With marketing budgets up in the air, here are 5 roles for agencies in 2023
Recent reports make mixed reading for 2023's marketing budgets. For The Drum's Predictions Deep Dive, Jody Osman of Propeller looks at five hats for agencies to wear this year during this uncertain year.
In 2023, businesses will have to reassess operating models and budgets while being mindful of changing consumer needs / Gerrie va der Walt via Unsplash
Marketing teams and agencies will need to work together to thrive in a rapidly changing landscape over the next 12 months. Around us, the cost-of-living squeeze forces consumers to change their behaviors and businesses to scale back activities. Challenging circumstances negatively impact certain categories agencies may be targeting, but are catalysts for opportunities elsewhere.
Research into marketer confidence and resource presents a mixed picture, but the latest quarterly IPA Bellwether report shows that marketing budgets continued to grow in Q4 of 2022, with nearly 40% of all marketing budgets expected to be higher in 2023/24.
The value of ‘keeping the lights on’ during an economic downturn and seeing a tough climate as an opportunity to seize market share was also supported by the latest CIM CMO75 report. It showed only 18% of marketer respondents reported budget cuts in 2022, with 53% expecting a budget increase in 2023.
The trick is to constantly monitor markets and changing consumer behaviors to understand what clients and prospects are worried about – and to adapt your support, guidance, services, and possibly even your overall business model accordingly. We’ve identified five roles for marketers, no matter what sector the client is in.
1. Proving ROI on marketing investment to the C-suite
This is extremely high on the agenda for chief marketing officers and concerns the age-old problem of marketing being perceived as a cost. Marketers will need to shift the conversation away from the narrow focus on return on investment, to a broader focus on the value of greater brand equity and a better customer experience.
Part of the challenge will be calibrating budget for the right balance of performance and brand marketing. Businesses will be looking for cash flow and immediate returns, leaning toward performance.
2. True understanding of consumer behavior
Predicting consumer behavior is difficult at the best of times, but in the current economic scenario, which many people have never previously experienced, it’s a real test. What luxuries will people give up? How many will compromise on quality? What will happen to media consumption patterns?
More people staying at home to reduce their spending means that they are more likely to spend time with streaming and social media channels. Everyone experiences a recession differently and brands are going to need fast feedback and intelligence from the consumer frontline – an extra role for agencies to play.
3. Capacity for empathy
Consumers expect brands to understand their current difficulties and to offer help. The need for businesses to show that they are listening and acting will be paramount. Empathy will range from tone of voice in communications, to actively helping with relevant money-saving mechanisms, which means help for employees as well.
Of course, people’s concerns aren’t just about money. They're concerned about representation in ads, diversity in the workplace, and environmental impact. Brands must take all of this on board and show they can make a difference.
4. Figuring out the best operational model
Businesses must evaluate how many of the services they need can be in-housed – and whether this is ultimately a cost-effective thing to do. Businesses periodically do this, but the economic climate means more will be running the rule over capabilities from creative to analytics.
Agencies need to demonstrate the extra value they bring, but also strengthen their processes and ways of working with in-house teams.
Businesses and their marketing teams are going to have to be more agile than ever as they pursue new revenue opportunities. They may also need to quickly change marketing and media plans. One of the touted strengths of agencies is their ability to adapt and dial up or pivot to reallocate resources at speed. Clients will be relying on this more than ever.
A new sense of urgency
Some of these challenges are evergreen, but many of them are given new urgency by the macroeconomic forces at work today. Agencies forged new skills and working practices and built up their resilience during the pandemic. By drawing on these strengths, they should be in a good position to navigate the months ahead.
Helping a client solve a challenge is the best way to get a potential new client's attention and will help you to stand out. By sharing your insight and experience, you are adding real value to the process. While planning your new business and content activity, take time to really understand how your agency proposition is relevant to the challenges your prospects will be facing.
For more takes on the year ahead, by and about marketing agencies, check out our Agencies Predictions hub.
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