In our series How Media Planning Works, we ask why advertising and media don’t work during a recession.
The complexity of decisions currently facing businesses is huge. Many firms are faced with making existential decisions on a regular basis. The need to balance risk with returns is obvious, but the volatility of markets worldwide makes those decisions difficult to make with any certainty.
Covid is the main, current, driver of volatility but there has been no shortage of other disruptive macro events over recent years.
As consumer behaviour has changed and adapted to new realities, the need to communicate with consumers has become more challenging. Media agencies were ready, but rapidly saw budgets disappear.
Covid and the Global Financial Crash over a decade ago saw media budgets slashed.
The question for agencies and marketers is, if advertising works so well, and the need is so great, why are budgets cut so deeply?
If advertising is an investment that provides regular, sustainable, and predictable growth, why cut that investment when financial pressures are at their greatest?
Commentators, academics, and industry bodies rallied to tell business that the smart brands invest through a recession. The logic is sound and the evidence reliable, but relatively few brands have heeded that advice.
In fact, the last twenty years has seen dotcom boom and bust(s), the GFC, and now Covid. Consistently media budgets have been cut during these periods. The reason they are cut is simple.
The argument that media budgets should be protected is solid and inarguable, but what it misses is the more complex realities of business.
Firstly, it ignores opportunity cost, what else could that money be spent on that may provide a better return during a period of economic uncertainty. And remember, the opportunity cost may also include reserving the budget to maintain the flexibility to react as market conditions change over time.
It misses basic empathy. ESG and B-Corps were key themes for progressive businesses pre-pandemic. Covid-19 has seen a surge in community and society giving, with large parts of the private sector stepping-up during the pandemic.
Given the choice of spending money on advertising versus protecting the jobs of their workforce - or lessening the impact of job losses on company morale - it’s difficult to make a case for media budgets to be ring-fenced.
That doesn’t prove advertising doesn’t work during a recession (advertising does work), it demonstrates that advertising needs to prove it’s growth potential and its flexibility versus other business investment and financing options.
Forget about Covid
Covid is a once in a generation challenge. The need to show the return on advertising budgets in comparison to other investment options exists every year. Ignoring Covid, the decisions facing a business remain complex and this is where the ad industry lets itself down.
Econometrics will give you the best possible view of advertising returns. But only to an extent (read me), and it is where econometrics finishes that business realities take-off.
Irrespective of what level your budget comes in at, how that money is planned and invested requires careful consideration and planning.
“The GFC (Global Financial Crisis) appears to have triggered or amplified a number of practices that undermine long-term effectiveness.” Binet & Field, Media In Focus, 2019
In other words, poor decision-making was driving down performance.
What is interesting for a planner or marketer is the notion that at times of economic pressure and uncertainty there is an inclination to make incorrect choices that wouldn’t normally have been made.
This paradox of choice is alarming but it is also difficult to spot and course-correct.
The challenge during Covid is how to ensure better decisions are made this time. The answer is surprisingly straight forward.
In media and marketing there are things we know, we know – facts that are measurable, demonstrable, and repeatable. They apply, with tweaks and adjustments, to every brand in every industry.
These facts are derived from the careful and methodical study of the structure and behaviour of consumers and brands. They are peer reviewed and open source – think Sharp, Ritson, Binet & Field, King, and many others.
In a creative industry, planning can be remarkably scientific.
As an example, the Share of Search work recently presented by Les Binet predicts business performance up to 12 months in advance. Armed with this predictive information, a plot can be traced between performance now and in the future.
The challenge for planners and marketers is how to use those facts and science to steer a course in your own favour.
If you want help working out the fact from the fiction of media planning, get in touch or sign-up for our newsletter.