In the shadow of the COVID pandemic, many marketers have failed to realize the implications of the crisis we’re now facing with inflation.
According to the most recent report from the Labor Department, consumer prices are 8.3% higher than just a year ago. These increases are largely impacting energy and food and soaking up the vast majority of consumers’ disposable income. Gasoline prices have jumped over 48% in the last year, for example. If you filled up in California at the end of May, you paid an average of $6.07 per gallon for gas, up from $4.17 in that timeframe.
Unlike the ongoing supply chain issues that impact certain products or industries, inflation is impacting nearly everyone—and nearly every brand. The last time we saw inflation at today’s levels was over 50 years ago in December 1981. It was a disastrous time for many businesses because they had few tools to combat inflationary pressures. Fortunately, it’s a different story this time.
As Machiavelli once said, “Never waste a good crisis.” Marketers have the opportunity to not only curb inflationary pressures, but also come out ahead as leaders in the industry by making the right performance improvements with the right marketing resources and tools.
DRIVE SIGNIFICANT GAINS WITH MARKETING EFFICIENCY
Marketers may be familiar with the retail magnate John Wanamaker’s quote from the late 1800s: “Half my advertising spend is wasted; the trouble is, I don’t know which half.”
The statement may still ring true of many marketing organizations today, but with inflation at all-time highs, it’s simply no longer sustainable. And frankly, with the tools we have available now, there’s no excuse for this ambiguity.
Marketing efficiency has never been more important than it is today—and improving efficiency is one of the most reliable ways to combat inflation. You can drive efficiency by accelerating your digital transformation, focusing on hyper-targeting, and maintaining smart marketing spend.
1. ACCELERATE DIGITAL TRANSFORMATION
Unlike the brands of 1981, we now have modern digital platforms and tools at our disposal, and we can use them to keep afloat as prices continue to rise.
Every marketing organization should be transitioning to a modern marketing cloud that puts a comprehensive suite of digital tools at its disposal. You should be moving your first-party data to customer data platforms that allow you to activate against that data with agility. And you should be transitioning away from analog advertising channels to digital channels.
These digital tools can provide you with the attribution capabilities you need to accurately measure the performance of each channel and optimize your marketing spend today while future-proofing the business for tomorrow. Connected TV, for example, is one of digital advertising’s fastest-growing channels—US CTV ad spending is projected to reach over $19 billion this year—and it affords advertisers measurement capabilities linear TV could never imagine.
2. FOCUS ON HYPER-TARGETING
The hyper-targeting capabilities digital platforms provide allow you to drive performance while also helping to achieve massive cost-cutting. The result can be a significant return on investment.
With the move from analog marketing to digital marketing, you can focus your budget directly on the 20% to 30% of people who are actively looking for products you sell (and ignore the other 70% to 80% who would typically represent wasted spend). That’s both massively efficient and effective, helping drive incremental sales at a much lower cost.
Zeta Global has worked with Samsung, for instance, to improve smartphone sales using this approach. They executed a retargeting program built using real-time website activity. Understanding real-time customer engagement allowed them to maximize efficiency. The campaign resulted in a 33% increase in return on advertising spend versus their classic segmentation.
This is where the move to digital is going to be game-changing—and with inflation, it’s never been more important.
3. SPEND JUDICIOUSLY, BUT DON’T CUT YOUR MARKETING BUDGET
When times are tough, marketing budgets are often the first to get cut, but cutting marketing can indiscriminately create a self-fulfilling prophecy of failure.
Conversely, pumping more money into marketing across the board is also not smart. You need to be willing to spend appropriately to fund the strategies above. That includes funding appropriate technology, as well as the expertise required to use it to its full advantage.
ACT NOW TO PROPEL YOUR BUSINESS FORWARD
Consumers are facing a crisis of inflation, and if you sell a product based on disposable income sales, your business will face that crisis too. Many brands will falter, and some will fail, as a result of ongoing inflationary pressures. Your goal, however, should not be to simply survive this crisis. Instead, you should focus on driving the efficiency that will propel the business forward—crisis or not.
It’s up to the marketing organization to make it happen. Get in front of inflation now and you can lead the business successfully out the other side.
David A. Steinberg, Co-Founder, Chairman & CEO of Zeta Global