The Cannes Lions International Festival of Creativity brings together professionals working in the creative space. Picture: GETTY IMAGES/FRANCOIS G DURAND
The world’s marketing and advertising industry makes a European midsummer pilgrimage to the south of France every year to be awarded, to network and to look at trends shaping the sector for the next year.
The Cannes Lions International Festival of Creativity takes place during a heady sun-drenched week fuelled by celebrity appearances — film director Spike Lee and actors Halle Berry, Kevin Hart and Eva Longoria — extra dry rosé wine, late nights and much backslapping.
Ogilvy returned as the most awarded South African agency, with a clutch of trophies that includes a Gold Lion.
However, as trade publication The Drum puts it, the party is over but the hangover is just getting started. Tech giants have pulled back on their advertising and most other categories of business are adopting a cautious approach to campaigns and ad spend.
The Drum’s sentiment was echoed by two local marketers who attended the event and spoke to the FM.
One said: “Keep my name out of it for the time being, but my agency partners will be in for a shock in coming months. There is just too much uncertainty to take big creative risks and spend money. My approach will be just to keep things ticking over.”
The other said: “With an election next year, a drop in consumer confidence as well as rand depreciation and a revision upwards in the inflation numbers, I’m battening down the hatches.”
That thinking is reflected in the latest FNB/Bureau for Economic Research survey, which says: “The further deterioration in the confidence levels of high-income consumers does not bode well for the retail sector, as affluent consumers have the greatest spending power among the different income groups.”
The Drum quotes a prominent European agency network as saying: “Everything is project based now. The agency of record role is not what it was. Since [the first quarter of the year] everything is taking so much longer to get signed off, and clients, especially in the tech sector, don’t want to commit in the way they were once prepared to. It’s tough — but I think it’s tough for everyone.”
The publication also cited complaints from creative agencies about delayed decisions as far as account pitches and the number of clients seeking to rerun old work rather than commission something new.
CEOs of three agencies involved in recent South African pitches all told the FM that time taken to award accounts was up by at least four to six weeks. And, says one, it means expensive strategic and creative resources are either remaining idle or working at half speed, at costs that agencies can ill afford.
According to a new global study by the Chief Marketing Officer (CMO) Council, with looming economic headwinds the next 12 months will test marketing’s mettle.
The survey, entitled “Outsmart Adversity”, says: “Unfortunately, there’s not a lot of confidence among marketing leaders that they can weather the storm, let alone emerge in a position for growth. Our study [of 500 global marketing leaders] found that two in three are only moderately confident, or worse, in their ability to handle economic adversity and uncertainty against their revenue growth mandate.”
The report says marketers will need to build alliances with finance and IT to protect budgets and marketing technology (martech) investments. Many marketers are doubling down on orchestrating customer journeys and developing hybrid customer experiences (blending physical and digital capability and leveraging artificial intelligence, or AI, and the use of data), it says.
On the upside, the CMO survey says there is some evidence that companies are starting to see a better connection between marketing activities and revenue growth. In a separate earlier study, McKinsey said 78% of global CEOs are now banking on marketing to drive growth.
The CMO study says 36% of global marketers are increasing their martech budgets, 25% are decreasing them and 39% are keeping them the same. It adds that increases in marketing budget and martech investment will likely be focused on engaging the cash-strapped consumer.
“This means orchestrating customer journeys to drive an omnichannel experience, leveraging AI and data to be more predictive, and improving loyalty and retention efforts.”
Tension between the marketing and finance functions in most organisations is a given, but the survey has found that dynamic is beginning to change.
The study says that to be effective and profitable, marketing and finance disciplines need to be on the same page. “For many CMOs, thankfully, this is the case. Nearly 60% of marketing leaders say, to varying degrees, they’re able to convince the CFO to invest in marketing and not cut the budget.
“Spurred by the pandemic, the acceleration of digital channels and e-commerce have given marketers the ability to better track and measure marketing’s impact on winning and retaining customers. And CMOs and CFOs are doing a better job aligning on important metrics such as customer acquisition cost and customer lifetime value.”
This piece originally appeared in the Financial Mail.
