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Don't let the current economic storm lead to emotional decisions about your media budget

Statistics released in the latest This year, next year report by GroupM identifies South Africa as one of the 'fragile five' in terms of a real recession. This group includes four other countries - Argentina, Brazil, Turkey, and Venezuela - some of which are currently experiencing extremely trying economic conditions including food-, electricity- and cash shortages. Globally, real interest rates are also rising, which places additional pressure on South Africans. Consequently, various countries left their prior ad investment forecasts unchanged, with others even making downgrades.
Ashish Williams
Locally, economic experts are echoing global forecasts, warning South Africans that they need to gear up for a relentless economic storm this year. These predictions are due to a combination of factors: rising living costs such as water and electricity; a somewhat stagnant economy; continuing job losses; a rise in inflation and interest rates; fuel hikes – all of which contributes to a reduction in consumers’ disposable income.

These macro and micro factors are placing South African brands and their media budgets under pressure.

Ashish Williams, CEO of MediaCom South Africa, has observed the same trend locally. “Many brands are suddenly finding themselves swimming, and even drowning, in a sea of uncertainty. Understandably, this has caused a shift in media investment.” He warns that marketing leaders must caution against cutting budgets; instead, they should be getting more for their budgets. “The answer doesn’t lie in decreasing media spend; the focus should shift to media investments demonstrating the business value through measurable, actionable results.”

Change is constant

Ashish continues to explain that, in the past, brands focused on innovation of the product and then selling that unique product proposition. Today, that approach is simply not enough to attract the attention of a demanding consumer. “Brands are looking for innovation in all aspects of the marketing model – innovation in terms of the commercial proposition, innovation in terms of distribution, and innovation of the holistic offering. Simply creating innovative content won’t stand the test of time.”

This is why new media innovations and models are placing traditional media under pressure, he explains. “For instance, the YouTubes of the world are taking media spend away from TV expenditure. But the cycle doesn’t stop there, because innovation is setting a fast-paced reality every day. The YouTubes of the world might be putting pressure on TV advertising spend, but the Netflixs of the world are pressuring them.”

The This year, next year report supports Ashish’s observation, stating that digital media investment will rise by 9.7% in 2019, with digital’s share of ad investment rising from 39% in 2018 to 42% in 2019. Traditional TV, on the other hand, will have minimal growth of 1.1% for 2019.

The essential question then becomes: With these shifts in unstable times, how can brands and agencies work together to ensure share of wallet translates into a share of consumer spend?

Caught in a negative creative cycle

In Ashish’s opinion, the future will only become more complex and more uncertain, so the solution is not to ‘wait it out’. He goes on to explain that brands tend to be avert to change in trying economic times. This results in a situation where clients can end up in an unproductive creative loop. “For example, budgets are cut to save money, but then it affects the ROI of the TV spend. In the next budget cycle, the money is then invested in digital spend – but for the wrong reasons.” Usually, this then leads to poor ROI as well.

The key, Ashish believes, is to always focus on the audience, regardless of the economic environment brands find themselves in. That is why we, at MediaCom, have a people-first philosophy. It is the agency’s responsibility to steer the client towards their goal if they start veering off-course out of fear.”

Facing the future with confidence

To achieve this, agencies should be seen as more than a creative arm, but rather as a strategic partner that can change and evolve the business. So, that leaves us with a challenge: “Shouldn’t marketers be prioritising long-term brand building over short-term advertising returns?”

The short answer is yes, of course, they should. But that’s easier said than done in trying economic times. People tend to look to ‘easy’ or ‘quick’ fixes that don’t demand a large chunk of the budget. With effective long-term planning and budget allocations, companies can expect to engage target audience in a better way, as well as a significant increase in operating revenues.

Media is a real investment that needs effective planning and enough budget to make a significant difference, not something that should be brushed off as an afterthought when the ice starts becoming alarmingly thin. In these trying economic times, the saying that fortune favours the brave is especially true for the media industry.


For more insights on the industry, thought leadership pieces, and perceptive posts, follow Ashish Williams on LinkedIn.

If you are interested to find out more about the man behind MediaCom South Africa, visit www.mediacom.com/za or read a previous press release about his appointment.


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MediaCom's new way of thinking has brought about a new way of operating. We're the leading initiators of change when it comes to planning and buying placement across media channels.
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