Opinion - Generation Media

Marketing in a recession

Weighing up whether the outlook for 2023 should be one of pessimism or optimism, Jonathan argues that the current climate can provide great opportunity, especially in marketing and gaining advantage over the competition.

How would you describe the past few years? Turbulent? Unstable? Maybe even transformative? Regardless of your stance, it is beyond doubt that since the global outbreak of Covid in early 2020, the industry has been subjected to unprecedented change. The Global Supply Chain Pressure Index peaked at a record high (Source: New York Federal Reserve). Exchange rate fluctuation has placed further pressure on the import/export of goods many toy businesses rely on, whilst inflation has also returned with a vengeance. Rewind the clocks back 12 months and perhaps the overriding view for the market would have been one of optimism. The subsequent war in Ukraine, continuing production issues in China and the domestic cost of living crisis mean that the outlook for 2023 is arguably one of pessimism, as we enter a longer period of recession. However, having launched Generation Media during the last global recession, we know that such periods can provide great opportunity, especially when it comes to marketing and gaining advantage over your competition. Of course, each brand’s journey through this period will be unique, but heeding the guiding principles that follow could make tangible differences to business success in 2023

Maximise SOV with efficient media

This sounds like common sense, but it is worth focusing on in the modern multimedia landscape where new opportunities appear on an almost daily basis.

Share of Voice (SOV) is a metric commonly consistent with brand success, and increasing SOV is relatively lower cost during a recession due to reduced competition. According to a variety of sources (Nielsen, Unilever, Millward Brown, Binet & Field), brands that maintain, or even increase, their SOV during recession typically emerge stronger. Investing to a level where your SOV exceeds your Share of Market (SOM) may feel counter-intuitive, but historically, it has been one of the tactics used by brands that have grown during times of recession.

So, where will the key battlegrounds be in 2023? Somewhat surprisingly, given audience trends, TV is predicted to play a significant role in the wider (non-kids) media landscape. Recession can often lead to deflation in pricing on Linear TV, but even if costs remain static year-on-year, the “real” cost of TV comparative to national inflation will be beneficial to brands looking to gain measurable SOV (ONS, Advertising Association, WARC). However, this isn’t likely to be the case when it comes to children’s linear TV, as audience declines are much more severe.

Digital platforms will therefore dominate children’s media investment in 2023. That said, unlike TV where there is a unilateral measurement system in place, measuring SOV on these platforms is much harder to determine. Therefore, how do you exploit SOV opportunities on platforms such as YouTube (which we know offers one of, if not the, lowest cost routes to placing ads in front of children)? This can be achieved through multiple methods such as hyper focused channel selection, or YouTube Kids takeovers. First and foremost, make sure you are assessing the concentration of your media spend on Digital platforms. Toy brands are accustomed to concentrating large budgets in relatively short periods on TV. But when it comes to Digital, the temptation is often to spread the budget over multiple weeks, due to its perceived low cost. Dependent on budget level, this can seriously dilute the power of an advertising campaign, which may have been better served being focused in a shorter burst to maximise brand attention.

Whilst accurate SOV measurement remains a challenge on Digital, we can still use tools such as Google Trends to identify the results of such endeavours. Take Smyths for example – after releasing its Christmas ad on YouTube in early November (supported by a heavyweight TV campaign as well as other social media activations), it amassed 18m views in its first month. This resulted in the annual peak in the search term “Smyths toys”:

Most interesting, perhaps, is the fact that this peak occurred in the two weeks immediately following the release of the ad and the concentrated online support, surpassing even the seasonal uplift created by Black Friday.

So, our advice would be to use 2023 to consolidate media spends in low cost, advantageous routes wherever possible. Of course, that isn’t to say that new and emerging media opportunities should be ignored. For example, the evolution of interactive Digital opportunities as we head towards the Metaverse (whatever form it will eventually take) will be hard to resist. Equally the introduction and advancement of ad placements on Disney+ and Netflix will offer value to toy brands. Nevertheless, these should not be prioritised at the expense of investment in low-cost media with effective track records. Enter into these opportunities armed with as much knowledge as possible, which is paramount to the next principle.

• E xploit low-cost media to maximise SOV for longer term gains.

• E xplore exciting new opportunities, but not at the expense of tried and trusted platforms.

Reduce risk through research

“The best way to maximise return on investment (ROI) is to spend £0” (Les Binet, IPA’s Marketing in the post-covid economy). Generating large percentage returns on small budgets is relatively easily achievable in the age of eCommerce, although this will not generate the scale of return needed to maximise profitability. The real skill is in determining the optimal budget which provides the maximum net profit, without crossing over the threshold of diminishing returns. This could be an expensive process if you were to test budget levels and learn through trial and error. Econometric modelling is a more effective way of projecting the impact of budget adjustments, although it too can be a costly exercise and is more suited to long term brand campaigns (think FMCG or Finance), rather than seasonal campaigns for products with a shorter life cycle.

