This article, written by our CEO, Fredrik Kinge, was first published in MediaPost.
Last October, the International Monetary Fund (IMF) said the world economy was headed for “stormy waters” as it warned of economic volatility in 2023. Since then, while the outlook for the global economy has improved slightly and inflation is falling slowly, economic growth remains at historically low levels and much of the world is teetering on the brink of recession.
The phrase “stormy waters” invites metaphors associated with the perils of sailing with brands as the ships and marketers the captains, carefully steering their vessels through the storm and into calmer waters. But how best to do that? When they meet a storm, sailors have to adjust their sails and either hold their current position, battening down the hatches, or change direction. The very worst thing to do? Take the sails down completely: that leads to one place – capsizing. And it is the same with advertising investment. However tempting it is to cut costs in advertising when money is tight and the economic context is uncertain, research and experience show that companies that continue to invest in advertising recover more quickly, win market share and grow more sustainably than those that go dark.
When facing stormy waters, a captain relies on GPS to find their position, weather data to understand their surroundings and a navigation system to optimize their route through the storm. For advertisers, it’s the same. They must rely on data – data that comes from frequent media-performance benchmarking and advertising effectiveness tracking. These tools provide a full, in-depth understanding of a brand’s media activity and the wider media landscape. Armed with that knowledge, media investment can be optimized to drive higher value and promote long-term success.
When waters are calm, it’s OK to refer back to data and insights every so often. There’s a bit of money to spare, and no one is really worried about a bit of excess frequency or a slightly underperforming spot (even if it’s still waste). But when every penny counts, it pays to invest in more frequent benchmarking. Things change rapidly in times of volatility and insights and recommendations need to be up-to-the-minute, so that decisions are made with accurate data. Being armed with insights derived from frequent benchmarking and tracking allows marketers to optimize media investments so they are more focused and more precise, thereby driving higher media value and ensuring that every ad dollar works hard.
So how do you drive greater focus and precision in your media investments?
Build reach, reduce excessive frequency.
When times are good and money is flowing, it’s easy to turn a blind eye to wasted messaging – does it really matter if someone saw your ad five times when three is enough? But when CFOs are demanding efficiencies, excessive frequency is a great place to look in order to identify savings potential. The money saved can most usefully be invested into building greater reach, so that your messaging is delivered to a higher proportion of your target audience.
Target with precision
Identify your exact target audience, and target them precisely, with tailored messaging and creative. A scattergun approach is not appropriate for when funds are limited; use your data-driven insights to hit the bullseye, every time.
Reduce the number of channels you invest in
It can be tempting to invest in every media channel that delivers return on investment, but that really isn’t necessary. It is far more effective and efficient to focus on the channels that really capture the attention of your target audience. Invest more into fewer, effective channels and formats (by the way, this will also save you a lot on production costs).
To return to the captain and their ship: when a storm hits, it’s crucial that your crew contains exactly the right expertise, and is aligned so everyone can work smoothly and effectively together. In the context of a brand and its agency partners, this means a few things.
First, your media agency team should adapt according to changing budgets and media mixes. A team built for high spend and high frequency will look very different to one with a lower budget that more precisely targets spend. Secondly, client and agency teams need to work more closely together. The days of an annual strategy meeting are over; these should be at least quarterly, and dialogue needs to be ongoing. As mentioned above, frequent benchmarking for a firmer, fresher understanding of the market will help ensure that there is one, reliable source of truth for everyone to work with as they create and implement effective strategies.
We are seeing many advertisers renegotiate their agency contracts or even launch media pitches to ensure that their agency teams and contracts meet their needs as they stand now. Transparency is at the top of the agenda. In order to avoid redundancies, some agencies are engaging in non-disclosed media bundling. Advertisers can mitigate this by paying a fair fee and implementing success metrics.
When waters get choppy and storm clouds gather, every sailor knows the very worst thing to do is to take down all the sails, as it leaves the ship even more vulnerable to the elements. Similarly, going dark in terms of advertising investment will lead only to a more prolonged crisis for your brand.
The best thing to do is to face the storm head-on. Continue to invest, and use more data, more frequently to help you decide where precisely to target your spend, so that you build reach and avoid excessive frequency. Refresh your agency relationships, so that you can be sure you have the right-sized team with the right expertise to support you. A reliable, independent media performance partner can play the role of marine traffic control and lighthouse – providing data, advice and guidance to ensure you chart the right course and sail into calmer waters with your boat intact and coming out as a winner.