Finding Leverage in the Great Deleveraging - Tom Cunniff

The global economy has a tough road ahead The main difference between optimists and pessimists is about how tough things will get and for how long before they get betterThe US is a consumerled economy consumer spending represents twothirds of the nation39s economic activity Our consumers have been milked pretty dry Broadband Internet and data plans for smart phones are monthly expenses that can39t easily be cut when looking for a job Boomers have seen their housing and other investments tumble and for older Boomers there39s scant time to rebuild nest eggs before retirement If Washington39s slashes entitlements too fast retirees will face real pain On the plus side if our government embraces total Tea Party austerity and squeezes people too hard our Seniors can get their heat in winter from the riot fires set by their grandchildrenThe Outlook For BrandsThe nearterm outlook is mixed Cost of goods is climbing in part due to competition from BRIC for raw materials The weak economy makes it very difficult to pass costs along to the consumer in the form of higher prices and consolidation at retail means important retailers can effectively forbid a price increase This squeezes margins hardAs brands struggle to drive turns at mass retail watch for advertisers to slash slowbuild media print bleedingedge digital and underfunded and ineffective social media efforts in favor of TVUnsurprisingly the main engine for growth will come from the BRIC countries But many companies are in the steep part of the investment trough amp8211 good profits and real growth will come but for the most part these are still some years off Frankly most companies now find themselves in the middle an awkward place The established profitable markets are weakening and the emerging markets are still emergingThe longterm looks quite good The struggle will be worth it But we have to get from here to thereThe Outlook For DigitalFor most brands digital search social media if the strategy and payout are clear and even mobile are here to stay The best predictor of next year39s ad budget is last year39s and the hardest thing is to get on the list in the first place iTV has struggled forever to get on the list It may never get there the two screen solution of TV iPad may be all that a consumer will ever want or need But digital suffers from rampant oversupply The content glut is unsustainable no matter how many targeting technology rockets we strap on to it To borrow a phrase from my friend Jaffer Ali we are chasing our own long tailSome believe the situation for banner ads can39t get worse I disagree I predict this will get much worse and finally crash A continued weak economy may tip over this house of cards sooner than later While painful it may be best in the long run to just get the shakeout over withOn a similar subject there are plainly too many targeting tools too many listening tools too many social media syndication tools too many networks etc A shakeout here is both inevitable and necessary Again the deleveraging may speed the processThe Outlook for AgenciesI see a lot of oversupply Midsized agencies will face pressure to acquire be acquired or shrink As marketing departments shed staff managing multiple agencies will get harder And as marketers seek integration keeping each specialty in a separate silo doesn39t make sense Look for smart marketers to hire integrationists former agencyside execs that have enough background in both traditional and digital to bridge the gaps between agenciesThe best large traditional agencies should do well in this environment Many have closed the skills gap There39s new opportunity for cottage industry with virtual agency teams of 20 or so people We39ve talked about virtual teamsoffices since the early 1990s Deleveraging may push us there fasterFinding Leverage in the Great DeleveragingThink global not local Product innovations that will work in developing markets countries will often be valuedriven They can change the game in developed markets too value is value everywhereGet focused Digital has tended to defocus marketing There is too much emphasis on tactics Smart CMOs should reemphasize strategy Demand to know what the overall efforts add up to and how they support each other Senior level creative people will be needed to bring focus to your efforts Balance youth and experience on your teamsKeep perspective Be open to change but skeptical of trends Innovations that have huge implications for one category may have none in another Ask quotwhat drives value in my category for my customersquot If no one on your team can explain the value in plain English without buzzwords send them away until they canStay curious Don39t let daytoday pressures push you into incrementalism We can39t slash our way to greatness nor can we get there inchwise Change always brings opportunity What39s possible now that was impossible in the old status quoDon39t forget to dream Goethe had it right quotDream no small dreams for they have no power to move the hearts of menquotSurvival isn39t enough This will be a slog we need a future worth slogging forTom Cunniff began his career as a copywriter at traditional agencies founded an interactive agency in 1994 and now works on the marketing side creating and integrating traditional and interactive All of Tom39s opinions are entirely his own Tom can be reached at tomcunniffnycgmailcomRead all Tom39s MediaBizBloggers commentaries at Radical Common SenseCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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Finding Leverage in the Great Deleveraging - Tom Cunniff

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