Batten down the hatches vs dig deep

Marketing gurus advocate holding firm on budgets, particularly on advertising, citing the McGraw Hill study from the 1980s that showed brands who continued to invest in comms during a downturn performed much stronger after the recession than brands who stopped investing. There are numerous other case studies to point to; in the 1990-91 recession, McDonalds slashed ad budgets, while Pizza Hut and Taco Bell pushed on. Pizza Hut sales grew by 61%, Taco Bell by 40%, and McDonalds declined by 21%.* It goes beyond advertising. In 2009, while many brand owners pulled launches and cut costs, Amazon continued to innovate with the Kindle, growing its market share both of tablets and of publishing. So the academic wisdom suggests holding firm – which in real terms, given the pace of inflation, might mean actually spending more.

Reality bites

Of course, all that is well and good, but is it in touch with reality? Most brands, especially in industries where sales are particularly hard hit by recessions will need to find cost savings to put back into the bottom line, right now. Some of the world’s most valuable companies may even be vulnerable; consumer tech has seen pacey growth in 2020-21, but tech demand for upgrades is cyclical at the best of times, let alone when the cost of essentials is rising fast. Those industries (which the Harvard Business Review terms “postponables”), will be facing pressures on marketing costs. And the most obvious, often considered least painful, cuts to make are to advertising budgets. So we’re back to sacrificing medium term sales and market share – catch 22.

A third way

What if it doesn’t need to be as deep a trade-off? What if some or most of the savings could come from how marketing and communications initiatives are delivered, rather than whether. It sounds good. Too good, you say? Not necessarily.

The old wisdom was that production should equate to roughly 20% of the overall budget, and media 80%. But that has shifted drastically through digitization, especially since platform and format fragmentation, localization and personalization** have made asset production one of the biggest challenges – and yet a vital requirement for success – for brand marketers. Production is now a much greater cost in both financial and time terms. But that also means opportunity to be more efficient – and make savings now, as well as improving speed and efficiency for the future.

How?

All-consuming transformation programmes that take years to enact are out of the question, but the tempting promises of SaaS platforms to automate it all, underestimate the complex realities of marketing production. There are multiple elements to improving creative workflows;

Automating routine tasks is definitely one – but not by big, bulky new systems, rather streamlined, smart tools that integrate with and between existing systems, making it easy to see gains in efficiency without clunky new interfaces or hours of training.

Centralising data, and generating meaningful and actionable insights is vital. Decision-making should not require marketers to become data analysts, but help them make decisions fast, communicate to stakeholders with ease, and produce exactly what’s needed, and when – and make that available for maximum leveraging across territories, business groups and consumer touchpoints.

The truth though is that no system, tech stack or insight replaces creativity. People and their expertise are part of the solution. But working with a multitude of specialist agencies on each initiative leads to mounting days in the critical path, endless handovers and unnecessary costs. Small, dedicated teams who work well together, have creative expertise across consumer touchpoints and can leverage tech tools seamlessly to deliver projects end to end, can achieve truly impressive results in speed and effectiveness – and make marketer’s lives considerably less admin-heavy too. With hiring freezes commonly introduced during recessions, or great talent choosing the security of staying put, more efficient and productive workflows can alleviate strain on teams, freeing them up to do their best work and avoid burnout.

It has to be a partnership

At Spark, we’ve been putting together people, tools and processes to optimize creative workflows for the likes of Microsoft and Netflix for years. We’ve found that the best results come down to curiosity, dedication and a willingness to listen and change things upstream to get results downstream. But to achieve that at speed, there needs to be a real sense of partnership and transparency between client and agency. Especially when we’re facing the r-word.

What do you think about a recession?

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“I thought about it and decided not to participate.”

- Sam Walton, Founder of Walmart

*Source: Forbes

**Source: Deloitte