The downturn is coming to Australia, but marketers can still grow their business if they leverage an outcome-based economy.
It seems like only yesterday we were talking about the rise of digital advertising, and what that could mean for marketers. As global audiences moved online, brands were quick to follow. Over the past year, that conversation has expanded to one of consolidation, transparency, and broader trust issues within the ecosystem. Now, as 2018 comes to a close, things are slowing down; we’re finally out of the whirlpool, with our feet on solid ground and our heads spinning.
The media industry managed to avoid the worst of the Global Financial Crisis (GFC) thanks to the explosion of the digital sector, with seemingly endless opportunities opening up in the agency world, as well as the marketing and advertising technology space. But signs of a market correction have been on the horizon since 2016 and a downturn is now on our doorstep.
2019 is looking pretty scary. By most accounts, Australia is heading for a recession. A correction in housing prices is already underway, with the question no longer being if it will happen, but whether it’s more likely to be a property slump or an all-out crash. An economic downturn is almost sure to follow. Now you may be thinking, “this all seems like doom and gloom”, never fear, there could be a silver lining for marketers who wise up and take action.
In recent years, we’ve seen a movement away from more traditional advertising mediums like newspapers, magazines and - to a certain extent - broadcast television, in favour of trackable, addressable, and outcome-focused marketing. I believe the new year will see further acceleration down this path. We’re coming into a period where transparency, measurability, and data-driven insights are “table stakes”; a period where it’s the outcome of the advertising that matters most and reach is only a consideration, not the end success metric. Dare I say it, we’ve found ourselves in an outcome economy.
In an outcome economy, goods and services are marketed, priced, and sold based on the results they guarantee, rather on their nominal value. This is great news for marketers who are set up correctly to take advantage of this type of economy, as it means significant improvement in ROI - think marketing where you’re only paying for quality, qualified leads, new customers, and customer that have a great LTV (lifetime value) i.e it’s all performance based marketing. In an outcome economy, advertising agencies, media agencies, and other partners have part or all of their remuneration tied to the advertiser’s business growth goals. Everybody involved has skin in the game.
Many advertisers are already moving towards this approach to selling, and remuneration structures, with marketing and media partners working on guaranteeing outcomes that are formulated towards the advertisers’ business goals. Important to note, that marketers may need to change the way they operate if they hope to fully realise the potential of a true outcome economy; upskilling staff, being more open with partners around success metrics, breaking down internal silos and having the very necessary conversation around investing in technology are all important considerations.
During a downturn, the marketing budget is usually the first thing to be cut. But for the companies that play it right and invest, not cut, there is actually the chance of growth: even in a downturn. Evidence shows that the more forward thinking companies increase their ad spend when the market takes a dip, allowing them to gain share from their competitors. When the economy eventually recovers, they end up with the biggest slice of a now much larger pie (copy that and email your CFO).
A focus on ROI is always important, but it becomes even more crucial during a recession. Marketers should be consolidating their ad spend to proven partners, and prioritising strategies that drive measurable business outcomes - my recommendation is if you can’t track it, don’t do it. The marketing technology that you have in place plays a significant role here. There are considerations around transparency, trust, and data protection, as well as understanding how different technologies can fit or displace established “technology stacks” to add value, and not layer in complexity. Technology can - and must - help marketers focus on what’s important. Through technology, marketers can make better informed decisions, with the opportunity for growth during a downturn.
From my perspective, it’s very clear. The movement towards an outcome economy has already begun. Each day momentum is building, media makeup is evolving, and the economy is changing. The question is, what are you going to do about it and do you have the right partners in place to turn a bad 2019 into your best year yet?
Impact managing director Adam Furness