. The question is how can business owners get set up when inflation comes back into check and any recession worries subside. I always encourage people to face the risk, and look beyond it. How will you be set up when the storm settles? The answer — and what we’re seeing — lies in driving online visibility and attention to your business using organic marketing channels. It costs less than paid advertising, it’s easy to get started, and pays dividends for many quarters to come.
What can small businesses do to adjust their spending in response to rising prices and keep up with inflation?
Most businesses want to be careful to not pass on rising costs to consumers because that would make their businesses less attractive. So naturally, business owners are looking for ways to cut their operating costs. Just the other day I was getting my haircut at a barber in Austin who spends more than $1,000 a month on a marketing program that isn’t delivering him results or foot traffic. What I recommended to this barber, and would recommend to anyone in a similar position is to turn to lower-priced solutions, such as SEO and organic marketing. They’re going to drive much higher ROI for businesses on a budget.
How will this affect advertisers and marketers when it comes to building relationships with small businesses over large corporations?
Advertisers and marketers working with small businesses should be sensitive to the needs of SMB owners. This isn’t anything new. I would expect SMB owners to ask more questions about where their marketing/ad dollars are going, especially now. If the traffic isn’t there, I would expect changes in the relationship. And hey, that’s not a bad thing necessarily. As marketers, we are always on our toes and always ready for what comes next. — Julian Cannon
By the numbers
Things are getting more expensive. From gas to groceries, shoppers are feeling the squeeze of inflation on all sides. In response, marketers have been focused on how to relay messaging regarding price hikes to customers. As the cost of living continues to spike, consumers expect brands to keep advertising but tread lightly, according to new research from UK-based insight company Reach Solutions. Find more details from the report below:
- 29% of those surveyed expect brands will advertise more over the next few months, and 57% expect brands to advertise the same amount.
- Only 20% of people surveyed think it appropriate that tech, car and home technology brands should reference cost of living in their advertising.
- Consumers believe that the brand categories with the greatest credibility around cost of living in their advertising are supermarkets (43%), food and drink (38%) and finance (31%), with gaming, (14%), fashion and beauty (both 18%) thought to be least credible. — Kimeko McCoy
Quote of the week
“People want to have fun with photography again and that’s hard to do. You’ve seen in the last 18 months of social products. One investor said to me: ‘The photo-sharing wars are back, but now it’s a war of ideas.’”
— Dispo co-founder and CEO Daniel Liss on why he’s betting on photos over video as consumers seek a photo-sharing home as Instagram continues its pivot to video.
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