It’s been a difficult month for WPP and the advertising holding companies. And as goes the advertising industry, so goes the economy, so you could say it’s been a bad month for all of us.
Indeed, the macro and micro trends that drove down holding company share prices are formidable. Slow growth, a mature economy with low inflation and little pricing power are driving up competition. Rapid change in the media environment as audiences shift to new channels and less measured formats, digital disruption explodes and the much-debated issues of viewability, fraud and brand safety continue to vex advertisers, publishers and platforms. Clients that are zero-based budgeting and cost-cutting their way to short-term success are bleeding out their brands. Additionally, agency-specific challenges related to increased scrutiny on costs, contracts and the rise of consultancies are a major hurdle, and changing consumer shopping and consumption patterns and disruptive challengers are confounding legacy clients that aren’t positioned to defend or evolve at a sufficient pace.
And while all of these challenges are daunting, it’s possible that the state of the industry can be summed up more succinctly and with a finer point: Most brands have forgotten how to grow.
Irwin Gotlieb, chairman of GroupM, who was recently inducted into the Advertising Hall of Fame, said, “When the history books get written on the last 15 years, I think they will say that the lack of brand building, the lack of effort on long-term marketing, destroyed and damaged more brand value than anyone can add up.”
Put another way, if companies are benefiting from goodwill in their market capitalization, they benefit not only from short-term revenue growth but also from long-term brand value creation. Businesses need to be mindful of all the ways marketing drives their business and be wary of overcorrecting.
Marketing performance measurement like market mix modeling and multitouch attribution, if well applied, can help marketers understand the impact of their media expenditures at the campaign, channel, tactic and audience level. Analytics make good marketers better and strong brands stronger.
In flat or down economies, with consumers shifting channels and migrating in their media consumption patterns faster than it takes a Snapchat selfie to disappear, it’s more important than ever to measure your marketing expenditures effectively in ways that enable forecasting, “what if?”-scenario planning and rapid optimization. Learning requires feedback. Marketing analytics provide that feedback loop.
Key to truly understanding the impact of your marketing expenditure and knowing whether and where you can safely cut back media investments is an approach that is holistic and complete. Most methodologies today are limited in scope. They do not have sufficient coverage of key channels and delivery to capture a complete picture of spend.
Blind spots reduce the explanatory value of measurement, over or underattributing the impact of sales to channels or to marketing as a whole. When brands are growing, it’s easy to overlook these shortcomings. But in times like these, with no easy path to growth, it’s more important than ever to measure, and measure well.
The other opportunity that is easy to overlook at times like these, when everyone is seemingly zigging in unison, is the value of zagging. When your competitors are cutting their media expenditures and zero-based budgeting their way to profitability, it’s time to double down, not take your ball and go home. Smart brands and companies will look at the ad industry outlook and see a spending opportunity.
Investment plus measurement plus a growth mindset are the way to win in any economy, but especially this one.
Julie Fleischer (@jfly) is vp of product marketing at Neustar.