The economy leads the list, but growth, marketing spending, sustainability, DE&I and measurement also loom large
With more economists predicting a recession will start in 2023, that’s naturally on top of marketers’ minds. But recent history also has taught marketers to expect the unexpected. After all, no one predicted the pandemic in late 2019 or a protracted Russia-Ukraine war late last year. So being ready to deliver growth regardless of what happens—even in the absence of a recession—remains important.
Beyond the economy, marketers also continue to be concerned about social justice issues, sustainability and better measurement to let them know their marketing is really doing what they want. Here are the six biggest things on marketers’ minds entering 2023.
The economy, stupid
Those magic words from Bill Clinton adviser James Carville during the 1992 presidential campaign ring true for marketers three decades later.
Concerns about a looming recession had been the top concern for marketers and others in the industry all year, especially since Russia’s war in Ukraine sent energy prices soaring. Marketers are pricing all kinds of other raw materials costs through to consumers too, preparing in industries such as packaged goods for a second round of double-digit price hikes in some cases.
The Federal Reserve, which already has made several rounds of steep interest rate hikes, continues to plan more, despite signs that two big drivers of inflation—energy costs and rents—have flattened or abated. The Fed almost never engineers a decline in inflation without causing recession, so it would be a major departure for this time to be different.
So, almost all marketers are in the midst of contingency planning in the seemingly likely case that recession begins next year, said Horizon Media CEO Bill Koenigsberg. Somewhat befuddling is that several rounds of rate hikes and closing the spigot of easy money from the Fed’s balance sheet still hasn’t caused a recession, outside of a capital-starved tech sector or a residential housing market hit by higher mortgage costs. Unemployment remains low and economic growth actually accelerated last quarter.
Hence the contingency planning. There’s still a chance that a much-anticipated recession never comes and marketers will want to turn on the spending spigot later in the year. So marketers ranging from Walmart U.S. Chief Marketing Officer William White to Clorox Co. CMO Eric Schwartz are putting a premium on being nimble.
Despite recession worries, marketing spending plans aren’t all headed south, in part because some marketers already pulled back in 2022 and are ready to rebound or face investor pressure to do so.
Many marketers began pulling back on spending this year as they tried to preserve margins while raising prices slower than costs, including Procter & Gamble Co. and others. But some also faced skeptical investors (e.g. P&G) who’ve heard in decades past about how companies were getting just as much bang for fewer bucks only to see said companies’ growth slow. So far, at least, P&G appears to be delivering on its forecasts but any stumble on the top line will raise doubts anew. Rather than argue bang for the buck, Unilever executives in their Dec. 8 investor conference said they plan to hike marketing spending in 2023.
Broadly, CPG, which tightened its spending belts considerably this year,is actually projected to increase marketing spending as a share of sales considerably in 2023, from 17.8% to 18.7%, according to a survey-based study by Cadent Consulting Group. Those numbers include trade promotion, which tends to involve price dealing, but Cadent found trade promotion as a share of CPG budgets should actually continue a long-term decline in 2023 to 43%. Out of that trade budget, 18% is expected to go into retailer digital media networks and less than half—48%—into temporary or longer-term price reductions.
If anything, the threat of recession has only increased pressure from marketers that their spending performs.
All this meant paying up on the bargain organizers of the Cannes Lions International Festival of Creativity made two decades ago when they started coaxing marketers to attend the annual June event. Marketers brought with them even more agency executives and a host of other media and tech vendors. But that could start to reverse if marketers stopped coming, something that P&G Chief Brand Officer Marc Pritchard and other members of the Association of National Advertisers’ CMO Growth Council warned could happen if Cannes Lions kept being awarded to work that had little obvious potential to grow brands, according to people familiar with the matter.
Hence, from 2023 forward, every Cannes award entry—not just those in the Creative Effectiveness Category—will have to make a case for how the work generates growth.
That doesn’t necessarily mean short-term sales lift numbers should drive every decision. It’s very possible that a brand can show numerous consecutive campaigns with a strong measured return on ad spending yet still fail to grow or decline because it fails to reach out to new consumers, Campbell Soup Co. VP of Integrated Marketing Marci Raible said during the Ad Age Next: CMO Conference in December.
Economists never had much success getting the world to manage pollution by taxing it—essentially turning a hidden cost into an explicit one. But the marketing industry might have found a way to weave climate impact into one of its most cherished currencies: awards.
Again, at the behest of the CMO Growth Council, the Cannes Lions will add sustainability criteria and carbon footprint accounting into all award entries and deliberations starting in 2023. Already, the growing interest from marketers in the carbon impact of their media plans had led measurement firms such as DoubleVerify to add such data to their dashboards.
This might be an area where the marketers are out front of the customer base in part because, well, millennials aren’t getting any younger. While the industry may be measuring carbon impact as never before, recent research by CivicScience finds Gen Z consumers ages 18-24 are less concerned about the climate impact of their purchase decisions than millennials were at the same age. The economy likely is to blame as Gen Z focuses more on pocketbook issues, a report by the firm concludes.
Read more: ‘Green hushing’—brands trim sustainability marketing
Big marketers at least are still concerned at least publicly about diversity, equity and inclusion. But one analysis says otherwise. At least when it comes to casting, the percentage of people of color and women in video ads declined in 2022, reversing two years of gains, according to research by Extreme Reach.
But among big marketers, that isn’t the case. Pritchard and Verizon Senior VP of Marketing Tony Wells made major points about the importance of DE&I in marketing in speeches at the ANA Masters of Marketing conference in October. And the Cannes Lions—again at the behest of the ANA’s CMO Growth Council members—is requiring that award entries from next year forward disclose the ethnic and gender makeup of people involved in the production of ads.
“DE&I will continue to be a big theme for next year,” said White, the CMO of Walmart U.S. “For us, it’s about how we make deeper and long-lasting relationships with our associates, our customers and our partners at large. We’re going to spend a minimum 5% of our total budget with Black-owned media and businesses, and that figure will continue to grow.”
Data and measurement
The impending demise of third-party cookies in Google’s Chrome browser and previous disappearance of other digital identifiers has placed a greater emphasis on first-party data, workarounds like contextual targeting and individually identifiable retail sales data. Regardless, the never-ending quest for better data and measurement becomes even more important as economic challenges increase.
“Things are changing fast, particularly in the world of data and technology,” said Clorox CMO Eric Schwartz. “My biggest personal challenge is not only understanding all of that but learning to be a different kind of leader—one that leads multi-year transformations in ecosystems, with partners, and can turn all that activity into results on a time frame that’s aggressive but also understanding of the technical challenges and the sequencing that is required.”
This article first appeared https://adage.com
Seeking to build and grow your brand using the force of consumer insight, strategic foresight, creative disruption and technology prowess? Talk to us at +971 50 6254340 or email@example.com or visit www.groupisd.com/story