Marketers place a premium on value for money

With Media’s seventh marketers poll launched against the background of a global financial crisis, it is hardly surprising that costs and returns should dominate the marketer’s outlook for 2009. But what is perplexing is just how deep the imprint of the recession has already been felt.

Across the board, those marketers who took part in the survey felt that greater value or money and further emphasis on ROI would be the cornerstones of the year. 

When asked to outline the key marketing issues and challenges for 2009, over two thirds said keeping costs under control would be a priority, a challenge that ranked second in importance to improving overall marketing effectiveness.

“I think maintaining cost-control and preserving cash are the two most important operational priorities for every business and every function in 2009 in view of the challenging economic environment,” says Argha Sen, head of marketing and CRM at Toys R Us Asia. 

Sen also emphasises the need for a brand to continue to evolve, despite financial pressures. “Strategically, for marketers, I think the greatest challenge will be to innovate, offer greater value to customers and maintain brand equity, even with decreasing marketing budgets,” he says.

With cost a priority, the marketers poll suggests that 2009 could be a disappointing year for media owners and agencies looking to tap into part of a marketer’s budget. In terms of media spend, close to 45 per cent of respondents expect an overall decrease in media spend, while a similar number anticipate a decrease in overall budget. Brand building fared slightly better, with just over one third of those surveyed saying they planned to lower spend in brand investment.

“We expect the market to remain challenging in 2008 as negative consumer sentiment may cause a reduction in spending at retail,” says Sen, accounting for some of the anticipated fall in marketing spend. 

What is clear is that the optimism of just 12 months ago is disappearing fast. While over half the respondents said they felt the outlook for their brand would be better this year than in 2008, less than 30 per cent felt the same about their respective sectors.

Conversely, almost 45 per cent of those surveyed said the sector outlook would be worse than in 2008, with the remaining 25 per cent expecting things to stay the same.

Value proposition

The overall pessimism in marketing circles willl be felt most acutely at the agency level. Lower spending and a desire for greater value could make 2009 an especially challenging year for agencies. Almost 60 per cent of those polled said value for money was an area where they wanted their agency partner to improve this year, while over half said they wanted their agencies to do better in terms of measuring the effectiveness of the campaign.

“The request for more effective and more measurable campaign will be raised even more in those tough times,” says Celine Del Genes, head of marketing at Reebok Asia-Pacific. “ROI has always been in the fore front of our strategy and more than ever are we’re looking at investment.”

Some agencies, however, feel the value issue may not be quite as clear-cut as the poll suggests. “We are obliged to provide value for money,” says Mark Ingrouille, CEO at McCann Erickson Singapore. “However, I fear that when marketers say it is about value for money, what they really mean is cheaper. That phrase is just window dressing. It is really about cutting costs.”

In addition, and reflecting the current pitch mania, over 80 per cent of marketers surveyed said they could be looking to review their agency in 2009, with more than half saying they would definitely be initiating a review. Value for money once again emerged as a key criteria in terms of what marketers will look for in a new agency.

Ingrouille, for one, is not convinced that this is the best way forward: “For years, agencies have been their own worst enemy, devalueing their services through competitive pricing. There is a knock-on effect - the tendency to hire cheaper people and have less quality control. I hope the recession is not going to lead to a further dumbing down of our industry.”

On a more positive note, agencies can still expect to be in demand for their strategic insight, especially in a recessionary economy. Almost half of those polled said they would expect their agency to advise and lead during the global financial crisis.

“I believe in agencies providing insights and advice; they need to play that card, specifically as most brands will not invest highly in creative content, “ says Del Genes. “However, I strongly believe that leadership needs to come from inside. We are accountable for our actions, and agencies can only provide guidance and advisory roles.”

The digital play

Looking at the marketer’s choice of communication channels, 2009 could be the year that digital finally takes a fully integrated role in the overall marketing mix. 

Almost 65 per cent of those polled said digital channels would play a bigger role in their communications plans. PR polled second place, while CRM came in a strong third. 

“Digital is a key medium,” says Del Genes. “We have always believed in it, and will continue developing digital components to communicate to our consumers.”

Positive signs for the wider acceptance of digital for sure, but also a reflection, perhaps, of the parsimony in the marketing ranks.

