These are nervous times for brands and advertisers. Having successfully weathered two years of a global pandemic and stepping hopefully into 2022, they are now being confronted at every turn by rampant inflation, global geopolitical uncertainties, supply chain shortages and, to cap it all, declining consumer sentiment.
ack in January, most marketing and advertising budgets were forecast to increase this year as many economies began to embrace some form of living with Covid strategies as consumers started to spend money again.
Conscious of the fact that they may have underinvested during 2020 and 2021 because of various lockdowns in different markets, many of the big global consumer-facing brand owners committed to increasing their marketing spend in 2022.
In the case of the two bellwethers of the global marketing industry — P&G and Unilever, the former announced in its Q1 2022 earnings call that it was increasing its marketing spend by 30pc or $130m (€124m) restoring it to pre-pandemic levels.
As a percentage of overall sales this was down by 80 basis points, but P&G has been successfully managing its marketing investment in areas like performance-related marketing and digital ad spend in recent years. This has ensured it has been getting a far better bang for its marketing bucks.
With well-known household brands like Olay, Gillette and Pantene in its stable, P&G is also the biggest investor in marketing with annual spend in excess of €10.5bn a year.
Elsewhere, Unilever, the second biggest investor in marketing, went into 2022 with a €7bn marketing budget which was up €122m on pre-pandemic 2019.
But other global giants with consumer-facing brands in their stables have also increased their marketing spend for 2022 and this is also evident in their Q1 results as well as those of the global advertising agency giants.
Earlier this week, the largest agency group, WPP upped its annual revenue forecast after a strong performance from its media investment business Group M fuelled a 9.5pc growth in turnover to £2.6bn for Q1. For the full year, the group is now guiding revenue growth of 5.5pc to 6.5pc.
Speaking to the UK media this week, group CEO Mark Read said the company is “mindful of the economic risks, and our guidance takes into account the economic outlook. As things stand, we haven’t seen any major reductions in spend from our clients.
«We see some pluses and minuses here and there but they tend to cancel each other out.”
Meanwhile, Omnicom, another global network, said it had lifted its annual forecast to 6.5pc while Publicis has stuck with 5pc because there was “too much uncertainty”.
While some element of inflation would have been already factored into 2022 budgets, it is probably fair to say that most companies and their brands underestimated its scale.
With a full-blown global energy crisis and a protracted war in Ukraine looking increasingly likely as each day passes, it is already hard-pressed consumers who will feel it most.
Brands will not only need to hold their nerve but also respond in some way to some of the pressures consumers are feeling.
Historically, the large retailing groups have always been good at this.
Back in the last recession, they all had recession-busting deals. Fast forward to 2022 and many of them are offering inflation-beating offers. Lidl’s feed a family of four for less than €74 a week deal is a perfect example of this.
In the marketing world, when the going gets this tough, the default reaction has always been to slash its marketing costs.
While there is plenty of empirical evidence to suggest this is the wrong strategy, coming so soon after the global pandemic makes it even more dangerous as several years of back-to-back underinvestment will be a deadly blow for most brands.
Most of all, however, now is the time for marketing to really connect with consumers to help them with solutions to their problems — whether it is a deal on their energy or other utility bill, a special offering on their shopping, or that staycation they have been putting off for a couple of years. In other words, brands need to be more in-tune with the needs of their customers now more than ever.
Ad complaints down
The total number of complaints to the Advertising Standards Authority of Ireland (ASAI) in 2021 decreased by 12pc in 2021, according to its annual report which was published during the week. A total of 1,450 written complaints about 959 ads were received by the ASAI during the year, with the travel and holiday sector generating the most complaints at 207. Once again, digital media continues to generate the most complaints, with 696 or 48pc of all complaints.
Accenture on Song
Accenture Interactive, which has more than 150 staff in Ireland, has rebranded as Accenture Song. Part of consulting group Accenture — which has its global HQ in Dublin — the digital and marketing services group is the largest in the world, with revenues expected to reach around $14bn (€13.3bn) this year. Accenture has acquired a number of top agencies worldwide in the last 10 years, including Irish agency Rothco which it acquired in 2018 for €35m.
Crisis del Corinavirus | Toda la información sobre el COVID-19 Suscríbete y permanece atento a todas las novedades del COVID-19
