An advertising executive says that the biggest threat to New Zealand businesses in 2019 is "invisibility".
"If you're not seen, any money you spend [on your business] is absolutely wasted," DDB managing director Chris Willingham told the Herald.
His comments come off the back of data from research firm SMI showing that advertising spend through New Zealand's major media agencies dropped in 2018 after three consecutive years of growth.
While still over a billion dollars, overall ad spend was down 4.2 per cent on a year earlier, with slides across every major media channel except outdoor, which only had a slight increase of 0.5 per cent.
Even digital, following years of uninterrupted growth, had an ad spend drop of 3.2 per cent from 2017 — which is particularly notable given that television, which retains the biggest slice of the ad spend pie, only slipped 2.5 per cent.
A decent portion of this drop can be attributed to the decline in government advertising, given that 2017 was an election year.
However, there are also growing whispers across the ad industry about how dwindling business confidence and international unrest is likely to tighten marketers' purse strings.
When businesses feel uncertain about the future, they become more reluctant to put funds toward future sales. It's a well-worn trend that's spawned the ominous adage that marketing is the first thing to go when things get tough. The problem with this strategy, argues Willingham, is that it's the quickest way to become invisible at a time when competitors are fighting for a contracting pool of money.
"The evidence is overwhelming that if you continue to invest in your marketing during a downturn you will come out of that time far stronger than your competitors," he said.
The sceptic might say, "Of course he'd say that. He's an advertiser."
That would be a fair comment if Willingham and his ilk were the only ones saying it. But they're not.
Far too many people are focused on what they want to say about their brands, rather than what consumers actually want to see and hear.
SHARE THIS QUOTE:
In a year-long study spread across three global recessions — 1980, 1990 and 2000 — and spanning 4700 companies, Harvard University researchers Ranjay Gulati and Nitin Nohria found that firms that cut costs faster and deeper than rivals had the lowest probability (21 per cent) of pulling ahead of competition when economic conditions improve.
But this doesn't mean breaking the bank and spending with wild abandon. Businesses that responded to a downturn by boldly investing more than their competitors only enjoyed a 26 per cent chance of becoming category leaders.
The best strategy, according to the researchers, was to balance today's cost cutting with investing to grow in the future. Companies that pared operational costs, while simultaneously continuing to invest in marketing, R&D and new assets, had a 37 per cent chance of moving ahead of the pack.
Looking at the historical share prices of companies, another Harvard Business School researcher, John Quelch, found that strong brands such as Colgate-Palmolive and Johnson & Johnson have held up better than those with weaker brands.
Quelch goes on to say that a fatal error often made is to cheapen a premium brand by striving to match the prices of competitors when the economy starts to squeeze. As an alternative, he points to the almost counter-intuitive strategy of US beer company Anheuser-Busch in introducing its Natural Pilsner brand, which was cheaper than Budweiser, on the heels of the recession in the early 1990s.
Quelch says that once the recession ends, the fighter brand can either be withdrawn or retained as price fighter on the budget end of the market — all without impacting the pricing power of the flagship brand.
This is also part of the reason why Apple has a long-standing reputation for not running deep discount promotions for its products. The moment you cut the price, it's hard to replenish the concept of value in that brand.
What's the antidote to invisibility?
If you were going to pick an ad that represents the opposite of invisible, then the iconic drumming gorilla from Cadbury's 2007 campaign would definitely be up there. It was a delicious concoction of weirdness mixed with Phil Collins that still felt strangely human despite the fact it starred a simian beast.
Reflecting on his involvement in this campaign, Willingham said it worked because it offered the audience something so captivating and entertaining that they just couldn't look away.
"It wasn't trying to shock you. And it wasn't trying to persuade you like traditional advertising has done. It almost jumped over the persuasion bit and worked like a seduction. I think that's the best word to describe it," he says.
Almost as bad as cutting marketing spend entirely is investing in branding that can't be separated from the mass of content that's flooded on to media on a daily basis, says Willingham.
He says the aversion to creative risk, to doing something that's not always obvious, is part of the reason why so much advertising is ignored and reviled.
Despite its success, even the Cadbury gorilla faced moments when it looked like it wouldn't be used.
"Some senior people at the company said 'over my dead body', but they eventually came around because they could see ... the effect it was having on the audience," he says.
Most tellingly, it was having this effect without wildly waving the product in the viewer's face. Instead, it let the creative do the work.
"Far too many people are focused on what they want to say about their brands, rather than what consumers actually want to see and hear," Willingham says.
"There's a saying that irreverence plus relevance normally equals success. But it's the irreverence bit that people sometimes find hard to stomach."
And being irreverent might come with some risk, but this is often outweighed by the bigger risk of disappearing entirely.