Don’t be fooled by a temporary government-led advertising bonanza, all signs point to a tough year for consumer-facing businesses says Spinach’s Craig Flanders.
A slew of recent headlines would have you believe ad land is in for a terrific year. According to IPG Mediabrands investment arm Magna, ad spend will be up 3.8% to $17 billion this year while a recent Dentsu Aegis forecast predicts growth of 2.4%.
Far be it from me to rain on this rosy outlook but consider this: in January, the Melbourne Institute and Westpac Bank Consumer Sentiment Index for Australia saw consumer confidence hit its lowest point since September 2017 driven by the ongoing slide in house prices, concern about global trade wars and political uncertainty.
The triple threat of Donald Trump, Brexit and a looming federal election in Australia is enough to make the most confident consumer tighten the purse strings. And this is a global trend with the Organisation for Economic Co-operation and Development charting similar sentiment around the world.
Sure, there are elections on the cards and the government is going to splash some cash but that’s going to do little to help anyone other a select group of media owners and agencies. The most recent SMI results certainly support a more gloomy forecast.
What this means for marketers is that if you sell products and services to people, at best, you’re in for a tough year. At worst, welcome to the road to Armageddon.
For many, 2019 is the going to be the year of bare-knuckle hand-to-hand combat. And since it’s not just in Australia that this is happening, don’t expect overseas shoppers to pick up the slack.
So what can be done to minimise the damage?
For marketers, there are a few weapons to add to their arsenal that could soften the blow. The first is an increased focus on personalisation.
To do it right, you need a number of pieces of the puzzle in place. Firstly, get your data sorted out. Banish any data silos and clean the crap out. Next, you’ll need a team of people that live and breath the word collaboration. It’s going to take data people, media people, tech people and creative people who are able to grasp not only the part they need to play but also what the others are doing.
Sounds pretty bloody expensive but the reality is, it’s actually going to save you money in the long run. Just ask Proctor and Gamble’s Marc Pritchard. Since he mounted his mass personalisation mission, the FMCG giant had decreased investment on inefficient media by one-fifth.
Now’s the time to nurture your one-to-one customer relationships and you can do that by looking after your best customers and re-invigorating past prospects. Get in touch with the people who have spent money with you before and then refer back to the previous point. Make it personal. Offer them something based on their previous purchase behaviour.
RFM (recency, frequency, monetary) analysis is perfect for this. It makes it easy to determine which customers are your best by examining how recently a customer has purchased (recency), how often they purchase (frequency), and how much they spend (monetary).
Automation is also going to be your friend but in your quest for personalisation, you need to be selective about what you automate otherwise it will have the opposite effect.
Simple things such as replenishment emails are an obvious candidate for automation. Look for ways you can free up valuable resources to focus on more pressing tasks.
When it comes to your media mix, get ruthless about what are the must-haves based on performance. Forget about the nice-to-haves, this isn’t the time. Unless you can see an activity delivering a clear and positive effect on sales or your bottom line, send it to the bench. Working with partners that have a 360-degree view of your business will certainly help.
And if all else fails, go on holidays. This may well be the year to take a lead from the stockbroking world where they often say “sell in May and go away”. It’s only February but the way this year is shaping up, there will be plenty of unprepared folks packing their suitcases already.