Dive Brief:
- One in five marketers surveyed by Advertiser Perceptions has trimmed their budgets in the face of rising inflation. Budgets dropped, on average, by 16%, according to findings the firm shared in an email with Marketing Dive.
- Cuts have been most apparent in upper-funnel channels, with 47% pausing connected TV (CTV), 44% digital video and 42% linear TV. Lower-funnel areas of spending including paid search, print, radio and addressable TV were the least affected.
- Four in five respondents plan to revive their budgets by the end of the fourth quarter, but tactics are set to change. Advertiser Perceptions forecast that half will alter their messaging strategy, while first-party data will take greater precedence as marketers focus on retaining old and existing customers versus snapping up new ones.
Dive Insight:
Advertiser Perceptions’ latest findings tee up a quieter period for marketing as brands try to make their dollars go further, though savvy leaders may have a window to usher in some creative innovation. The firm surveyed 300 advertisers at the end of April to glean its insights.
The short-term picture is not pretty, with three-fourths of respondents feeling a negative impact on their business. Inflation hasn’t shaken all areas of the industry equally. While 90% of packaged goods and retail marketers have been hurt by rising consumer prices, only 42% have reconsidered their messaging strategy. That serves as a contrast to the 70% of apparel and fashion marketers and 56% of financial marketers that have done so.
Macroeconomic conditions have worsened since the spring, when the research was fielded, suggesting trends identified in the report could actually be more acute today. Inflation surged 9.1% year-on-year in June, according to the latest data from the Bureau of Labor Statistics, surpassing economist forecasts to hit its highest level in more than 40 years.
The upshot is that many marketers are peeling back costly upper-funnel activities that play an important role in brand-building. CTV and digital video — previous benefactors of the pandemic-driven shift toward streaming and social media — have felt the dampening effect. Thirty percent of respondents said they would turn the CTV taps back on once inflationary signals wane, though June’s snapshot indicates that moment might not be soon.
Meanwhile, lower-funnel marketing has benefited from the volatile environment. Marketers have flocked to performance-oriented tactics like retail media to try and tie their efforts closer to last-click results. Advertiser Perceptions expects the retail media boom will continue, supported by the current inventory overload that is pushing more merchants to hold closeout sales.
The flight away from the upper funnel also opens opportunities. Digital video now has less competition and lower advertiser density, meaning marketers could wring more out of their campaigns on the channel, per Advertiser Perceptions.
Even if marketing activity rebounds in 2022 — and it sounds like Q4 and the holidays could see a spike — messaging is primed to evolve. The looming death of the third-party cookie is placing a premium on media enriched by first-party data. Given this, it might be easier for brands to target consumers with whom they have an existing relationship versus jumping through hoops to acquire information on new consumers in a more stringent privacy landscape. That scenario could, in turn, lead to more substantive brand-building following a comparatively dry period for standout creative.
“Media with first-party data can make the strongest case for upper-funnel or brand advertising, especially where it’s becoming less expensive than performance channels,” said Nicole Perrin, vice president of business intelligence at Advertiser Perceptions, in a statement. “That’s a massive opportunity where the crux is context and audience rather than clicks.”
