Earlier this month, the Wall Street Journal published “Three Things Marketers Should Know About Ad Spending Trends.” The reporter suggests three top ad spending trends marketers should pay attention to, given the current economic climate and a potential recession.
Those three top trends are:
- Brand spending will likely be the first to be cut, while ROI/performance programs will survive another day on the island.
- Small and medium-sized companies are continuing to invest in advertising, while larger companies are already undergoing budget reductions.
- We are slowly returning to pre-Covid ad spending, which means a decrease after “hyper-growth” in digital advertising during the pandemic.
If these trends are correct — and MediaPost did recently report that ad spending receded 3% in June — performance marketing is critical. Overall spending is projected to decrease in the coming year.
So how should marketers plan for next year’s budgets? More importantly, how should shareholders think about results?
From my perspective, there are a few considerations for marketers as we approach the 2023 planning season.
Maximize the bottom of the funnel
Performance marketing is great. I, too, believe that maximizing the bottom of the funnel is a strategy every brand should consider when running lean budgets. But prospects also need to know your brand and the problems you are solving.
Furthermore, if a prospect comes to your site from a branded search term, they are usually 75% more likely to be a sales-accepted opportunity. If that’s the case, there’s an inherent need to keep some brand marketing live. So knowing the amount is the crucial question you have to answer, which leads to the second consideration.
“Companies that thrived in recessions explored potential combinations of economic conditions and likely customer behavior to predict business outcomes, allowing them to prepare instead of simply responding.”
Consider future scenarios
Planning for potential future financial scenarios has been discussed more recently in the context of challenging economic conditions. The authors of a 2019 HBR article reviewed past recessions and company performance. They learned that companies that thrived in past recessions had one thing in common: scenario planning. The companies explored potential combinations of economic conditions and likely customer behavior to predict how business outcomes would be affected. Those predictions allowed them to prepare proactively instead of simply responding.
Looking into your customers’ future is essential for keeping your preparation current and understanding how outcomes may be changing. Of course, predictions don’t have to happen in real time. However, there is great power in regularly examining, and planning with, predictions for your critical business goals. Predictions can be generated from your first-party customer data, transactional data, and third-party economic data. Those predictions give your team an accurate, deeper sense of what’s happening in the market.
Levi Strauss & Co. recently adopted a similar approach in light of the pandemic. It has given them more visibility into quarterly performance and any blockers in reaching guidance.
Using predictive modeling to aid ad spend decisions
Leveraging the right analytic platforms (like Pecan AI), marketing, operations, analytics, and revenue lifecycle teams can create a variety of predictive models. Those models’ predictions help them anticipate potential business impact of customer behavior trends and economic conditions. With Pecan’s platform, analysts can develop predictive models for conversion rates, upsell, cross-sell, customer lifetime value, customer churn, and a host of other important business goals. In addition, you can enrich your internal data with third-party data to gain an even better sense of what’s going on in the market.
This predictive approach allows you to understand the full scope of your business. In our experience at Pecan, these reliable predictions become a source of shared understanding and direction among marketing, sales, customer success, demand generation, and other teams. As a result, these teams can work more effectively together to overcome broader organizational challenges and ensure a successful quarter.
“Historical analytics just doesn’t provide the future-looking information nor the detail you need to plan for customers’ likely behavior.”
Focus on the customer
Focusing on the customer isn’t anything new. But as we progress into and through a recession, it’s imperative to keep the 80/20 rule top of mind. A large part of any business’s revenue comes from a small percentage of customers.
As a result, all teams need to understand the trends impacting customers. Therefore, they must be equipped with the right predictive analytics resources with user-level details on which customers are about to churn, which customers are your VIPs or high value, and which customers are open to cross-sell/up-sell offers — plus insights into why customers will behave in these ways. Historical analytics just doesn’t provide the future-looking information nor the detail you need to plan for customers’ likely behavior.
Pecan AI offers a great platform to enable your team to adopt this predictive perspective on customers. Pecan’s predictive models, tailored for specific business use cases, not only give you insight into why customers churn or which customers are likely to buy again or buy more. In addition, they can also support broader CX initiatives that can increase your CX score, supporting loyalty and retention programs.
Explore how predictive analytics could help you allocate marketing resources most effectively. Let Pecan assist in bringing a future-driven perspective to these decisions, augmenting your team’s capabilities with accessible, automated AI.
Get in touch for a quick, easy use-case consultation. We’ll help you find the best way to get future-ready.