3 Things marketers must know for 2023
Brands that boosted their ad investment increased incremental sales by 17%. And your customer doesn’t care about the distinction between ‘performance’ and ‘brand’ content.
December is always the time; the predictions for next year are here. Cutting the clutter, my top three list of what marketers and all content people need to know for 2023 and how to prepare for 2024.
I do realize I don't mention AI in this overview. This is a topic on its' own and is so mindblowing; I still don't know whether to be stoked or scared sh*t…
Key take aways
- More marketing budgets despite the recession
- A shift toward brand-building content
- Rising of communities that need that brand-building content
Last but not least, realize how your 2023 marketing budget is defined to prepare for 2024. Now is the time to create a solid plan to steal some budget from idiot marketers who do not have a good plan or snatch some funding from the pre-set unassigned budgets.
Why this matters
Contradictionairy to the (for some) logical thinking to invest heavier in performance marketing in a recession and to cut down the marketing budgets – both will not happen in 2023.
Be aware of the sales-driven KPIs that tend to get more important in difficult times. Simultaneously the balance between brand-building content and performance marketing shifts to the latter. This is a financially driven strategy, not the best for the brand and the long-term longevity.
Next to this shift in the balance, the C-suite tends to cut back on marketing budgets in total. Not the best decision either. Research shows that brands that boosted their ad investment increased incremental sales by 17%; those that cut back saw an 18% contraction.
Below is the rationale and explanation with the details, copy-paste-editing from the sources, and justification of the data used.
1. Increase in marketing budgets
Marketers use many strategies to manage the economic situation. As we’ve seen during prior economic slowdowns, about 36% planned on reducing marketing spend.
For 2023 more respondents in the WARC research predict an increase in budget in both brand and performance areas.
And about 89% of CMOs and senior marketing executives are planning to increase their marketing budgets in 2023 (Matter Communications Survey). Marketing budgets will increase next year, prioritizing social media and martech. With brand building at fifth place in areas of investment
- As inflation challenged spending habits this year, it has become increasingly important for brands to make their value known to consumers.
- Over a quarter (26.8%) of US CMOs said that inflationary pressures have caused them to make stronger brand-building investments, per a survey conducted by Deloitte and the American Marketing Association (AMA).
In the Glossy research via Digiday, more than half (58%) of respondents expect a medium increase in their online marketing spend over the next 12 months and 26% expect a large increase.
Explanation
- One potential explanation is that more marketers are finally taking the advice to double down on brand spending during a downturn.
- Another is that there is clear recognition amongst respondents that the lines between brand and performance are getting murky, with 62% saying they see a convergence between the two on digital commerce platforms.
The proof is in the data
Does investment during downturns really work? Analytic Partners data from the last recession shows what happens when advertising Is considered an investment.
Brands that boosted their ad investment increased incremental sales by 17%; those that cut back saw an 18% contraction.
In these inflationary times, where you are fighting for every other ... dollar that a consumer spends, consumers will always prefer brands that have strong equity. There might be a small dip or small growth, but the preference will always be to go for the known brand and brands that have been consistent in the past. (Source of the quote: WARC)
2. A shift toward brand-building content
In times of recession, pandemic, financial crises, and other not-so-good times and slow markets, usually there’s more focus on activation and performance marketing. Sales-driven and short-term to get the sales. Pretty logical, as when the market is tough, you need to shout harder to sell your stuff.
However, realize that the old-school marketing rules still apply, and the current societal changes demand brands to take a stand, show their values, and communicate how they contribute to a better world. Not only to sell products but also to get employees.
The result – more than ever, in 2023, you need to show and tell why and how you do what you do. As a brand, you must tap into what matters to society, stand out, and speak up. If you don’t, it looks like you don’t care, you don’t know or even care what is happening around you, you’re not relevant, and you’ll miss out. Meaning: focus on brand-building content.
Yet, more respondents than last year predict an increase in budget in both brand and performance areas.
- On the brand side, 31% say they are increasing spend (23% last year).
- On the performance side, the split is 46%/41%. (see the graph below)
The ideal balance is 60-40 between brand-building and activation. Please check the excellent work by Les Binet and Peter Field. Based on 40 years of research, they discovered this optimal balance. Give or take some single-digit percentages left or right depending on the industry, market maturity, and brand maturity.
All above is confirmed and acknowledged by the WARC research ‘The Marketer’s Toolkit 2023’; check it out for more interesting stats, details, and cases. Or listen to the (free) WARC podcast.
Brand-building content and performance marketing need each other
It's not the one or the other; it's the combination. In a healthy balance. With pride. I’ve stolen some elements of the great work by John Long. A copy-paste-edit of his work is below. Credits were credits are due, follow him for more inspiration.
'Everyone should stop approaching ‘brand awareness’ and ‘performance’ as though they’re totally unrelated activities. Treating brand and performance as disconnected and distinct invariably leads to brand inconsistency.'
'A reminder: Everything a brand says and does contributes to the brand
Here’s the thing: your customer doesn’t care about the distinction between ‘performance’ and ‘brand’. That’s marketers talking to themselves. Your performance marketing should build your brand. '
Top 3 lessons on brand-building
- ‘Ensure your online brand looks exactly like your offline brand–even at a glance’
- ‘Always maintain your brand voice everywhere, even in demand-gen ads’
- 'Performance ads can be billboards for the brand–they don’t have to be product or offer-focused'
All of the above is very easily said and sounds like a no-brainer.
‘In reality, more often than not, there’s a distinction between brand-building content offline and online. Suddenly, the performance ads are not in line with the brand ads due to screaming sales and conversion focus. And last but not least, does your ad still resembles the physical product?’
