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Economic slump - time to introspect marketing function?

With all the economic downturn, advertising was bound to be depressed.

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Let's face it. Asian Tiger China's GDP growth rate has hit a 27-year low and is likely to end 2019 under 6 per cent. And GDP growth rate of India - the other Asian tiger has also hit a six year low and is expected to fall to 6 per cent in this fiscal year, according to the World Bank. Both these big cats are however, above the Asia Pacific GDP growth rate which is expected to be below 4 per cent. 

2019 - year of the falling economies?

While a steep fall in demand, direct trade disputes with the USA & political churn in Hong Kong is responsible for the 27 year low in GDP growth rate of China, to make matters worse, the Chinese government has not yet recovered from the after effects of providing stimulus to the Chinese economy for nearly a decade.  

Back home, the real estate industry is still struggling & factory output is slowing down, resulting in slow growth in employment. However, considering the situation in our neighbouring country, while the government has taken a slew of measures - steep cut in corporate tax rate (22 per cent from 30 per cent) and an even lower tax rate for new manufacturing companies (15 per cent) to attract new foreign direct investments (FDI), the same is yet to translate into meaningful outcome and spur growth. 

Economy in advertising

With all this economic downturn, advertising was bound to be depressed. And it did, especially in the last two quarters. The Indian advertising industry's estimated worth was Rs 62,000 crore in 2018. Most predictions of Indian ad spend growth hovered between 10 per cent & 12 per cent riding on the wave of ad spends during the 2019 General Elections & the ICC Cricket World Cup. However, the actual growth may be lower at around 9 per cent - 10 per cent (including inflation), taking the total annual ad spend to Rs 67,000 crore. (By the way, the Asia Pacific ad spend growth rate for 2019 is predicted at 4 per cent.) 

So what worked & what didn't? 

Television medium growth is estimated between 9 per cent and 10 per cent in 2019. Digital medium growth is estimated between 25 per cent and 30 per cent in 2019. Print medium growth is expected to range between 5 per cent and 7 per cent and all the other media growth being under 6 per cent. So while television managed to hold its fort, print medium was marginalised in a real sense.  Meanwhile, digital medium hopscotched to pole position from where it is poised to overtake print & challenge television. And the other media chugged along.

Role of marketing dept in slowdown

It's all very well to acknowledge the economic slowdown, demand slump and the marketing slack. Question is, with a full team strength, what should marketing focus on during this slack period?

For one, marketing can start adopting technology seriously. This is a challenging task for the CMO & his team, but if successful, this is the surest way of boosting marketing ROI. How? Because you can only improve what you can measure. And bringing IT into marketing is the first step towards measurement.  The objective itself is deceptively simple: bring information technology closer to marketing strategy as well as marketing operations.

The first step can be total process automation for Marketing Depts., where every activity is included. Apart from bringing discipline, process automation will also bring uniformity & transparency.

. Once marketing processes are automated, a central marketing database is automatically created and populated in real time.

. This bridges the "data chasm" between Marketing, Finance & Sales, bringing data transparency.

. This "data transparency" will result in immediate cuts in unnecessary marketing expenditure - as managers will start to spend with more caution. This itself can result in 10% to 15% immediate savings.

. The central marketing database will also provide real time dashboard reporting to Marketing Managers for quick reviews.

. This data can be clubbed with sales, research, share of voice ... to get ROI statistics.

. And the clubbed data can be further used for conducting analytics exercises & generating deep marketing insights.

Marketing departments must adopt information technology. And for this, the CMO must lead & exert his influence on his team. And this is the perfect time to solemnise marketing department's marriage with information technology & contribute to the company’s savings for now & the future!
(The author is founder, Brandintelle Services. The views expressed are his own and Indiantelevision.com may not subscribe to them.)

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