I can still remember the Great Recession like it was yesterday. Ten years of expansion in the housing market dulled our senses, making us all think the gravy train of ever-increasing profits would never end. Little did we know the train had already left the station and much pain was lurking around the corner.
I had just relocated my fledgling, full service advertising agency and Inc. 5000 List member, OBI Creative, from San Diego to Omaha; I had hired staff and we were making waves through our Stand and Deliver campaign.
The sky was the limit.
Until it wasn’t.
I saw the writing on the wall but I wasn’t willing to read it.
Ultimately, I waited too long, didn’t prepare as well as I should have, and had to do something I swore I’d never do – downsize. But I weathered the storm and took away the best kind of wisdom – the lessons learned the hard way.
When Covid hit, I was ready for it. Instead of pulling back, we expanded. Instead of shutting down, we shouted from the rooftops that opportunity was there for the brands willing to take it.
And we grew.
Clients commissioned voice of the customer studies and learned exactly what their customers needed in the chaos of the pandemic.
So, when 2023 opened with a world braced for another recession, I put my foot on the gas and didn’t let up. And, more importantly, I encouraged clients to do the same. As Nielsen confirmed in its 2024 Global Marketer Survey, marketing budgets in companies in every industry and corner of the world were slashed. Layoffs ensued, despite the fact that the dreaded recession never materialized.
Now, rumors of an impending recession are swirling again. Thankfully, like me, global marketers are optimistic. I’m a voracious reader (even at the beach I can’t help but devour government and industry reports), and I was encouraged by some of what I read in Nielsen’s report.
Here are the top takeaways I’m encouraging my account team to leverage with our clients to help them make gains this year.
The TLDR version for busy leaders is: 1) Your competitors are planning to increase their ad budgets this year and so should you; 2) Your KPIs could be misaligned with your marketing activities; 3) If you over-emphasize digital channels with your ad spend, you risk not being everywhere your customers are; 4) Your ROI measurements probably aren’t as good as you think they are; and 5) You might be TOO focused on ROI at the expense of other mission-critical KPIs.
For those with time, let’s dive in.
#1: Your competitors are increasing their ad budgets and you should too.
Nielsen found that 72% of marketers surveyed plan to spend more on advertising this year. APAC in particular; their ad buy is up from 56% to 81%.
In particular, marketers plan to spend more on digital advertising. A full 63% of their budgets will be allocated for digital channels. That’s up from half of their media budgets last year. Podcasts, streaming audio, native advertising and out-of-home placements are some of the executions seeing the biggest jump this year.
Your competitors are leaning into digital advertising. What should you take away from this? If you aren’t at least considering the same, you’re not being safe. You’re falling behind.
#2: Your KPIs could be misaligned with your marketing activities.
I loved Nielsen’s callout that long-term goals require long-term focus. It’s so simple that it’s easy to miss in day-to-day marketing.
Nielsen found that global marketers’ most prioritized KPIs are long-term ROI and full-funnel ROI. Interestingly, they also found those same marketers are shifting toward performance marketing.
To save money, many plan to lean more heavily on performance marketing and less so on brand building to generate revenue. But performance marketing isn’t a long-term goal. It necessitates a short-term focus to drive short-term gains.
There’s a fundamental disconnect that you’d do well not to replicate.
Take another look at your ad spend. Are you ignoring traditional brand-building channels while still expecting long-term gains? If so, you’re ready for my third takeaway.
#3: If you over-emphasize digital channels, you risk missing your customers.
Global marketers are shifting their ad spend to digital channels (see takeaway #2) because it’s easier to track spend back to revenue there. But TV and radio are still mass market channels built for brand-building.
If you expect full-funnel results, but over-invest in tactics on channels designed to generate conversions, you’re actually only focusing on half of the funnel.
The fundamental problem with conversion-only marketing is that you aren’t putting new leads into the top of your funnel. That could create a long-term problem for your brand.
#4: Your ROI measurements aren’t as good as you think they are.
I loved Anthony Jackel’s insight in the Neilsen report; the Director of Consumer Analytics rightly pointed out the importance of marketing mix modeling in understanding ROI averages and making decisions in light of them.
Absolution ROI includes brand-level factors in addition to marketing campaign level metrics. Greater returns come from detailed ROIs that take into account response curves and saturation points across brands, channels, tactic mix and third party partners.
The top brands generate six times as much ROI than the bottom quarter of brands. Brand-level data shows that 75% of people who are exposed to social media ads for example, say those ads positively influenced their purchase decision.
But, search ad ROI has been more than 50% lower than the average ROI across all media channels over the past three years, according to Nielsen.
What are we to make of the apparent contradiction?
Data doesn’t lie. What works for the top brands in the space, might not work for yours. Examine what they do to glean insights, but as with all tactics, evaluate them against a current and thorough understanding of your customer.
#5: You might be ignoring mission-critical KPIs.
Consider this statement from Nielsen:
“A one-point gain brand metrics, such as awareness and consideration, drives a one percent increase in sales.”
If you want to build the health of your brand for the long-term, make brand awareness one of your mission critical ROIs.
If you ignore brand building, you risk becoming invisible to your customers.
I’m probably asked customer journey questions more than any other kind. And I love it. Understanding every touch point your customer has on their journey from disinterested consumer to loyal brand advocate is critical to maximizing the ROI of your marketing efforts.
As you consider adjusting your ad spend for maximum effectiveness over the last half of 2024, keep your customer at the heart of every effort.
It’s smart to keep one eye on your competition, it’s smarter to evaluate their actions against your understanding of your customers’ journey with your brand. It’s even smarter still to invest in voice of the customer research that keeps your understanding of what they want, need, fear and experience razor sharp.
Do that and you’ll avoid the most costly mistake marketers make – getting caught in an echo chamber and mistaking your voice for your customers’; your assumption for reality.
That, more than misplaced ad dollars can do you in faster than even your most ardent competitor or bad news cycle.
If you don’t trust your understanding of your customer, listen to their voice. And if you need a partner to help provide that perspective, OBI Creative is here to help.
Connect with me now for a fresh perspective on your customer.