Originally appeared in StreetFight Magazine.
Recession fears, a tight labor market, and skyrocketing prices are changing the way brands think about ad spend in the second half of 2022.
Ad budgets are one of the first places to see cutbacks during a recession, and with economic uncertainty on the horizon, multi-location brands are beginning to take a closer look at what they’re really getting for their money.
Global ad growth is expected to come in at 9.2% this year, significantly lower than previous forecasts. Lower growth is anticipated throughout 2023 as well.
As brands struggle to deal with restrictions on data-driven ad targeting and an economic slowdown since the second quarter, ad budgets are on the chopping block. Brand marketers and agencies are being asked to do more with less. Expectations on return on investment are at an all-time high, even while ad budgets stagnate or decrease.
WHAT’S THE SOLUTION TO RECESSION ADVERTISING PRESSURE?
According to Frost Prioleau, CEO of Simpli.fi, now is the time for marketers to get creative with ad targeting. Prioleau says accurate ad targeting is the single best way for brands to ensure they are reaching the right people at the right times and places.
During an economic downturn, it’s vital for businesses to maintain the customers they have already acquired, Prioleau says. Continuing to target those that have already purchased a product or service will be essential for the rest of this year into 2023.
“Pulling back on advertising or marketing during economic downturns may be a necessity for some advertisers. However, for those that can maintain their advertising [and] marketing budgets, they often see less competition and are able to gain market share more easily,” Prioleau says. “In many cases, the reduced demand during a recession is more than offset by the reduced competition to reach new customers.”
That reduced competition could be a game changer for marketers looking for a long-term strategy that actually produces results. Brands that go against the tide by increasing their ad investments while competitors are pulling back stand poised to see the greatest gains in the second half of this year.
With the right retention strategy, Prioleau says the gains made today could pay dividends for years to come.
“When the economy slows, there is often an opportunity for brand marketers to take market share from brands who slow their advertising [and] marketing efforts,” he says.
Any brand that is still using very broad audience segments or demographics to target their media spend or personalize creatives is making a critical error, explains Prioleau. This type of strategy only works well when brands are marketing products or services that are used broadly by large groups of people. When targeting more specific audiences, brands should move to more specific, granular audiences that can deliver a better conversion rate and greater ROAS.
“If an advertiser wants to keep costs low while increasing ROI, one of the most effective levers is prioritizing their ad spend, increasing spend on the more efficient channels, and reducing spend on the channels that aren’t working as well,” Prioleau says.
Looking forward, Prioleau believes more brands will need to focus on marketing across channels if they want to succeed in a tough economic climate. Tools like CTV retargeting allow advertisers to use the same creative across multiple channels, such as television, mobile, and tablet, while also saving on creative spend and increasing return on investment.
“The key is to communicate with prospects on the media types that they are consuming most,” Prioleau says. “That means tailoring media buys to the channels that index greatest with their prospect base as the key for driving efficiency in media spend.”
Ready To Maximize Your Return on Ad Spend?
Fill out the form below, contact your Simpli.fi representative, or email us at firstname.lastname@example.org for next steps.