A recent survey by Advertiser Perceptions reveals 1 in 5 marketers has trimmed their marketing budget, and budgets dropped by 16 percent on average. These cuts are most apparent in upper-level funnel channels where brand awareness is the key objective.
In short, the impact on digital marketing during inflation is that some marketers are pulling back on spending or doing more with less, and focusing more efforts on lower-cost, existing customers.
But that doesn’t mean spending less on marketing and advertising is necessarily the best strategy.
Turns out, there can also be a positive impact for marketers even during volatile periods.
Why Inflation-Driven Panic Can Spell Opportunity for Digital Marketers
In a recent webinar, consultant Gordon Borrell highlighted the increase in small businesses that viewed the current economic situation as poor:
Typically, negative sentiments associated with times of “crisis” cause some marketers to decrease their spending — even though consumer spend may be increasing:
So, we see that the response doesn’t match the reality, and this is where the inflation we’re experiencing in digital marketing can be an opportunity to scale up.
- During the current period of inflation, digital marketers tend to get shy on marketing spend for fear consumers are buying less. Yet we can see by the data that’s not the case, and so this opens more space in an advertising and marketing landscape that now has less competition.
- Consumers are spending more time on media to get news on what’s happening with the economy, and marketers should be there in those moments with advertising — and they’ll have to spend more to maintain that presence.
- Less competition, more audience share = greater opportunity
Mr. Burrell also highlighted the types of marketing we see during this period are unique. At the onset of inflation, digital marketers focus on promotions to help them recover what was lost during previous periods (in this case, the pandemic):
Marketers can use this opportunity to run limited-time, measurable promotions that increase new customer acquisitions quickly, allowing them to grow their customer database and first-party data, and then enable email marketing to nurture and build loyalty.
Promotions like coupons, rebates, contests, giveaways, and games are just some examples of how digital marketers can take advantage of the inflation period — by spending more, not less — and experience a positive impact.
The inflation being felt worldwide certainly breeds uncertainty, and the impact on digital marketing during inflation is clear in the way some marketers are spending less. Yet the flip side is the inflation period can be one of great opportunity for marketers who have the financial capacity to invest more. Not only is the space less crowded by competitors; it’s also a great time to capture first-party data that’s becoming more critical in a privacy-first marketing era.
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