December 15, 2022
    Reding_icon 5 MINUTE READ

    BRAND DAY, Episode 16:

    Ready for 2023?

    How to Optimize your Marketing Budget for Success

    Inflation continues to run rampant. The big tech companies are tightening their belts, with mass layoffs. Consumer spend is dropping into the new year. And yet, despite all the talk of a looming recession, 95% of marketers are increasing their budgets for 2023. (Source: webinar with Gumgum and Forrester)

    Your competitors are planning on spending more to try and make up for sinking demand and rising ad costs. Which means you can't afford not to. The brand who does the best job staying in front of your customers throughout any given economic downturn will reap the rewards in the long term: people will remember them, and place them at the top of their consideration list when they are ready to spend again. 
    But simply trying to outspend your competitors to keep ahead of the game is inefficient. Think about how you might spend smarter, not harder. 

    Getting Inside the Consumer's Mind
    To spend smarter, first you have to understand how your customers' buying patterns are changing. The most obvious shift is that wallets get a bit more snug. Spending patterns become more conservative, shoppers switch to cheaper brands, and they postpone big purchases. (Gumgum, Forrester)

    However, this doesn't mean all discretionary spending goes away. Consider that during the pandemic, while many people saved their stimulus checks, online learning and entertainment shot through the roof. The reality is that people will look for ways to cope with financial stress - consider it an investment in upkeeping mental health. 

    The key driver of consumer decision-making is value. Even when money is tight, people will put their dollars behind what brings them perceived value. 
    The presenters on the Gumgum and Forrester webinar referenced above defined 4 types of value you can deliver: 

    • Economic (good value exchange)
    • Functional (easy to buy and use)
    • Experiential (how you create positive interactions)
    • Symbolic (intangible - such as building a tribe for your customers to identify with)
    With this emphasis on delivering value in place, let's turn to allocating budget. 

    2023 Budget Priorities 
    For many marketers, performance marketing (short term, sales- and attribution-driven marketing) continues to top the priority list. This comes at the expense of brand advertising. While the urgent need for revenue-generating activities is understandable, those activities are taking more and more dollars to see the same results. 

    Instead of spending more on advertising to try and convince consumers to spend money that they're guarding a little more closely, consider tightening your belt and focusing on creating long term brand value. Maybe your sales do dip this year, but as we've written before, recessions tend to be short, and thinking past the next 1-2 years can deliver your brand explosive growth once consumers reopen their wallets.  
    So how can you prioritize these longer term, brand equity-building opportunities in your 2023 budget? Here are some ideas.

    #1: Focus on the customers you already have
    While "customer service" doesn't seem like a normal "marketing" expense, it can certainly be an investment in keeping customers around (and possibly even turning them into brand evangelists who do your marketing for you). 
    As we close in on the new year, develop some creative brand experiences for your customers - go beyond what they're used to in your industry to deliver on experiential and symbolic value as described above. 

    #2: Get clear on your values - and the values of your ideal audience
    We all know that buyers are increasingly driven to shop with brands that align with their values. So tap into that. From sponsoring events or programs to running charity projects, show, don't tell, that what matters to them also matters to you. This helps build symbolic value, from the above list. 

    #3: Pivot product offerings and focus on innovation 
    While the example of distilleries transitioning from making alcohol to producing hand sanitizer during the pandemic might be a bit extreme, think in terms of how you can create product-adjacent offerings that meet your prospects where they are. By pivoting to connect with their needs right now, you can both increase short term revenue and build demand for your current products amongst now-warm leads. 
    Another area of focus here is on innovation. Look for ways to increase functional and experiential value for buyers in your core products themselves. 

    #4: Create communications that emphasize transparency and authenticity
    Sure, they're buzzwords, but for a reason: people are drawn to genuine connection. Instead of using your content to continually promote the awesomeness of your products, dedicate bandwidth to talking about your vision, struggles, mistakes, beliefs, etcetera. Say what you're thinking - publicly. Let people have a dialogue with you. Chances are, you might just start a movement around whatever it is you're trying to accomplish. 

    #5: When it's time to start advertising, use a healthy mix of brand-focused and performance-driven efforts
    Marketer Les Binet says that "Really smart marketers build the brand long-term and activate it efficiently. Building the brand long-term builds up preference for the brand, and then activation converts that preference efficiently into cash. You need to do both jobs because each enhances the other, and you need to do them in balance."
    He goes on to highlight companies like Google and Amazon who, after 20 years of going all in on performance marketing, are now doubling down on traditional broadcast channels like TV and out-of-home. 

    Find ways to integrate social media and out-of-home advertising. Or SEO with PR. Don't be afraid to break the divide between the digital and the real worlds: your prospects live in this dual existence, so your messages should as well. 

    Wrapping Up
    Red Bull makes energy drinks. But they sponsor extreme sporting events. Why? 
    Because they know that their target audience identifies with extreme athletes, even if they aren't remotely physically adept themselves. If they want to feel like the people they identify with, they drink Red Bull. 

    The impact of putting dollars behind what your brand stands for in unconventional ways is far greater than any possible short term revenue you can drive from an exclusive focus on performance marketing. 
    As you're making final decisions on budget allocation for 2023, especially given the potential impact of a recession, try a bucketed approach: 

    Bucket #1: Customer Loyalty
    Bucket #2: Product Innovation
    Bucket #3: Aspirational (values-driven partnerships/sponsorships)
    Bucket #4: Content & Media

    Within bucket #4, Les Binet recommends a roughly even budget split (with variations based on industry, etcetera) between brand-building and performance marketing. 

    At Adkom, we would propose that around 15-20% of that bucket should be out-of-home. Why? Because out-of-home has the proven ability to dramatically amplify the other 80-85%, improving your leverage across all of your media spend, while boosting both brand and performance advertising goals. A sample budget breakdown might look something like this: 
    20% out-of-home
    30% content
    10% PR
    40% performance

    By weighting spend towards brand building and integrating all of these together closely, your chances at dramatically strengthening your brand equity during a recession go up significantly. 

    Need help working out-of-home into the rest of your plan? Adkom can help you build a campaign seamlessly. Reach out today to book for 2023.