Marketing experts have waded into the row over Government plans to urge brands to divert their marketing spend into slashing prices, with a growing consensus that now is the time for efficiency not cutbacks.
Originally proposed by the new “cost of living tsar” and former Just East boss David Buttress, ministers are now planning to run a major marketing campaign to tell firms to cut their own marketing campaigns and divert the funds into price cuts.
Despite no official word from industry bodies such as the Advertising Association, the IPA, ISBA, or the DMA, The Federation of Small Businesses was first out of the blocks last week, claiming the plans are a “slap in the face” for small and medium firms.
FSB national chair Martin McTague said: “Asking this group to soak up additional costs just isn’t realistic, especially when so many are worried about basic survival, and have already cut all expenses, even necessary ones, to the bone.”
Many cite the 2019 Bain study on the 2008 recession which found companies that continued to invest in marketing saw compound growth of 17% compared to the firms that cut their marketing budget and whose growth remained static.
And for Tug UK managing director Faye Daffarn, now is not the time to cut marketing budgets, but she does agree that spend should be “refocused”.
She added: “Brands must be able to move budgets fluidly between the best-performing channels and measure everything to ensure they’re being as efficient as possible and can see where they can afford to pull back without affecting sales.
“Businesses should also be led by demand and focus on showing consumers what they actually want to see: a prime example being sustainability.
“Rather than slashing budgets, brands should channel them into promoting sustainable consumer choices and developing lower-carbon media plans. Moving forward, we hope to see businesses increase their use of digital advertising to bring added value to customers.”
Meanwhile, Zefr EMEA marketing lead Suzy Ley insists that brands which maintain presence throughout good times and bad are the ones that consumers will reward.
She added: “For marketing budgets, it’s about ensuring you’re maintaining spend where audiences are — which will be good for the platforms — while being cautious about spending in the long-tail. Transparency into where adspend is going should be the focus for marketers at all times, but especially now.”
Adverity chief marketing officer Harriet Durnford-Smith agrees. She explained: “Cutting budgets, especially marketing, is not a silver bullet that will solve all your problems. Rather, efficiency is the name of the game – businesses can prepare best for a recession by making sure they are as efficient as possible with the money they have. And that includes marketing budgets.
“Sadly, marketing is often the first thing that gets cut and that is because too often it is seen as a nice to have rather than must have part of the business. Again, this won’t change until marketers, and CMOs in particular, start being able to clearly demonstrate what the impact of cutting marketing’s budget will be on revenue.”
And Scuba Analytics chief executive Tony Ayaz concurs, claiming that calls for a reduction in marketing spend to relieve the pressure on consumers’ purses is encouraging businesses to take a short term view.
He continued: “The road has not been smooth for brands; despite an initial post-pandemic resurgence in spend, the economic climate is now challenging once again. Rather than a reactive approach to economic challenges, businesses should be considering the long term efficiency of their marketing spend.
“After all how a CMO chooses to spend their marketing budget can guide an organisation’s long-term direction, impacting customer experience and influencing internal efforts such as culture.
As such, marketers should be striving to deliver the best return on investment and should manage their advertising activity in real time, Ayaz believes.
He concluded: “By leveraging their data to create a continuous, 360 degree view of the customer, brands can produce targeted and effective campaigns. A better understanding of consumer data will afford businesses the efficiency required to deliver what consumers really need.”
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