New Business Agency Business

How should agencies persuade clients to keep advertising in a cost-of-living crisis?

Author

By Sam Bradley | Senior Reporter

August 30, 2022 | 12 min read

Each week, The Drum asks agency experts from across the world and the ad business for their take on a tough question facing the industry, from topical concerns to perennial pain points.

question mark

How can agencies restore client confidence? / The Drum

Following on from last week’s debate on how agencies should go about shoring up client confidence, we reveal the second set of responses from our expert agency panel.

How do you solve a problem like... persuading clients to keep spending?

Inline headshot

James Fox, chief client officer, Havas London

Now is a time for empathy and conversation with our partners, not the old tactics of persuasion. We mustn’t forget the wider business context our clients are wrestling with, and the immense pressure they’re under from profits needing to absorb soaring inflationary costs, their boards and consumers.

It’s time to listen and understand this myriad of pressures – and remember, it will be different by brand as well as by sector.

Only then can we establish the best route forward and build a case – together – that reconciles what we’d want in an ideal world with the reality brands face right now.

Inline headshot

Matt Holt, chief strategy officer, Digitas UK

There is lots of evidence that proves that achieving excess share of voice – be that in a recession or not – is a successful path to growth. However, similar to the argument put forward by Remain during the EU referendum, it is a rational argument. And we know – again from the EU referendum – that arguments that use emotion win out.

So, in the face of skepticism, agencies need to build their argument from a different starting point. In our view, that should be the customer experience – investing in digital service, tools and content to help people cope with the cost-of-living crisis. Emotive acts can then be used in advertising, helping customers through the recession while also helping the business.

Inline headshot

Paulo Salomao, business leader and co-founder, The Or

The question is not about dipping into pockets and spending money during a recession, but whether it’s OK for marketers’ brands to disappear from their audience’s psyche during a recession, and if they have got the ability to re-engage them once it’s all over... whenever that is.

The chances are someone in your competition will keep things ticking along in your absence. Maybe you are one of the lucky few who can spend their way back into their hearts and minds. But if you’re not, maybe think of it less as a question about spending money and more of a calculation of how invisible can you afford to be in the face of your competition. It kind of changes how you think about those pennies.

Inline headshot

Ben Allison, vice-president, global media, VaynerMedia London

For brands that are heavily reliant on holiday spending dynamics (or have strong associations with sport and the World Cup), this quarter presents a huge opportunity. But for brands that experience different sales spikes and consumer associations, this will be a time to step back from what will most certainly be a highly inflationary period.

For brands focused on driving performance and sales in this period, we are seeing a significant uptick in native checkout using Meta-owned platforms, which presents a massive opportunity to increase investment efficiently and effectively. This is alongside further bolstering owned properties using in-app notifications, emails, SMS and other channels, which are great ways for brands to push their marketing in competitively-priced environments.

For brands aligning with sport and the World Cup specifically, there continue to be opportunities around growing recommendation-based media (such as TikTok, Reels or Shorts). This is because time spent and daily active users keep rising at a breakneck pace, and content tends to be focused on culturally-relevant and timely events, of which the World Cup is a perfect example.

Inline headshot

Hannah Johnson, executive director, global marketing and partnerships, Blue State

This is less of a budget question and more of a measurement one. It’s crucial that clients know what their budget is delivering for them in terms of KPIs and ensure that these tie to business objectives; that they demonstrate value to justify spend – and what this means for the coming months and beyond.

We work across the brand and charity sectors, and charities know that when you spend less, you make less, which causes a spiral that can resonate negatively for years. There’s no reason the same wouldn’t apply to brands – it’s just that most aren’t measuring the right things to find out.

Inline headshot

Duncan Wood, managing partner, Ingenuity

Use the pandemic as an example. The brands that kept spending through the pandemic came out in a much better position than the brands that didn’t.

Mark Ritson was right: you should keep spending.

Inline headshot

Natalie Matti-Brown, client director, Taxi Studio

To encourage spending in a downturn, advertising and consumer engagement via brands become all the more important. You must understand your customer and if their consumption fits into one of the four categories: essentials, treats, postponables or expendables.

Understanding how to reach consumers and how they’re spending during these times allows businesses to tailor communications and content around these insights while staying true to the brand’s fundamental proposition or positioning. When a brand understands and prioritizes customer needs and adjusts strategies, tactics and offerings in response to shifting demand, they are more likely to flourish during and after a recession.

