Mark Kennedy.
The AdNews end of year Perspectives, looking back at 2024 and forward to next year.
Mark Kennedy, Managing Partner – Consulting, Kantar Australia
2024 saw a big percentage of Australian businesses driving towards performance marketing and the bottom of the funnel. With P&Ls under pressure and short-term thinking becoming even more short term, this is no surprise – and the expectation of many marketers is that this focus will continue to intensify.
The big issue for Australian brands in 2024 is that we were coming off a low base. At Kantar, we ran large-scale marketing effectiveness studies across Europe, Australia and New Zealand in 2024 – and the results make for salutary reading. While businesses outperforming their category globally focus predominantly on the upper part of the funnel driving performance through the entire conversion funnel, Australian and New Zealand brands – even from the best performing businesses – focus the greatest weight of their effort at the bottom of the funnel.
The pressure to push even more effort to the bottom of the funnel is being felt by teams across categories. The impact of this focus is very clear. When we look at brand equity, we can see that over the last decade, brands in our part of the world that are seen as ‘meaningfully different’ have dropped 51 per cent and this is speeding up.
When we run a meta-analysis of our Marketing Mix Modelling, we can fully see the impact and the challenge building for marketers. The bottom of the funnel focus has a huge effect on the strength of base sales, setting marketing departments up for ever increasing promotional dependency and increased levels of sunk cost marketing.
As a marketer myself, this finding frankly felt scary. As we move forward into next year there are some big challenges for marketers and their businesses.
How do they rub their tummy and pat their head?
We have to recognise the relentless push for short-term results is not going away, so how do we balance equity building and performance marketing so we simply don’t kick the can down the road and make our lives miserable?
I see 2025 as a tummy rubbing whilst head patting challenge or more simply, yes and...
Yes, we need to drive short term sales AND we need to build brand equity.
Yes, we need to focus on the cost-of-living AND hit our sustainability goals.
Yes, we need to optimise our media mix AND produce brilliant creative.
Yes, we need to innovate AND rationalise our portfolio.
The challenges and pressures in 2025 will be significant AND the solutions will need to be integrated.
Across many organisations, the implementation of significant and often fundamental change to the operations of the business have had unintended consequences that may well come back to haunt us in 2025. I believe those that will succeed in 2025 will make the most of the transformational change that technology is driving in the marketing space.
There is a massive watch-out or caveat to pay attention to. Not all that glitters is gold. There is a lot of fool’s gold out there. Promises are big but often the reality is lacking.
So, the first big success criteria is ‘buyer beware’.
With that said, there are some truly brilliant innovations happening in the brand and insight space and leaders in 2025 will be able to see the real gold in all the noise.
The next big success criteria is that ‘hope isn’t a strategy’.
It is important to fully embrace and understand the transformational level of disruption that is happening around the world. Hoping things ‘go back to normal’ or stabilise seems like wishful thinking given all the foresight and future projection analysis that is available.
We will continue to progress into a brave new world that has advantages and disadvantages; but one thing is clear: it will be a different world to the past. Actions and strategies that worked brilliantly before will often fail to deliver in a different context.
Again, our ability to model the future has never been better, this is no guarantee of future success, but businesses focussed on future growth stand to gain significantly.
Above all else, 2025 will continue to drive heat in two paradoxical emotions.
The excitement and clear opportunity for brands and marketers to do and achieve some of the things in the past that have only been dreamt of, thanks to technology and innovation. Balanced with the nagging doubt and worry created by rapid transformational change and highly disrupted environments.
The relentless drive for short-term performance and immediate gratification will continue to put pressure on people and processes within businesses. Balanced with the sense that the only way to drive sustainable success is commitment to a solid strategy and the ability to course correct based on data when needed (the actual definition of agility).
2025 will be dynamic, challenging, thrilling and scary. Those businesses with the ability to rub their tummy and pat their head will thrive. Those hanging on and hoping are very unlikely to do well.
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