question of the week
Advice to CMOs: How To Manage Your Marketing Budgets?
Agency chiefs on how CMOs can defend their budgets and align marketing investments towards growth, despite the economic headwinds
14 November 2022
Marketers continue to navigate economic challenges brought on by inflation - impacting consumers’ relationships with brands, presenting them with serious challenges. While being mindful of the business goals set forth by their CEOs, focused on efficient growth investments. So how best to defend their marketing investments?
In the context of all the economic uncertainty and the political shocks, it won’t come as a surprise that marketing will be looking at costs - from improving processes and rationalising agencies to getting to grips with media charges. We asked agency bosses what advice they would have for CMOs looking for more cost efficiencies from their marketing budgets in the year ahead?
Sam Hawkey, chief executive, AMV BBDO
Stare at wastage. Because there is a truck load of it. Where are you running impressions that perform under platform benchmarks? Kill them. Where are you advertising on platforms with terrible user experiences and editorial that makes for a negative context for your communications? Bin them. What are the briefs that aren’t fundamental to the core strategic priorities of the business? Delete them.
I speak to so many clients who feel these issues and want agencies to focus their efforts on fewer, bigger and better and to do that we must dig for what not to do. Find those things and they’ll be more potent and save some cash along the way.
Satin Reid, managing director, Mediacom UK
Recently, I’ve started giving my son pocket money and it’s been interesting to watch him deeply scrutinise every penny he spends now that it’s “his” money. Wondering if he buys two small packs of sweets whether he will he get more than simply buying a bigger pack, or if he should buy a Lego set second-hand on eBay – even if the box is dented and the instructions are missing.
A small, but perhaps timely lesson for him as we all face difficult financial times. We’re all analysing our budgets, personally and professionally, and we’re all looking at the same goal – to get the maximum value from the money we’re spending.
If I were to take my media agency hat off and put myself in the shoes of a CMO, there would be a few elements I’d be examining right now:
The first place I’d start is getting clarity on what I really know about how my money is working in both the short- and long-term. And most importantly, how much I understand about the relationship between the two timeframes. Whilst the temptation might be to focus on short-term gains, no-one wants to come out of this period lagging behind their competitors who kept an eye on the full funnel effect of their investment.
Second of all, I’d want to understand if every impression is connecting effectively. Everyone has a multi-channel media plan, but very few have a multi-channel content strategy that leverages the value of the context they’re advertising in. We have seen significant benefits from building platform-relevant creative, yet many are missing the benefit by force-fitting creative, such as TV ads into social channels.
Finally, I’d make sure my team is empowered to take the unexpected opportunities that might come their way. In the coming year, there will be bargains to be had because we know that where there is volatility, there is opportunity.
Those that are ready are the ones that will win now and in the long run.
Michael Frohlich, EMEA chief executive and global transformation lead, Weber Shandwick
Recently, a media outlet reported that PR agencies do well out of economic uncertainty because they require less budget. Utter balderdash! Putting aside the fact that some media outlets perpetuate an outmoded view that marketing communications are siloed and can be considered in isolation, those agencies that will “do well’ are those that help clients meet their objectives within the confines of their realities. Although we've been here before, how marketers respond is, as ever, up for debate.
Lockdowns and the corresponding economic slowdown showed that those who continue to 'market' are much more likely to bolt out of the start gates. Those that cut everything will struggle or disappear.
So, with the assumption that you must keep going, what's the best solution in an economic slowdown? Look at what your business needs to achieve immediately without losing sight of your long-term goals and ambitions; consider the whole picture. Looking at your business through this lens will allow you to box smarter rather than focussing only on what's immediately in front of you. Less will be more if you keep your short, medium, and long-term objectives in mind.
No doubt too that getting closer and more intimate with your customers will play an important part. TVCs and complex lifetime CRM programmes might not be the answer, but simple, focused social content, driving e-commerce, served through the most relevant channels at the right time could suffice.
Equally, using the media and influencers to continue to deliver and endorse your messages, reminding customers of who you are, will help keep a warm environment for when you start marketing hard again.
Sid McGrath,chief strategy officer, Wunderman Thompson
Firstly, take a breath, don’t panic and don’t do anything rash. Everyone will be advising you what to do now so your brand is stronger when we come out of recession. But the truth is, that won’t be any time soon and we may never return to anything that looks economically normal again. So, you have to plan for chaos and unpredictability because whatever you do today, your business will have to live with for the next year and maybe much, much longer.
The smart thing to do, as well as thinking what’s best for your consumers, is also to think what’s best for your brand as any action today will have long-term consequence. Chances are you’ll want to redeploy your budget into ‘performance’ or ‘trade hard’, but the reality is that this will likely dilute the equity you’ve built up in your brand over previous years.
The fact is that no brand interaction is singular, it’s connected and consequential. You have to ensure that whatever you say or do in one channel can be reflected and repeated in all, otherwise the consumer just becomes confused, frustrated and likely to walk. Rather than lurch randomly from one channel to another, you have to be single-minded and find the reason-why people should choose your brand above all others and then ripple that across everything that you do.
You don’t even have to spend a lot, as this consistency of brand expression will give the illusion of size. Taking a more thoughtful approach and thinking about the whole brand will ensure any budget you do have to spend is working as hard for you as possible, today, tomorrow and throughout the chaotic unpredictability of 2023 and beyond.
Gareth Mercer, founding partner, Pablo
History shows us that the businesses that stay firm and double down when other lose the ability to invest always win.
So do brands that back ideas that truly cut through.
My advice is to focus on this. Don’t waste a penny on work that won’t stand out. Being firm in this can mitigate reduction in media budgets.
Central to achieving this is retain the strongest talent and find efficiencies by getting closer to the work.
Larissa Vince, CEO of TBWA\London
I have masses of sympathy for clients right now - budgets are under a lot of pressure and organisations are understandably looking for savings and efficiencies.
Improving processes is a great way to start. Brilliantly effective ways of working between client and agency teams can save both parties time and money while only being of benefit to the quality of the work.
When it comes to media spend, we all know that marketing science has proven that continuing to invest in a recession pays dividends in the long term. Unfortunately, marketing seems to be the only discipline where this science is all too frequently ignored! I can't imagine a scenario where a CFO going into a recession decides to ignore all the data about how to run a business during difficult times.
That said, we have to dial up the empathy right now. Help our clients make the right choices if there are tough choices that have to be made, and do that with the best interests of the brand at heart. Help them make the right internal arguments for investment if those arguments need to be made. Prove, prove, prove the effectiveness of the work we do. And, I would argue, work with our clients to demonstrate that strategic and creative brilliance is what will drive the business to outperform even in the toughest of tough times.