2022 was supposed to be the great recovery, yet it is ending much softer than predicted, with a pessimistic outlook for 2023. Experts predict further economic turbulence, with business leaders taking the necessary steps to weather another downturn. The technology sector, one of the brightest spots of the pandemic, is starting to shed tens of thousands of jobs. How did we get here, and what does it all mean for ad agency business development in 2023? A recent ANA conference might hold some clues.
According to AdAge's coverage of the October ANA Master of Marketing conference in Orlando, the forces that are shaping CMO behavior are things like protecting ad budgets amid economic headwinds, appealing to new consumer demands for sustainable business practices, and overhauling media buying and ad tactics to reach more diverse consumers. Can we use these forces to shape our business development strategy?
Are you surprised there was very little mention of the metaverse, NFTs, or Web3 at the conference? The issues that preoccupy CMOs are more pragmatic and pressing. How bad will the recession be? How significantly will my budget get cut? How much will I miss my DEI and ESG goals? According to Bob Liodice, ANA CEO, "In the next few months, if you've not already been asked to, you're going to be asked to cut your budget. You'll be asked to find ways to save money."
Marquee events like this draw the top marketing luminaries to define the leading edge of marketing think. Unless those brands are your target audience, you might summarily dismiss them because they don't represent the way most companies think. You would be right, to a degree. I like to take what they say and interpret it in the context of the agencies I work with to understand better what factors influence their prospects. I also use it to inspire their prospects by developing a vision of what is possible and what is practical.
For example, every marketer is challenged by a faltering economy. Gary Osifchin, CMO and GM at Reckitt hygiene, said, "Concerns about the economy are likely to pressure marketers to shift more money into "bottom-funnel" efforts expected to immediately drive sales, a movement that could easily get out of hand." The growth of retail media is one outcome of bottom-funnel thinking. "Especially with concerns about the economy, retail media and its ability to deliver measurable sales is going to be increasingly tempting," said Osifchin. "My fear is that marketers will want to look at all the lower-funnel considerations and performance marketing even more."
Ironically, Airbnb has been in the press recently touting that they have transitioned their marketing spend from performance to brand building and the result has been well received. "Airbnb isn't thinking of marketing as a way to "buy" customers because more than 90% of the traffic to its platform arrives directly, unaided by search advertising," Airbnb Chief Executive Brian Chesky said on a recent analyst call. Visionary? Perhaps, but it certainly flies in the face of the most prevailing CMO thinking.
You can use these top marketers as inspiration for your prospects, knowing the reality will be far less than the vision. Although who wouldn't want a greater impact with less budget? Soyoung Kang, CMO of Eos Products, Jeff Charney, Ex-CMO of Progressive, and Raja Rajamannar, CMO of Mastercard, talked about the importance of risk-taking and the benefits to the brand and bottom line. Kang urged marketers to "find the edges of comfort and respectfully push on those edges." Being brave to push creative boundaries paid off for Eos as they saw significant sales growth. The results were hilarious, authentic, and viral. Kang found "it's possible to get outsized impact with small budgets."
Your prospects may not be as data-savvy as these marketers, but they probably would like to get better results from whatever data they have. Mic Zavarella, VP Marketing, PepsiCo, said, "We have more data than we've ever had in the past – but in a lot of ways, that makes it even more difficult because you're talking about consumers with an expectation. They expect personalization; they expect you to remove friction from the purchase. It's not just about having the data, but how you use it."
Your prospects may struggle to ignite even one of their audiences' senses. Raja Rajamannar talked about using branding to reach all five senses. He noted as an example that hundreds of millions of people are using smart speakers, which is why they developed the sonic brand that MasterCard unveiled three years ago. "This evolution helps us prepare for the future of voice commerce. The digital age is transforming the way we live, shop, and pay."
Your agency may target smaller prospects who think they can only afford to reach the general market or need help understanding the value in any other market. Yet they see the demographic and cultural changes taking place all around them. Demonstrating an understanding of multicultural markets and the impact on marketing results may be the kind of leadership they seek from an agency. Procter & Gamble Co. Chief Brand Officer Marc Pritchard and Verizon Senior VP-Marketing Tony Wells talked about blending multicultural and general market audiences. And the need to continue making progress in supporting Black and diverse-owned media. Others spoke about the industry's commitment to gender equality. Walmart U.S. CMO William White said, "Still, men are two times [as likely] to be depicted in the workplace in advertising than women, and that's problematic."
Purpose marketing was once again a topic amongst CMOs, many admitting they still need to achieve their goal. According to AdAge, CMOs took pains to outline how they change corporate practices to do more good. It is no surprise they feel defensive since many have been called out recently for purpose-washing. Is it all a moot point? Recent data suggests many brands are setting purpose aside in this down economy and focusing on results. Will consumers do the same? Acknowledging this shift and showing prospects how to manage in this counterintuitive market may get you the results you are after.
Success in ad agency business development combines skill, luck, perseverance, and being able to read the marketplace tea leaves. Each of these marketing execs provides clues about their assessment of the next couple of quarters, and the things they want to focus on that business development pros can use to shape their strategy. Considering that these sources are on the leading edge of trends, you may have to moderate some opinions to fit your audience and where they play on the spectrum. Others seem universal based on what challenges lie ahead. By understanding these challenges and developing solutions for the things that are top of mind to your prospects, you can stand apart, differentiate, and provide relevant, timely, and well-appreciated value.
2023 is shaping up to be another challenging year. Inflation will continue to take its toll. The recession could grind things to a standstill. Continuing layoffs will make agencies and marketers work harder and longer, cutting corners and finding efficiencies wherever possible. What work there is will undoubtedly see slower payments. Clients will become even more reactive, canceling projects, reallocating budgets, and causing more significant delays in decision-making and approvals. Despite the challenges, the agency pulls its clients through this mess. U.S. revenue for agencies from all disciplines jumped 13.5% in 2021, the fastest growth in Ad Age's annual Agency Report since 2000. 2023 could end up even better.
Schedule a call if you'd like help planning your 2023 new business strategy. Please forward it if you know someone who might benefit from this post. And always, I enjoy a spirited conversation if you want to kick around ideas. Remember to sign up for my new business newsletter if you received this from someone else. Find me on LinkedIn for daily tips and insights. I might even return to Twitter… we'll see. #LetsGrow!