WASTE NOT, WANT NOT: HOW ARE COMPANIES INVESTING THEIR SHRINKING AD BUDGETS?
Published on February 17, 2021
2020 was arguably one of the toughest years that the advertising economy has seen in decades. While some platforms such as e-commerce, OTT streaming services, and social formats have emerged relatively unscathed, the vast majority of the media landscape suffered significantly. According to estimations from WARC, media owners saw revenues fall by a combined $63Bn last year, and while ad investment is forecasted to rise by 6.7 percent this year, it won’t be enough to recoup last year’s losses.
Given that businesses would focus on prioritising cash flow during times of uncertainty, it’s hardly a surprise that marketing budgets have seen a significant decline over the past year. However, this also means that marketers need to be more strategic with their spending in the pursuit of higher ROI. Despite the many challenges prompted by the pandemic, the disruption also presents many unique opportunities for brands to interact with their audiences in more meaningful and authentic ways. In such a climate, marketers who can look at the world with fresh eyes and identify new paths forward will be the ones that come out ahead.
Marketing Through Change
Prior to the pandemic, many large-scale changes were already underway in the marketing sphere. The proliferation of smartphones and the rise of social media had already led to increased focus in influencer marketing, native advertising, and the migration from traditional to new media. Then COVID-19 struck, and as the whole world scrambled to adapt to the realities of life in a pandemic, consumers vaulted five years in the adoption of digital within a matter of weeks.
This great shift in consumer behaviour means that businesses have needed to adapt swiftly in their marketing strategies or risk losing out. Going forward, marketers will need to rethink their media mix across a larger set of channels, including video conferencing platforms, OTT, and DOOH platforms. Understanding the role that different media channels play will be crucial to toeing the line between short-term consumer trends and long-term changes.
As we move into the next normal, placing a stronger emphasis on digital channels is crucial, but not enough. Creativity is key, so marketers must look for new ways to distinguish themselves in an already saturated market. More importantly, companies must rethink how they can connect with consumers, building trust and authenticity in the process, leading ultimately to customer loyalty.
Maintain Connection, Build Loyalty
One of the biggest challenges for marketers right now is adapting to new buying patterns. According to studies last year, the pandemic generated unprecedented challenges to brand loyalty. While some shoppers might stick to their new choices, others will return to the names they know as soon as they have the opportunity. These are your champions — they will be the ones recommending your brand to other prospects. As such, it’s crucial for brands to not only maintain a consistent connection with their consumers but to also reward them for their loyalty and provide incentives to keep coming back.
With budgets reduced for the foreseeable future, priorities will be shifted to conversion rate optimisation and customer retention. During these times, marketers should focus on campaigns that emphasise repeat purchases, and take advantage of data and learn how to use it to better personalise offers and messages to ever-narrower customer segments. Customer-first omnichannel strategies that utilise all-encompassing touchpoints from physical to digital can prove to be what makes the difference between one-time customers and long-term loyalty.
Optimise Campaigns To Maximise ROI
As the media mix continues to expand across offline and online channels, consumers are engaging with campaign efforts at a rapid pace. This means marketers have to pay close attention to campaign success rates in order to maximise their ad spend. Furthermore, the decrease in ad budgets will also likely put increased pressure on advertisers to pursue higher ROI on their marketing efforts. Luckily, it's now possible to fully analyse buyers’ purchase path and understand which audience touchpoints are most effective.
By investing in advanced marketing analytics tools, brands can have access to measurement and attribution solutions that are user-first, open, and actionable. Furthermore, analytics data must be generated quickly in order to effectively see how campaigns are running. Real-time data offers the ability to make faster decisions, allowing marketers to cut their losses for underperforming segments and reduce wasted ad spend. When marketers can understand which specific campaign elements are performing well and vice versa, they can then make necessary adjustments, maximising impact and ROI.
In-flight campaign optimisation offers the ability to adjust campaign elements and reallocate media budgets among channels in real-time, while the campaign is still in the field. Even so, when it comes to data, how marketers maintain compliance and customer trust can become a point of differentiation and even a source of competitive advantage in today’s privacy-conscious world.
The world has changed, and how well brands change along with it, will determine their success in the next normal. Maximising campaign performance, informed by data-driven insights, will go a long way in ensuring that advertising dollars are well spent. In an ever-shifting landscape, it’s clear that advertisers must learn to react swiftly and invent new ways of marketing in order to stay ahead.