2021 budgets causing headaches for digital marketers around the globe
Marketing leaders across the globe have had a year of complete disruption. Now, without any discernible trends to work with, they are expected to craft budgets for 2021.
“This year has left markets in tatters,” says Tich Savanhu, head of digital strategy at digital marketing specialist Incubeta. “Globally, companies have had to make drastic changes. Those that haven’t had to downsize have often had to slash their budgets, and the big question remains: When is the recovery coming?”
One good thing to come out of 2020, he says, has been the significant leap forward in digitisation. However, when it comes to planning for 2021, the complete upheaval as a result of the pandemic has decimated years of trends which companies have traditionally relied on for planning purposes.
“How do you plan for something you can’t measure? There is no historical data, because behaviour patterns are just not there anymore. The best that marketing teams have been able to do this year was to look towards retention strategies and try to secure repeat business or bigger spend per customer.”
Planning for a virus that won’t play ball
As the northern hemisphere goes into winter, many countries have experienced a sharp uptick in Covid cases. Second and third waves are playing havoc with business leaders’ planning process.
“Many of our global clients have planned a few scenarios depending on their lockdown level,” Savanhu says. “Each one of these scenarios has different media and communication strategies and each of the main scenarios will then have regional nuances. It’s all about remaining agile but planning ahead so teams are not caught off guard should their trading environment change.”
He believes budgets will remain layered as the year progresses. “Planning will be more segmented and granular. Spend will have to be adjusted as needed. If there are spikes, and regions go back into lockdown, companies may shift from the hard-sell, bottom-of-the-funnel efforts and rather focus more on retention strategies and looking at ensuring that their brand perception is being maintained. Focus should then be on segmenting traffic into buckets so that when lockdowns ease, they can put their efforts into a remarketing and retargeting strategy.”
A more resilient local approach
This is not so much the case in SA, however. While SA companies will also be trying to achieve more with less, Incubeta group MD, MEA, Roan Mackintosh says local companies seem to have a more resolute outlook.
“Chatting to clients, partners and the industry in general, we aren’t seeing too many multi-scenario contingency plans happening in SA. This could be because we went through one of the most stringent national lockdowns at the start of the pandemic. For example, Ireland has just gone back to a level 5 lockdown, yet people may still exercise within a 5km radius and get takeaways. There were no such luxuries for SA at the time, and companies simply can’t fathom further lockdowns. It could also be that given our more entrepreneurial flair in SA companies are confident that they can react to changes and implement strategies on the fly. Or it could simply be that businesses are now so focused on recovery strategies as well as Black Friday and festive season planning that they have not yet had time to develop in-depth scenario planning for 2021,” he says.
Mackintosh says local budgets will differ significantly depending on the sector, with retail brands drafting budgets which reflect their growing reliance on e-commerce.
“When their brick-and-mortar stores haemorrhaged during the early phases of lockdown, retailers turned to their online offerings to make up the difference. CEOs who had previously never considered digital as anything more than a fringe exercise are now asking about the progress of digital efforts at their board meetings. And so we are seeing a continued uptick in spend to support these ‘new’ digital offerings. In some instances, we are looking at five times the original budget,” he says.
Doing more with less comes with a warning
The first thing that happened after Covid-19 and lockdowns hit was job rationalisation. In marketing departments around the world, CMOs were faced with the challenge of delivering the same (or even more) with fewer hands on deck. In many instances agency budgets were also cut, leaving in-house teams to perform often complex technical tasks that would ordinarily be handled by specialists at their agency.
Savanhu says the assumption will need to be made that this trend will continue into 2021 and may even be accelerated. “Globally, CMOs will be looking to tech to enlarge return on adspend, decrease the cost of sales or just increase operational efficiencies. Companies will also be considering different models of optimisation – instead of just looking at optimising return on adspend, marketing leaders may shift to lifetime value,” he says.
Again, SA has its own challenges that leaders must bear in mind. “When it comes to in-housing, the nuance in the local market is our limited pool of skills,” points out Mackintosh. “It’s difficult to find the right talent at the moment, especially when it comes to the high-end specialist skills. Going it on your own, especially in tricky times like these when you must be laser focused on efficiencies, can be a risk. Leveraging the power of martech and global experience is critical and success will depend on leaders choosing the right partnerships to help them navigate the uncharted waters ahead.”
The big take-out: As consumer patterns change historical data is no longer as useful.
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