Marketing budgets are under pressure and feeling the burn.
Inflation is making itself felt.
There is little doubt that marketing teams are feeling the pressure of economic complexity and rising inflation. These factors directly influence budgets and planning, and how marketers approach their campaigns and strategies. According to a recent article in Ad Age, marketing is coming under ‘increased scrutiny’ because of inflation but this means brands need to be more creative and precise, not aiming at budget slice and dice.
This view is reflected in the Merkle Performance Report that found companies are investing into new technologies such as automation and machine learning in the face of inflation. The report said that 41% are taking action and 38% have already made significant progress. Technology can provide companies with the insights they need to accurately benchmark their performance and deftly navigate their campaigns against their competition.
Even though marketing budgets are not at their pre-pandemic levels yet, they are rising and inflation is likely to have a ‘positive impact on strategy and investment’.
Inflation’s uptick is less of a death knell for marketing and more of an opportunity. But, there are some obstacles that may need to be overcome.
Inflation equals innovation
There is a theme of overconfidence in marketing that echoes in the complexities that inflation brings. Gartner found that many Chief Marketing Officers currently hold the belief that marketing is thriving in spite of budgets shrinking in relation to revenue. Not one industry achieved double-digit marketing budgets versus revenue in 2021 and many brands are feeling serious dips.
Marketing teams need to prove their value through increasingly creative and innovative approaches to spend, campaigns and strategy. It can be perceived as a positive shift, one that allows for marketing teams to showcase their ability to pivot to meet markets and consumers with approaches that are more aligned and relevant than ever before, but there are headwinds.
Additional economic factors that companies have little to no control over are directly influencing spend, budgets and inflation. This makes it hard for marketing teams to know where to pivot or what direction their strategy should move in. As double-digit ad spend continues to wobble – direction dependent on industry and vertical – some companies will reduce their ad spend while others will use the situation to drive growth and increase marketing presence.
However, marketing teams need to be careful with the data as the rising costs coupled with inflation may see a corresponding rise in revenue that isn’t an accurate reflection of the situation.
It’s time to put science into spend
While inflation adds another layer of complexity to an already fractured marketing environment, it does offer teams two very clear wins – the opportunity to innovate, and the opportunity to leverage data visibility to create efficient use of their budgets.
Inflation and other economic challenges may shift performance trends but with budgets and procurement built on solid, data-driven foundations, marketing teams can make relevant and informed choices that map back to the changing landscape.
Using tools like RightSpend, marketing teams can assess if their spend is outstripping that of competitors. They can use this data to ensure that the decisions made are aligned with the industry and the company.
While there is no simple route around inflation and its impact, there are ways of using it to the brand’s advantage. Smart data equals smart decisions, and the right data means that teams can make significant savings and efficiencies, and they can do so in spite of riding the choppy financial seas.