After a period of turbulence in the industry, the recent findings of the TRA’s Agency Perceptions Survey reveal some intriguing patterns in New Zealand’s Adland. Andrew Lewis, Managing Director at TRA, offers insight into these results and illuminates the present state of the country’s marketing industry, highlighting significant trends.
New Zealand’s Adland has faced a lot in the last two years, dictated by the of global events, the pandemic and economic uncertainty.
Recent TRA work in New Zealand uncovered that 78 percent of people are expecting at least a moderate level of uncertainty while 37 percent are experiencing a high level.
“While we can’t do much about the big social, economic, and environmental shifts that are impacting people, it’s worth considering how agencies can help client brands respond to this context in a way that might be helpful,” Andrew says.
Despite these external factors, the industry remains well-awarded in terms of creative quality of work on both the local and global stage.
“Our best agencies are also the world’s best agencies and there’s a lot to suggest we are in good shape. We see clients telling a similar story in the data of this study, with the vast majority feeling well-served creatively.”
The industry has also seen a number of senior professionals move positions and a number of new agency openings and growth stories.
“It will be interesting to see some of these new combinations of people and newer agencies really start to develop their philosophies around what matters and what great work looks like in 2023 – perhaps we will see a lot of rebirth and change in the coming year or so? All of which will be great for the long-term health of advertising here,” he says.
Some of the key trends emerging from the local advertising industry include a focus on long-term brand building via advertising as “philosophical centre” Andrew adds.
“A strong, singular story across the industry is emerging regarding the importance of investing in future demand (credit to James Hurman for his work here) and the power of creativity, storytelling and consistent brand codes in creating long-term growth for clients. And this story has strongly shaped the work that’s been delivered. We’re seeing more sustained campaigns, stronger consistency and brand codes evident in execution, and stronger creative commitment to campaigns across media channels.”
According to TRA’s quarterly Favourite Ads study, 9/10 ads on the list now have brand characters, which Andrew says, “highlights this commitment to storytelling, emotion and consistency”.
As the industry heads towards economic headwinds, and with more scrutiny around business performance and tighter budgets, we can expect to see things move towards short-term performance marketing.
“We are certainly seeing within our own clients increasing internal pressure to be able to demonstrate tangible ‘right now’ commercial results from ad investment, and this is something that is also clear as a growing area of focus for clients in the Agency Perceptions data.
“Hopefully this will play out as a simple shift towards a more finely balanced ‘long and short’ approach, but I think there is potential for a stronger shift towards short-termism and proving ROI on activity.”
Looking ahead to 2023, it appears as though a marketers job is set to get a little more difficult thanks to three key forces at work.
The first is the increased pressure to prove the effectiveness of marketing activity and drive commercial outcomes for an organisation.
“Long-term brand building activities are empirically proven to have long-term benefit to organisations but are tough to show returns in the short term – marketers may find it challenging to protect this investment against internal pressure.”
The second challenge is around lower consumer spending as the cost-of-living continues to rise and households tighten their purse strings.
“Again, this may well drive practitioners towards more activation-based marketing and make the case for longer-term brand building more difficult to support. The sad reality in this, of course, is that many studies have shown that those who focus on brand building during recessionary times emerge stronger in future years, when conditions become more favourable.”
A third challenge is around the “constant increase in complexity around the tool set with which to execute marketing”.
With new channels constantly being introduced and then waning, the job of creating strong executions is becoming even harder, Andrew says.
“When you put these three forces together, it’s easy to see how marketers will be looking to agency partners for further strategic support in the coming year, while also demanding a deeper level of business knowledge from them.”
Looking outside the industry, global factors such as the economy, wars, and climate change will combine to create one big challenge for marketers when it comes to making decisions around spend and creative marketing.
As a result of this, ad spend will come under significant pressure, particularly at the more brand-driven creative end where showing immediate ROI is more difficult.
“For creative marketing, we can also see the challenge as one of increased uncertainty. With so many different forces at play, most of which have unknown timeframes, impacts or outcomes, we expect that this may well have an impact on decision-making and risk-taking.”
It is human nature to try and control what we can in times of uncertainty by reducing the risks we take and stick to what we know and trust. This means marketers may veer towards a more conservative approach in 2023 and look to agencies for support.
According to the survey results, help with strategy is the number one priority for marketers when seeking agency partners. Andrew believes this is due a more complex and uncertain environment with a bigger focus on return, combined with an ever-changing technology tool-kit.
“With all these forces at play, guidance and advice is at an increasing premium for marketers looking to execute well.”
Marketing has never been an industry where people stay for a long time which means knowledge and expertise is lost quickly and replaced with someone new wanting to build up their reputation in the industry.
“This again places an importance on partner agencies providing a strategic overview and depth of knowledge back to an organisation.”
This strategic support rises in importance as creativity becomes less of a priority, not because creativity is not still important, but rather New Zealand has built a reputation for doing this well and now the focus is moving into strategy Andrew says.
“When market conditions are difficult, getting strategy right is even more critical because it can give a brand a competitive edge, which can make all the difference when demand is slowing, and growth needs to come from increasing share.”
In terms of how agencies can best collaborate with their marketing partners for the best strategic input, marketers want agencies to “have a better understanding of their client’s business and situation” by bringing customer-led, data-based insights to drive strategy.
The survey found that marketers are wanting their agencies to “really immerse themselves in their world, listen to what they’re being briefed on and focus on improving their business”.
“Great strategy not only requires an incredible understanding of how to utilise the tools of advertising and media, but also deep knowledge of both the customer world and the client world,” says Andrew.
Based on marketers’ responses in the survey, the early stages of strategy formation is where there is the most need for improved collaboration, a shared understanding of the goals to achieve, based on strong insight into the customer.
The survey also revealed that despite forecasts of a recession, only one third of marketers are expecting a decline in spend. This, Andrew says, could be because currently the recession feels “a bit like a hidden recession”.
“Retail spending has been patchy over the last six months, with some good months, some bad months. Employment is still very high, and a lot of households haven’t yet had to refix mortgages, so therefore the full impacts of the Reserve Bank’s actions haven’t been seen. With the impact of the weather, any recessionary trends will be hard to spot, so it may feel that we’re not really there yet.”
So, what do the insights garnered from this study mean in the real world for marketers and agencies?
“Hopefully this study gets both parties thinking about how they can do their best work together, listening to what each other can bring and using it to develop better strategy and outcomes for everyone. And to make sure these results are built on a foundation of customer-led, data-based strategy. This is something we should be doing at all times, but especially now at a time of increased economic pressure and complexity.”
One key take-away from the study, Andrew says, is the importance of longer-term brand building even in times of economic uncertainty and increased pressure to deliver commercial results.
“If many marketers are going to choose the short-term performance marketing route, then those that are able to hold out for longer returns stand to benefit in the future when things stabilise.”
This article was originally published in the March/April 2023 issue of NZ Marketing. Click here to subscribe.