The marketing industry should prepare for a post-pandemic ‘dead cat bounce’
In the COVID-19 era, agencies and clients alike could be in for a world of change, argues Assembled group chairman Craig Hart.
It’s tempting to believe that the current uplift in pre-Christmas marketing activity we are likely to experience as the country emerges from the COVID restrictions is a true sign of economic recovery, or at the least a return to retail normalcy.
Unfortunately, this is unlikely to be the case. More probable is that we are experiencing a pre-Christmas ‘dead cat bounce’, which basically means the current uplift in marketing spend could be followed by a contraction of marketing spend.
With pandemic restrictions almost fully lifted [across Australia], there will be a rush to spend retained marketing budgets to engage clients for a short-term windfall just before Christmas.
The marketing industry will need to deliver more if it is going to successfully navigate the challenges of a post pandemic economy. In the years recovering from COVID-19 we are likely to see the same highly competitive markets that followed significant market disruptions of the deregulated markets in telecommunications and energy and the Global Financial Crisis. However this time It does not follow that there will be the same unconditional boom time for the marketing industry as clients will need more for less throughout an extended recovery period.
A new dynamic lies ahead in 2021 and beyond, and the marketing landscape could radically change. After some gains most clients will focus on reducing their cost of operations and maximising return of use of capital. In turn they will demand more from their marketing partners. This accountability will be required across the marketing spectrum from advertising, creative, media and digital services and only those agencies capable of articulating a clearer ROI approach are likely to thrive.
Service providers are on notice to lift their game and respond with a more innovative approach towards fee structures that should increasingly be dependent on delivering the measurable outcomes and success as defined by the client. Sustainability will only be available to brands that minimise their on-balance sheet costs and seek to in-source specialist services to drive more sales and deeper relationships with valuable customers.
In a post-COVID-19 world clients and brands will need to re-engage with their customers in new ways to retain customer loyalty and share of wallet. Cost of acquiring customers is invariably higher than the cost of retention. The likely beneficiaries in the marketing industry will be social media, strategic communications and digitally led capabilities where the cost of engagement and ROI are more easily quantified. For the remainder of the marketing industry it is to be expected that clients will demand more from their agencies.
Marketing agencies love to position themselves as “a partner” with their clients. The attributes of a partnership are likely to move from sentiment to require agencies to provide more demonstrable value, skin in the game and greater transparency. To deliver this accountability it is likely that agencies as much as clients will need to increasingly review their operations and improve the effective and efficient delivery of their services.
Those capable of responding to this challenge are likely to benefit from a post COVID-19 recovery while those that do not will invariably struggle for relevancy and survival which may in turn lead to the most significant disruption to the landscape of the marketing industry that we have seen for some time.
Craig Hart is the chairman of the Assembled group.
