Marketers are witnessing their financial decision-making powers diminish even though brand investment remains a focus for many global companies, according to a survey of 600 global C-suite leaders, with almost two thirds (68%) highlighting business resilience as a top priority and profit growth less so than last year.
According to a study carried out by the IPA and the Financial Times, which examined how the pandemic has affected the perception of brands and how they will spend on brand building in the near future, many marketing teams are experiencing budget cuts as companies look to save money in the short term.
The most likely business sectors to maintain their marketing spend during a period of high demand, when businesses are building their online and ecommerce capabilities, are IT and technology companies (41%) with manufacturing, engineering and industrial next on the list (34%).
However, perhaps to be expected, there has been a shift in decision-making powers for marketers as a result of the pandemic with data from the survey indicating that marketers are being left out of corporate financial decision-making for their companies, with short-term decisions becoming the norm in order to achieve the common priority of resilience.
As a consequence, over a third (36%) of companies revealed that marketing decisions are being taken on a more short-term basis, although more than three-quarters (79%) either strongly agreed or agreed that long-term marketing investment was still important to sustainable growth. Only 3% disagreed with that line of thought.
Generating future levels of cash flow has also unsurprisingly grown in priority according to 59% of respondents and reducing organizational risk is another growth priority this year.
“It is encouraging to see that an overwhelming majority of decision makers see marketing investment as key to long-term sustainable growth, even in a hugely challenging business environment, an uncertain macroeconomic outlook and rapidly changing customer habits,” commented David Buttle, global commercial marketing director for the FT.
The recent growth of online discovery was also reflected with 51% of respondents stating that the pandemic had led to an increase in new customers through digital channels, which has led to an rise in importance of brand strength to drive online discovery and potential purchase loyalty. Exactly half said that emotional messaging was the most effective route to engage new customers and changing perception and feeling towards a brand.
Janet Hull, Founder of EffWorks and Global and Director of Marketing Strategy for the IPA, outlined the positives from the data, despite the “tough environment” that companies are currently working within around the world.
“To recover, we need upbeat sentiment which we see in terms of company attitudes, together with investment to underpin this, which we see in terms of the maintaining of marketing expenditure in some significant sectors. What is also interesting from these findings is the growing importance of online activity, alongside companies placing value on emotional messaging to acquire new customers,” she commented.
Next week the IPA will release its Bellwether report for the third quarter of 2020 which will update the market on advertising spend across the industry. The previous report found that total marketing budgets had retracted at the fastest pace in at least 20 years with events being the hardest hit sector, but it did predict a recovery for 2021.
Commenting at the time, Paul Bainsfair, director general of the IPA, highlighted the move to slash marketing budgets to save money by the sectors most affected by the pandemic but he claimed that such a practice would not serve well in the long-run.
“While the future trajectory of the economy is unpredictable, however, that of brands starved of marketing investment is much clearer. Our evidence from previous recessions and periods of buoyancy consistently shows that cutting marketing investment weakens brands in the near-term and limits growth and profitability in the long-term,” outlined Bainsfair.
“There are positive forecasts for a return to adspend growth in 2021 but a significant part of this coming to fruition hinges on the decisions companies make now. Ultimately, companies must invest in marketing in a recession in order to profit in a recovery.”