“A business wants to create value at any given time,” says Amanda King, president and managing partner, Tribal DDB Asia-Pacific. “But as budgets contract globally, the key to business success is to focus on contribution, which is why we’re seeing a shift from traditional media strategies to digital strategies.”

For Tarun Deo, managing director and partner, market development and tech group at Fleishman-Hillard, the high positioning of digital and PR in 2009 communications plans comes as no surprise. 

“Using digital programmes are a unique way of reaching key audiences directly and in an effective and measurable way,” he says. “This proposition becomes all the more powerful as part of a larger integrated public relations programme and can be the key that works for marketers in the current economic climate.”

And with marketer’s attentions being drawn towards digital and PR, television is one of those that looks set to miss out. Over 42 per cent of respondents said TV’s role in their overall plans would be smaller, the highest percentage for any media channel.

Even those marketers that aim to keep faith in traditional media channels such as TV, do so with an all-important pricing caveat. 

“Our spends on Digital and CRM have been increasing every year for the last few years so that is definitely the trend but we do not plan to reduce TV, outdoor and other mass marketing media,” says Sen. “In 2009 we aim to keep the same levels of mass media with better price negotiations.”

Methodology and Marketer Profiles 

Media's marketers poll had three research objectives: to evaluate current trends in marketing actions and strategies; to gaugue business performance for 2008; and to understand the outlook for 2009 in terms of business performance and marketing investmen .

On behalf of Media, research company TNS sent out online self-completion surveys to marketers on Media’s extensive database of industry professionals. Fieldwork was carried out between January 21 and February 15.

Of those who responded to the survey, just under 47 per cent said their role had local responsibilities, 48 per cent said their role had regional responsibilities and 29 per cent said their role also included global responsibilities.Almost 90 per cent of those polled had over two years of experience working in marketing, while just over 40 per cent said they had been working in the industry for over 11 years.

Almost 35 per cent descibed their company's main area of business as Travel and Leisure.The next most popular industry sectors were Finance,Technology and Consumer Products. 

The majority of respondents, some 81 per cent, worked for companies that employ in excess of 150 people. However, almost 60 per cent worked in marketing departments of less than ten people. Only 11 per cent worked in a marketing department of more than 30people.

Only 10 per cent said that their marketing budget for 2009 would be US$10 million or more, while, in contrast, over half said their annual budget would be less than $1 million.



Channel of choice: digital overview



A common complaint heard from within agency circles in 2008 was that clients still don’t understand digital. However, as this year’s marketers poll demonstrates, this refrain may well be a little misleading. 

Not only do the majority of those polled say digital will play a much bigger role in their 2009 communications plans, over 40 per cent highlight the development of digital media platforms as a key challenge for the current year.

If anything, for many marketers, it is the agencies that need to step up their game in the digital sphere. Less than one quarter of marketers felt that their agency partners were doing a good enough job of understanding digital media, while close to 40 per cent saw it as an area where agencies could improve. 

Amanda King, president and managing partner at Tribal DDB Asia-Pacific, has no problem with agencies taking the digital lead: “With digital, you reach more people, more deeply and with more conviction, and, most importantly, at a lower cost. It is up to the agency to lead their clients with confidence down this path.”

But while marketers are enthusiastic abut digital, the proportion of overall marketing budget they are willing to dedicate to new media channels is less inspiring, which is perhaps accounts for the agency cynicism. Almost 90 per cent of those polled said digital would make up less than 30 per cent of their 2009 budgets, while almost one third said it would comprise less than five per cent of spend. Although this can be attributed, in part, to the lower comparative cost of digital, it also indicates little progress in terms of budget considerations.

In addition, not all digital channels are created equal, at least in the eyes of the region’s marketers. Those surveyed showed a clear preference for dedicated websites, with over 70 per cent saying they would either continue or increase use of this channel in 2009. 

The biggest losers were gaming content, interactive TV and blogs, neither of which polled more than 10 per cent, suggesting a lack of confidence in more experimental forms of digital marketing.

“Digital is moving away from tactics to hard core strategy,” says King. “ We have learned a lot and the smart [clients] are now using that information to question their current approach.”