Can marketers cut costs but uphold brand value?

The economic outlook in the UK maybe improving but this will not stall the relentless drive to lower prices, especially in media.

As if marketers were not subject to enough pressure, wherever you look now they are being attacked on pricing. The question is: will this squeeze marketing budgets and lead to a tougher approach to media spending?

Whether it is campaigns about supermarket prices, opening up the skies in the airline market or new e-commerce operations promising to undercut everything on the high street, companies are finding quality and value propositions are not enough.

The process is spreading far and wide. The utility companies face tough demands from regulators, and, because of the cross-selling of fuels, they are essentially selling the same products. Price has become the only discriminator.

Even economic pundits are promising an era of low-cost inflation and virtuous economic cycles, which is reinforcing the public feeling that, from now on, quality, service and low prices are a package they can demand as a right.

The newspapers are filled with stories about other UK industries that are supposed to be operating unfair pricing policies compared with “perfect worlds” such as the US or elsewhere in Europe. You can argue there are other factors that make this a more complicated story, but it won’t have the same impact on public perceptions.

Inevitably, margins, profits and resources for investment will be affected by the unremitting stranglehold these low-cost forces exert on the market.

As a result, if marketers find they have to spend more on price cuts and promotions, will they be able to maintain the kind of brand marketing and advertising that uses image, emotion and style to make the consumer appreciate intangible brand values?

The answer is: with difficulty, unless they can put pricing pressure on media owners and demand the same bargains as they now have. The immense increase in both the type and quantity of advertising media options will only strengthen their search for cost savings allied to value and effectiveness.

Indeed, could this mean the return of cost per thousand as the main driving force behind ad media decisions, after years where the emphasis seemed to be moving towards strategic planning and the importance of qualitative measures such as editorial environment and empathetic target audiences?

In tough and crowded markets, people look for simple, clear benefits they can measure clearly, without too much time and effort. That is what consumers are seeking, and it may well be that advertisers will follow their example.

If this is the case, outdoor – as a medium with increasing audiences – has the potential to be competitive and deliver both value and low costs in this new marketing and media environment.

Francis Goodwin is managing director of Maiden Outdoor.

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