Kevin O’Farrell, associate vice-president of Analytic Partners, explains how media strategists should think about how rising consumer costs will force a change of approach.
The consumer landscape is changing, again... But this time it’s not (solely) because of a global health crisis. Despite in-person shopping benefiting from pent-up demand, inflation – now at a 30-year high in the UK – is starting to bite. With the looming impact of cost of living comes more unstable consumer behavior, and advertisers are going to have to work harder than ever to retain strong consumer relationships. In times like these, long-term planning and brand marketing become increasingly important.
Faced with the double whammy of shifting consumer behavior and rising costs, marketers need to shift their media strategies, and there are several key areas to focus on.
Customer centricity is here to stay and grow
Even when consumer behavior shifts, the golden rule of customer-centricity is solid as a rock. Many brands claim to be customer-centric, but the proof will be in the ever more expensive pudding. Knowing how, when and where your customers shop or interact with your brand will always be key, and never more so than now. However, our ROI Genome research proves that focusing too much on the short term is detrimental when something – including shifting consumer behavior or inflation – attacks your base business.
Marketers must react and adapt (and ideally begin to accurately predict) to shifting consumer behavior and actively challenge short-termism by focusing on building the brand. A strong relationship between business and consumer will protect the base business even during inflation.
Omnichannel marketing needs your attention
Since Covid, the combination of stores with online engagement options is likely to drive the biggest chunk of growth in the next half-decade for retailers. And with that, marketers need to always keep in mind that marketing activities don’t work in silos. They should avoid using performance metrics for budgeting decisions and should consciously and comprehensively measure both online and offline business drivers across channels and ecosystems.
From our research, last click and performance metrics overstate impacts from some tactics by two to 10 times, and severely understate the role of tactics such as video and audio. Indeed, video advertising has two times the half-life and 160% higher impacts in weeks after delivery v non-video content, but this is only apparent if you measure it.
Media inflation is inevitable – so deal with it
Marketers can collectively wring their hands over price hikes, or they can get creative and deal with it. Media is likely to see an overall 4% rise in costs this year, with TV to see the biggest price hike at around 6% – but with budgets less elastic than the costs, advertisers are going to have to get imaginative. A multi-channel strategy, tying back to the omnichannel approach, will be their friend.
Layering channels and platforms will expand reach while spreading the cost, and smart reallocation of spend – for example to different, more targeted and cheaper slots on schedules, or on currently cheaper inventory such as transport display – will make budgets go further. Our research has shown that brands with a high investment in media tend to experience a lower sensitivity to price increases, and keeping up spend – even if its distribution adapts – is fundamental. Withdrawing spend will result in long-term sales decline.
Get serious about first-party data
As cookies crumble, marketers need to embrace their inner geek and get deep into first-party data. Long-term consumer relationships will be the secret to weathering any inflationary storm and mitigating shifts in behavior.
First-party targeting hasn’t historically worked as well as it might, but time spent enriching first-party data sets and creating more reach will result in better targeting and better results. Many brands are using only a fragment of their CRM first-party data or the wrong kind of data, and are quite literally sitting on untapped riches. A thorough analysis of existing data and how it might be better exploited through CRM and loyalty program strategies should be an immediate action.
What’s the purpose?
Purpose is everywhere these days and it is certainly another factor consumers are asking for. But one size of purpose does not fit all brands.
To set up a purpose strategy, it should be treated in the same way as any other marketing activity and must start with the simple question: what’s the KPI? Is it revenue, profit or consumer love?
All have a part to play in a brand’s journey, and marketers must ensure they pick the right path for their brand, one which differentiates it in the market, otherwise it will just be another short-term scheme.
Speak the language of the board
The most perfect media plan remains just a plan if it doesn’t get the buy-in of the board. Marketers need to brush up their communications skills and be fluent in C-suite-speak to ensure that everyone understands how the media plan and investment will translate into growth.
Finding one language that everyone understands can make all the difference. So marketers should aim to build up a holistic view of their efforts, involving all commercial aspects of the business.
It’s all about balance
Media strategy this year will ultimately be a balancing act that is going to be constantly put under pressure by unforeseeable external and internal factors. But marketers have an array of strategies at their disposal to ensure they don’t take a tumble.
Putting the consumer at the center and building a strong strategy around them will be key for long-term success. Adapt, survive and thrive.