How to convince your C-suite to invest in AI and web3 during a recession
With recessionary budget cuts, how are marketers balancing their innovation spend and justifying it to C-suite? We take a look as part of The Drum’s latest Deep Dive.
Budget don't need to be at odds with excitement about new tech
According to the IPA’s latest Bellwether report, 60.5% of marketers expect their budgets to stay the same or be cut in 2023/2024, while 39.5% expect increases. Meanwhile, AI and machine learning budgets typically range from 15-35% of marketing budgets and brands are allocating 5-15% on web3.
So are budget cuts at odds with excitement over new tech? For 20Something’s strategy partner Fran Docx, investing in tech during a recession will future-proof a brand. “The market won’t stay still during a recession and not investing can make recovery slow and painful,” she argues.
According to Docx, the “cost of tech in a recession is cheaper”. The layoffs from tech giants mean that independent companies can now compete for talent, while acquiring a specialist company or team might have a lower valuation when times are lean, she explains.
Docx adds that tech investment in a recession can also help “generate new revenue streams and support business development”. She points to Elon Musk’s ”big bet with his recent investment in solar city and launch of Tesla Energy,” saying: ”Soon he will provide both the cars, the infrastructure and the energy they are run on.”
The difficult thing about rolling out new AI, however, isn’t the technology itself, says CreativeX chief executive and founder Anastasia Leng. Leng, who has helped behemoths such as Diageo, Nestle and Mondelez integrate AI-generated creative data into their business, says “soft management changes” are needed to convince an entire organization to work differently. “It’s always much more of a psychological hurdle than anything else,” she says, especially when the word ’AI’ is involved.
According to Leng, the savings made by adopting tech solutions like AI can actually “liberate” budgets to be reinvested into marketing. She draws reference to CreativeX’s work with Diageo that halved the drinks company’s cost per acquisition for online ads. On Diageo’s latest investor cal,l the company said the savings would be plugged back into advertising. “So, in a time of economic constraint, it’s just found a lot more coins under the couch cushion that we can use to drive more effectiveness,” Lens says.
There’s a perception that marketers are the cost center and not a revenue driver, Leng adds. “The fact that Diageo was able to achieve such results and get to a place where it’s getting more investment during a time where budgets are really tight just shows how important marketing is to driving growth.”
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So how should marketers convince C-suite?
It’s all about the business case says Nicole Yershon, founder of the NYC Collective. Marketers need to be providing the C-suite with a comprehensive understanding of the benefits, risks and potential of AI, machine learning and web3 technologies, she says. ”Employ curious people and build new relationships with new partners.”
Here is Yershon’s advice for getting the C-suite onboard...
1. Demonstrate ROI: ”Present case studies and success stories from brands in similar industries that have effectively integrated AI, machine learning and web3 technologies into their marketing strategies. Focus on the return on investment (ROI) and long-term benefits of these technologies, such as cost savings, increased efficiency and improved customer engagement.”
2. Educate about the technology: ”Break down complex concepts related to AI, machine learning and web3 into digestible and relatable information. Help C-suite executives understand the potential of these technologies and how they can be harnessed to drive the company's marketing objectives.”
3. Address concerns and risks: ”Discuss the potential risks and challenges associated with adopting these technologies, such as data privacy, security and potential bias in AI algorithms. Propose strategies to mitigate these risks and ensure responsible technology use.”
4. Propose a phased approach: ”Suggest a staged integration of these technologies into the marketing strategy, starting with pilot projects and gradually scaling up based on the results. This approach will allow the company to test and learn, minimizing the risks and financial commitments.”
5. Highlight competitive advantages: ”Emphasize the growing competition in the market and the need to stay ahead of the curve by adopting innovative technologies. Show how investing in AI, machine learning and web3 can provide a competitive edge and help the company stand out in the crowded marketplace.”
6. Partnerships and Collaborations: ”Build the right partnerships, which means someone in the organization needs to be out there seeing who is doing interesting work, with interesting tech and introduce it to their own organization and their clients.”
For more on the latest happenings in AI, web3 and other cutting-edge technologies, check out The Drum’s latest Deep Dive – AI to Web3: the Tech Takeover. And don’t forget to sign up for The Emerging Tech Briefing newsletter.