Check more learnings
Everything a brand says or does, contributes to the brand. And... here's the thing: your customer doesn't care about the distinction between 'performance' and 'brand'. That's marketers talking to themselves. Stop approaching 'brand awareness' and 'performance' as though they're totally unrelated activities.
3. Communities are on the rise, and they thrive on brand-building organic content
Good to know, for 2023, the communities are even further on the rise. ‘People want to belong and connect, creating an opportunity for brands to deepen their relationships with their customers; smart brands have a strong presence where their customers are. 2022 saw some hype with new apps like BeReal or Gas, indicating that people hunger for something new.’
‘Communities and niche platforms can deliver this experience. 47% of consumers say they would become loyal to a brand if they were part of a community with like-minded people.’
Tips for marketers
- Niche content for a dedicated audience. Put in some research before you build your audience to find out what your audience wants.
- Nurture relationships. The core of a community is the relationships that members build with each other. While your main goal is to get people to love your brand, you should focus on something other than brand promotion but on delivering a close ‘gathering’ experience where people can share and gain information about the topic they love.
- Encourage user-generated content (UGC). Once successfully set up, your community will have a pool of highly-dedicated consumers. Motivate them to post their experiences and knowledge in the community. Hearing product recommendations from other customers is seen as much more trustworthy than promotions from brands.
Source credits and read more in the Brandwatch Marketing Trends 2023 report.
Requirements
These communities like real and authentic organic content (that is engaging and builds the brand). Lessons learned, organic social only works if you play it by the rules.
- Have value-centric content; focus on the community and add value to them, and the user needs to get something out of it. In my own words: entertain, inspire or educate in your content. Your content is not about you, it is about your customer. If it isn't, they will not engage. If they don't engage, the algorithm pushes your content down the timeline.
- Being recognizable, outspoken, and distinctive in your visuals and copy.
- Focus on social listening and engaging with your audiences. You can't publish and don't listen or engage. Communities are two-way communication with a next-level webcare.
- You can use the engagement with your community for learnings to apply in other brands’ communications and retention.
More about organic content and the sources.
Get your marketing budget for 2024
Now it’s too late to make changes to the 2023 marketing budget. However, by being aware of how your marketing number is constructed, you may influence this for 2024. This one is also stolen with pride from Mark Ritson in the On Strategy podcast. Below is my copy-paste-edit of what I think matters for you.
The budget basis should be your objectives
In summary: for the next year, you are in the lead. You create your own plan with a good return on investment. The base of your plan is to have clear objectives; what are you going to do? Work out what the approximate value of those objectives would be to the firm. And the costs to achieve those objectives. That's the budget you need.
Easier said than done. And getting more budget is tough. ‘Probably the CFO will not increase your marketing number, yet you can steal some budget from the idiot marketers (your coworkers) who do not have a good plan or snatch some funding from the pre-set unassigned budgets.’
Reality: budget based on numbers and ratio
(the edited script of the podcast)
‘Let’s take a look at the ridiculousness of budget setting in almost every company.'
‘How the process is: someone in HQ looks at the last four to five years, calculates and extrapolates it. And books the number. Then they work out the marketing-to-sales ratio. (…) and there you have the marketing budget for next year.’
‘What’s wrong with that?’
‘First of all, the calculation is done by finance people who have no idea what’s going on in the market.’
‘Second, they already booked the number. Before marketers even thought about next year, finance booked the number for next year. It’s almost as if marketing doesn’t matter.’
‘That’s where the ‘marketing is a cost’ comes from. Marketing in a recession gets cut first. Because it’s seen as a cost.’
‘Next, the marketing-to-sales ratio is bullshit; it has no real logic behind it. And it’s cut down whenever the finance team needs to cut it. It comes from a non-strategic place.’
‘… The enemy is the traditional manner of budget setting.’
‘How should it be done? We should put the cart before the horse.'
‘We should have a strategy and a plan, we should have clear objectives, and we should therefore work out what the approximate value of those objectives would be to the firm.’
‘And also how much it would cost for us to achieve those objectives, should we get approval. Objectives and tasks budgeting. Work out the objectives, and price the tasks to deliver the objectives. Then bottom-up the numbers.’
‘How to flip that thinking?' Mark Ritson has never been able to change the top-down budget setting. 'That’s out of our reach.’
‘What is in our reach, there is a pot of money.’
‘Internally, if we can show we have a better plan, a more likely plan, a plan at all – because a lot of internal rivals don’t have a plan. And that that plan will get a good return, we will get more of that pre-set money. In effect, the best way to do budgeting, in Mark's experience, is to have an internal competition. Where we will take money from the idiot marketers who don’t have a proper plan or don’t offer a good return, and that, for Mark, is capitalism at work. (...) The worst that can happen is that there are only good plans.’
Key take aways
All of the above, in summary.
- More marketing budgets despite the recession
- A shift toward brand-building content
- Rising of communities that need that brand-building content
Last but not least, realize how your 2023 marketing budget is defined to prepare for 2024. Now is the time to create a solid plan to steal some budget from idiot marketers who do not have a good plan or snatch some funding from the pre-set unassigned budgets.
Sources
Note that I combined several sources to write this article. Before jumping to any conclusions, please do your homework and check the sources for in-depth details and make them applicable to your brand and market situation.
🎙️ https://podcasts.apple.com/nl/podcast/the-warc-podcast/id1563243327?i=1000586550887
🎙️ https://podcasts.apple.com/nl/podcast/on-strategy-showcase/id1494056579?i=1000583897023
https://www.pwc.co.uk/issues/transformation/customer/cmo-study.html
https://www.insiderintelligence.com/content/marketing-budgets-social-media-martech
https://brandwatch.com/wp-content/uploads/2022/12/Brandwatch_Digital_Marketing_Trends_2023.pdf
https://www.thinklikeapublisher.com/organic-social-these-are-the-requirements-for-success/
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