Inline headshot

Luke Willbourn, chief client officer, Talon Outdoor

It’s never been more important to make marketing spend work as hard as possible as we enter further economic instability. Clients’ media budgets will be scrutinized, and understanding audiences and their behaviors will become even more important to ensure campaigns deliver as much ROI as possible. Moreover, insight from IPA and its partners has shown that advertising in a recession can help firms recover, and not doing so can forego sales and risk market share, especially if cutting budgets is relative to competitors’ spend.

Out-of-home (OOH) has long been used to build brand trust and has been proven to deliver results across all brand-building metrics. At Talon, we have built proprietary technology to understand audience behavior, ensuring brands can target their desired audiences at the right time while benefiting from the mass reach OOH is famous for.

We’re gearing up for huge moments in advertising where reaching consumers effectively is crucial. Christmas and the World Cup are magical shared experiences, and big OOH campaigns have the power to lift spirits and unify people during harder times – while also providing significant return on investment and building long-term brand equity.

Inline headshot

Benedict Buckland, chief creative officer, Alan

Evidence from the 2008/2009 crash showed those that doubled down on brand-building increased their market share over four times more in the recovery phase than those that paused investment in advertising.

True. But quoting a stat from the IPA (as compelling as it is) isn’t going to cut it. To persuade the powers that be to invest in advertising when costs are squeezed, we need to win hearts as well as minds.

This must go beyond simply tantalizing with creative to crafting a narrative that moves them emotionally as well as rationally. We need to do what we do best: communicate the benefits of the ‘product’ (advertising) in the vernacular of their personal experience.

Inline headshot

Hillevi Lausten, chief operating officer, DCMN

Given the current climate, it’s natural for clients to revisit their marketing strategy – but it’s important not to dial back completely. In fact, now’s the time to grow your brand and invest in a quieter, less competitive market.

However, it pays to be strategic. We’re encouraging clients to approach their marketing more holistically from both a brand and performance marketing perspective, and uniting them under a broader ‘brandformance’ methodology. This is key to better understanding the full impact of their marketing.

Benchmarking all their combined activities – performance and brand, creative and media – helps clients identify new opportunities for improvement and growth. This is especially important in times of crisis, so brands can invest limited budgets for maximum impact.

Inline headshot

Alex Young, managing director, We Are Futures

Recession brings fear and uncertainty. The goal here should be not to think, ‘how can I get clients to spend?’ but to put yourself in the end customers‘ shoes and implicitly understand their needs in a time of crisis.

The truth is that people don’t want just ads – they want help, guidance and advice. There’s no magic solution, but redirecting budget to personal touch-points and actions that will make more of a tangible impact is key.

The value will show itself, but it’s your job to show your client that success may not come simply in the usual form of clicks and conversations.

Inline headshot

Jaye Cowle, founder and managing director, Launch Online

My tip: invest in improving advertising analytics and measurement while ensuring it’s compliant. Clients, and the boards they report to, have to see that while advertising requires continued investment, it’s a long game that has an indisputable impact when measured well. Accurate data and reporting make results easier to prove, justify spending and help clients feel confident in their decision-making.

Inline headshot

Jake Stott, chief executive officer, Hype

It’s never an easy conversation to have. If a client is convinced that reining in their ad spend is the only way to weather the storm, then there’s little to add. But we believe that companies that continue building up their brand during a downturn are also most likely to reap the benefits of this investment once the market bounces back – and pull ahead of competitors.

That said, it never hurts to re-evaluate how you spend your ad budget and who you target. In web3, downturns usually mean shifting focus to improving product, helping users through a bear market, and strengthening brand loyalty.

Inline headshot

Alice Waterman, business director, BrandOpus

Marketing and advertising decisions are not absolute questions of whether to invest or not, but rather what to say that matters to consumers. We have to determine what will enable the brand to add value to consumers, making it top of mind and unable to be substituted. In a recession, we put limited resources where we can maximize returns, and when consumers are faced with difficult decisions, it’s critical that our clients’ brands are not only mentally available but also relevant and meaningful.

When there might be lower-cost options available, brands that mean something and have a bigger, more relevant role in their consumers’ lives will survive and thrive in even the harshest economic environments. Price promotions and cuts might bring short-term results, but as the IPA ad highlights, the long-term impact of short-term fixes could be fatal.

Want to join in with our weekly discussions? Email me at sam.bradley@thedrum.com.

New Business Agency Business

More from New Business

View all

Trending

Industry insights

View all
Add your own content +