The context should still suffer the reverberations of external factors such as the war in Ukraine and inflation in Europe and the USA
The challenging economic scenario in the country, with high unemployment, high interest rates and high inflation, and potentially troubled elections in October this year, will demand a closer look at budgets and better strategies to dialogue with a population that increasingly rationalizes purchasing decisions, considering the most limited and scarce resources. A context that still suffers the reverberations of external factors such as the war in Ukraine and widespread inflation in the United States and Europe, which also raise interest rates.
Google, for example, already perceives “a sort of tidy brake”, in the words of Fabio Coelho, the company’s president. He says that the move is part of a process of rebalancing companies, which are once again able to offer other actions to consumers after periods of isolation, but recognizes that the moment is more challenging. “Companies are starting to look and be more careful in the use of money, more rationally, seeking more efficiency in this approach”, he explains.
According to economist VanDyck Silveira, CEO of Trevisan Escola de Negócios, the scenario presents a recessive bias both for Brazil and for the rest of the world, which will certainly impact investments in marketing and communication. He works with an expectation of zero growth or a recession of up to 0.5%. On the other hand, there is high inflation, unrelated to the world, just not higher than that of Argentina and Turkey.
“With the current environment, and taking into account that the biggest investors in marketing, the biggest advertisers, whether retail companies, consumer goods in general, and banks, with this prospect of inflation out of control in most parts of the world and especially in Brazil, where the situation has really gotten out of hand, and the cost of money is rising, the trend is for a big reduction”, he says. According to the most recent data, among the companies with the largest contributions to communication are Unilever, Banco do Brasil, Bradesco, Sky, Via, Telefonica, Mercado Livre and B2W.
The specialist also predicts that investments in actions such as training, parties, events and benefits for employees, already heavily penalized throughout the pandemic, should suffer impacts, as well as mergers and acquisitions, new investments in new plants and equipment. A framework that could harm the flourishing innovation ecosystem, with the presence of brandtechs, adtechs and martechs.
For Felipe Mendes, General Director of GfK for Latin America, industries and retail are afraid of increasing prices and losing sales and, therefore, are left with tight margins. In a cascade effect, this leads to the reduction of investments in general – and the media enters there.
He notes, however, that there are now two trends that can “protect” this investment a little differently than in other periods. The first is the creation of performance tables; and the second is the expansion of media investments in retail properties, such as “ads” from the big markerplaces, which have attracted new advertisers and generated revenue. “I believe that the total investment in media will not suffer as much as in other crises, but I foresee an important change for retail media and for formats that allow greater performance measurement, both with more digital content”, he adds.
What to do?
For Márcio Oliveira, president of R/GA, contamination will be multimarket and brands need to define strategies. He suggests focusing on those who already know the company and consume its products.
“Loyalize that person, in every way: content, advantages, discounts, experiences, etc. These are the people who will bring new people to know your brand. In times like these, a membership program, loyalty program or a subscription club are perfect strategies for you to be able to take advantage of this coming storm,” she says.
Initiatives like these, which even contribute to the acquisition of “first party” data in the face of the announced end of cookies, make the relationship more natural, according to the executive. “Open dialogue, generate experience, care, services. Products enter in a more natural and fluid way if brands establish a constant, interesting, relevant and, above all, true relationship”.
Caito Maia, founder of Chilli Beans, says he prefers to think that crises like the current one create opportunities. “A delicate economic situation makes any entrepreneur question the amount invested in marketing and communication. But at the same time, it can be a great opportunity to position yourself and win the market, while other brands are pulling back and cutting their budgets,” he says. As an example, he cites an action in this year’s edition of the BBB that continues to deliver results even after the program ends.
An understanding that dialogues with that of Patricia Cerqueira Reis, professor and researcher at ESPM and partner at HOD Marketing Territorial. The specialist argues that it is outdated not to look at the “expenditure” on communication and brand management as an investment.
“Old communication, kept on promotion with the aim of seducing the consumer, must have a significant drop in investment. But brand communication, which is strategic, which aims to create long-term relationships with stakeholders, as well as adjust to building reputation, must remain with its resource allocations already foreseen”, he proposes.
The concern about investment cuts is part of a “trauma” in the market, which has always been the first – or one of the first – to see resources disappear in the face of the various crises that the country has accumulated over the years. In a year that represents the post-pandemic resumption and has elections, the World Cup, Black Friday and Christmas “all together, at the same time and now”, as Oliveira, from R/GA says, generates even more headaches.