Thankfully, in the toy market, there are many things we can do pre campaign to ensure every £ spent on media is at its most effective, and this starts with great insight. Traditional marketing research focuses on adult consumers, meaning that children’s research for toy marketers can be limited, and where available, relatively generic. Through our affiliation with Giraffe Insights, we have unique resources which allow us to understand the media and consumer behaviours of children (and their parents), in a COPPA and GDPR-K compliant manner. This level of insight can for example pinpoint what percentage of boys or girls of a certain age range have access to Disney+. Knowing this will help determine whether or not Disney+ will be an effective platform for your brand without having to risk test budgets to find out.

Bespoke research studies can be a powerful tool in helping shape the entire communications strategy, be that testing packaging concepts, key consumer messaging, influencer affiliation or even pricing. In challenging financial times, research budgets are often reduced as part of cost saving exercises, but in the everevolving media landscape can you really afford not to continue investing? As an agency, we will be increasing our investment in insight tools and reporting to help navigate the road ahead.

• Invest in bespoke research to ensure optimal brand messaging.

• Use audience insights to reduce the risk in platform selection.

Harness creativity

Did you know that optimising your creative can increase the effectiveness of your media spend by as much as 10-12x (Data2Decisions)? Therefore, where budgets allow, invest in engaging content and ads that ensure your brand captures the attention of your target audience, whenever and wherever it is placed. Referring back to the principle of reducing risk through research, make sure you are testing your creatives either through consumer research, or lower cost A/B testing on social media.

In the multimedia landscape, effective creativity can take many forms beyond simply creating the most emotionally engaging ad. Successful marketing campaigns require multiple touchpoints. As marketers, we need to remember that audiences use each of these touchpoints for different purposes, so where possible the creatives need to reflect this. Due to budget constraints, it is perfectly acceptable practice to simply cut down a video asset to the varying specifications of social media and other online platforms. However, the most engaging campaigns will tailor the messaging to the platform; for example, demonstrating more competitive elements in gaming environments, or more collaborative elements on social media.

Don’t be restricted by any associations you may have with what constitutes a traditional ad. Branded content is an important piece of the toy ecosystem, and placement opportunities are now more varied than ever. Whether on Broadcast TV, Connected TV or Digital platforms, the best selections will encourage target audiences to spend extended periods of time engaging with brands. And finally, don’t underestimate the power of your brand. Whether through content, or emphasis within the ads themselves, promoting the brand has the power to reduce the price sensitivity of your product, and in 2023 this will be more critical than ever.

• Tailor your message to the platform wherever possible.

• Harness the power of your brand through content to strengthen loyalty and advocacy.

Optimise prices

Effective marketing can be extremely influential to brand or product success, although when reviewing econometric studies across most product categories, the greatest determining factor is price. Therefore, understanding the price elasticity of your products will be key to enhancing profits in 2023.

In support of the previous principle, the best way to gain the understanding of this (outside of real-world experimentation) is through econometric modelling.

Granted, this is most effective for brands with longer lifecycles and will not always be appropriate for the shorter-term product lifecycles sometimes seen within the toy industry. Nevertheless, there are some learnings we can take from historical studies (presented by the IPA’s Marketing in the Post-covid Economy). When it comes to price, econometrics commonly reveals that sales promotions actually reduce profits, and most of the sales volume delivered within a promotional period is not incremental (in many cases the promotional purchase brings forward a purchase that would have happened at a higher price at a later date or relocates the purchase from one retailer to another). Repeated promotions also increase price sensitivity, reducing control over your pricing and eroding margins. In 2023, it will be tempting to use price promotion to create short term uplift. While this is encouraged in a structured manner, be wary of overusing this tactic to prioritise short term gain over long term success.

• Maximise ROI, but not at the expense of larger scale profit.

• Use promotions effectively – over-use can reduce long term success.

2023 (and beyond) looks set to throw even more challenges at our industry. Although not an exhaustive list, learning from the above historic principles and embracing the opportunities a recession can bring about should position your brands in the best possible place for what lies ahead. Managing the complexities needn’t be daunting either. Aligning your business with strong partners in the key fields of Media, Creative Production and Research will benefit your business. We have developed our full-service agency offering for our client partners to ensure the most effective link between these vital areas, optimising the flow of information to create actionable insight at all stages of the marketing journey. Make sure this is the case for your brands too, to make navigating the challenges that lie ahead as seamless as possible.

So, here’s to 2023 – wishing you a happy and prosperous New Year from all at Generation Media.