Strategies for turning nightmares into best practices
Opinion: Strategy Leaders
For strategies to be effective in uncertain times they should be evaluated every 2-3 months and shouldn’t stretch further ahead than 12-months.
The key changes that make scenario planning so important today can be separated into growing uncertainty around three categories: Environment, Media and Technology.
When it comes to the Environment, brands must consider the different futures that could unfold from an economic and consumer perspective. Covid showed how quickly the landscape could change; Ecommerce jumped 55% during Covid to hit $1.7 Trillion, a rate of growth 5 years ahead of initial predictions. In the UK we are now dealing with the intersecting issues of a recession, cost of living crisis, and inflation – and ever changing predictions that make it difficult to plan with confidence. With a rise in inflation in February in the UK, consumer spending was threatened. This in turn led to a drop in consumer demand and a pull back on discretionary spending.
Increasing Media fragmentation and emerging channels means there are exponentially more and more outlets out there which can create a greater level of difficulty in reaching target audiences. To complicate things, this fragmentation tends to be linked to environmental changes too. Lockdowns drove people to use more digital channels, and inflation might drive them away from subscription offers to, for example, ad-based alternatives (just think of Netflix or Amazon´s ad-based offers). While following every new trend has never been a good idea, marketers need to leave enough wiggle room in their media plans and contracts to allow them to adapt course if needed.
Technology is the third accelerator. Technology that allows scenario planning is advancing at a rapid rate, with ever evolving capabilities which need to be taken into account when building out a strategy. Modern commercial mix models allow businesses to simulate different possible future scenarios and optimise their plans accordingly. As opposed to the marketing mix models from the 90s, they allow businesses to take on a much broader lens that considers a variety of non-marketing and external factors. Aided by AI and machine learning, as well as increasingly better data, these technologies allow businesses to simulate and adapt at much greater speed, accuracy, and granularity – a real competitive advantage, if implemented thoughtfully.
Future-proofing your strategy
In order to consider these practically, businesses first need to start with a clear strategy. After establishing the targets that they want to achieve, it’s key that they look back at what was accomplished last year and analyse what worked, what didn’t, and why. Once a company has this vantage point, they can forge a much clearer path towards figuring out how to spend their marketing budget for the upcoming year.
Evidently this has its limitations as the landscape keeps on changing so, thirdly, businesses need to think about their external factors and the future scenarios that may unfold. Using data and commercial analytics which offer scenario planning tools will give businesses a clear advantage when it comes to acting on, rather than simply reacting to, environmental, media, and technological changes.
To account for the environment, businesses must monitor and anticipate the ebbs and flows of the economy, and its impact on consumer behaviour and then ask the right questions: What if demand drops – how do I adjust my media spend? What channels will get us the highest return on investment in relation to my KPIs? One of our customers is examining exactly these kinds of scenarios to determine how they can increase sales by 10% over the next 12 months with constant, or increased, media budgets. Factors such as inflation and response are taken into consideration for the scenarios and can be adjusted based on actual market dynamics to determine outcome.
Apart from considering developments in the economy, possible changes in the media landscape itself also need to be taken into account. Are we expecting drastic changes to consumer media consumption and response, depending on, say, a possible recession? Are existing ones on the horizon? TV advertising costs going to inflate? Are there new formats and channels, or changes to existing ones on the horizon?
The media platforms must adjust to the challenges and changes as well. Currently Channel 4 is trialling reduced ad loads and new formats on their streaming platform which could lead to changes to the number of ads being run in breaks, as well as the inclusion of new, interactive formats. AI is also set to disrupt the landscape due to rapid growth – in 2020, the global AI market was worth $51 billion, and is predicted to grow to $641 billion by 2028. Businesses must think through how this could affect the kind of ads they’re putting out, as well as where they’re placing these ads, and who they’re targeting.
Being cognizant of these factors allows companies to develop plans and adaptations in advance, that can then be actioned much faster when different situations arise.
Use proxies for when hindsight isn’t enough
Hindsight is a perfect art and historic data gives us brilliant insights into cause and effect. But hindsight is a luxury brands don’t have when hit with unexpected events such as the pandemic. Lockdowns and other measures were not only hard to predict in terms of when they would occur, but also in terms of the impact they could have on the economy and consumer behaviour.
In situations like this, businesses should look to proxies that will help in the decision-making process. During the various lockdowns, for many of our customers, we used Google mobility data as a proxy for social mobility. Simply put, mobility data showed how much people were moving around, and how this changed depending on different Covid measures. By adding this data to our models, we could – within a very short time frame – measure how people`s mobility was impacting base sales, allowing businesses to plan ahead and adapt their activities depending on possible further lockdowns in future.
Where proxies aren´t available to gauge possible impacts, informed assumptions are the next best option to plan ahead. If unprecedented scenario x happens, what do we estimate the impact might be on demand? How might competitors react in terms of spend?
And finally, brands should consider conducting experiments – such as running an OOH campaign in one of two otherwise comparable regions – and feeding the results back into their commercial mix modelling to understand the impact of activities in a changed environment.
Finding the balance
When organisations come to review these scenarios, they need to think about how this may increase or decrease their supply and demand as well as determining the potential risks and opportunities created. Tying this into strategic moves is how you make the abstract idea of scenario planning have real-life effect.
However, it’s important to strike a delicate balance. Scenario planning is a powerful tool but do not give in to the temptation of trying to cover all possibilities. Each scenario can branch off into many additional scenarios and before you know it, you’ll have too many questions and not enough answers.
Businesses need to walk a fine line between keeping the overall vision for their company in sight, holding strong to the goals and plans that they have laid out, and being flexible.
It is important to try and balance the short and the long term, trying to match the severity and longevity of an expected change with the speed and magnitude of changes to your goals and planning.
For strategies to be effective in uncertain times they should be evaluated every 2-3 months and shouldn’t stretch further ahead than 12-months. This allows for successful navigation of unexpected bumps in the road without veering off course in the wrong direction for too long.
It is, of course, impossible to know what the future holds, but by ditching the temptation to stick rigidly to an annual plan, building in flexible reviews and being disciplined enough to ask, ‘What If?’ without disappearing down a bottomless rabbit hole, businesses can create the best possible outcomes, whatever the future holds.
Maren Seitz is senior director of commercial intelligence provider Analytic Partners.
Strategy Leaders: The Media Leader‘s weekly supplement with thought leadership, news and analysis dedicated to excellence in commercial media strategy.
Sign up to our daily newsletter for free to get Strategy Leaders every Thursday.