Lessons from Cannes
Marketing best practices during a recession
Written by
Michael Murray
July 1, 2022
6
min read
Be the first to receive the latest insights in advertising effectiveness to help you achieve creative excellence and subscribe to Solve for X.
Uncertainty, inflation, using creativity as a force for growth and good, and the latest effectiveness research – here are a few learnings from Cannes Lions 2022.
Cannes Lions is no longer a festival of creativity. It’s an adtech festival.
In fact, the great unbundling of advertising can be seen along the Croissette and in the harbour. The beach huts and yachts are no longer rented by holdco’s but platforms and adtech companies. The advertising industry has long-been “digital” – in the sense that all comms (e.g. radio, OOH, TV, print) are delivered through digital technologies – and this was evident at Cannes.
While the Metaverse, NFTs, Web3, and the false death of TV advertising, echoed around Cannes, a few talks were rooted in the here-and-now. Set against a backdrop of inflation, recession, war, climate crisis, and a global pandemic – to name a few, the unbundling of advertising is forcing smart marketers to ask,
“Where do our budgets go, what do we do with it, and how do we measure success?”
This edition of Solve for X provides four learnings to help answer these questions (in the here-and-now).
Looking at the current economic landscape, Sir Martin Sorrel told the crowd that he expects brands to go short (e.g., leverage lower funnel tactics to deliver short term cash) and invest more in digital. Despite a looming recession, Sorrel is extremely bullish on adspend: expecting adspend to rise from 1% of gdp to 1.5% (driven by digital adspend). For context, adspend in the US has never broken the 1.5% mark.
On another stage, against the backdrop of $70bn drop in stock value, Ted Serandos confirmed Netflix was adding ads – specifically expanding their service through a new tier to people who will watch ads but won’t pay for a subscription (expect to see Netflix at Cannes next year). Ad businesses are profitable: margins can be as high as 60%; Amazon’s ad business is already providing similar operating incomes as their AWS business ($18bn vs $18.5bn). Scott Galloway has a great piece comparing the profitability of TikTok and Netflix. TL;DR Attention = $$$.
It’s an interesting move, one that doesn’t necessarily cannibalize their existing customer base but looks to regain the 200,000 paying subscribers they lost, plus others that won’t pay the rising subscription fee.
Like Netflix, eCommerce experienced phenomenal growth during Covid-19. Unlike Netflix, eCommerce is unprofitable – due to associated costs which have kept many from being profitable. The last mile (i.e., delivery) reveals that 10x1 ≠ 1x10; eCommerce suffers from the reality that one person buying 10 things is not the same as 10 people buying one thing. Unlike Netflix, eCommerce will have to canablize existing customers to obtain profitability, (cost) cutting acquisition-led tactics like free returns (e.g, Zara).
What can marketers learn from this?
Speaking about the challenges in making eCommerce profitable, Castlin revealed data that showed growth-first firms are “twice more likely to perform poorly (low profitability and low growth) than profit-first firms.” and “twice more likely to decline than improve than profit-first firms” (more data on this). To release the pressure, Hankins recommends focusing on the four Ps of Marketing (Place, Price, Promotions, and Product). Marketers have multiple levers to profitability, ranging from risk mitigation to building strength in your brands to justify price increases (particularly as consumer confidence falls to record lows).
That said, growth – market growth – is one of the industries greatest value-adds. Growth and cost-cutting can be synergistic if marketers focus on more profitable BUs, but the data suggests increasing ad spend is a better strategy in downturns. P&G’s Marc Pritchard proposed three principles for defending adspend, delivering business growth, and providing value to society.
As marketers brace for inflation, P&G’s Marc Pritchard revealed how P&G uses creativity as “a power for growth.” For creativity to be a force for growth and good, it should inspire innovation that delivers market expansion, economic inclusion, and improved purchasing power. To do this, Pritchard revealed three creative principles: creative that “feels personal” (based on human connection); “communicates performance” (i.e. the job-to-be-done); “and builds trusted partnerships” (diversity on-screen is reflected behind the screen).
Providing value to society was a theme at Cannes. There was an upward tick in purpose-led campaigns. Advertisers are increasingly connecting their product to solutions – to do good and avoid irrelevance and inauthenticity. Overall Cannes Lions winners in 2022 and 2021, AB InBev and Microsoft shared insights on how to connect creativity to purpose.
First, recognize that creativity is a means, not an end. For creativity to be a force for good and for growth, it needs to connect with solutions. Marcelo Marcondes mentioned that 95% of AB InBev's award-winning work weren't ads. They were projects and programs that included ads. Marcondes recommended marketers “don't fall in love with the problem,” but rather, “fall in love with the creative solution for the problem.” This approach led Budweiser to sponsor the women’s soccer in the USA, helping, ultimately, to increase wages by 20%.
Second, to make purpose authentic, find the intersection of truth and purpose. Kathleen Hall described Microsoft's approach as identifying "the intersection of our product, our brand, and the social need." Purpose in brand-building must add value to consumers in a meaningful way.
Anastasia Leng CEO of CreativeX, and Jenny Bullis, VP, Marketing Science EMEA, Meta referenced three pioneers of creative data, Nestlé, AB InBev, and Heineken, to show the audience how to use creative data to understand what works for your business, to create a common language of effectiveness, and to scale it across your organization - through a process of systematization. There was a cautionary tale, as well. Isolated insights are little better than the tags that enable them. For creative data to deliver the last mile of effectiveness for your brands it must provide tangible, repeatable, and scalable solutions. Otherwise, it’s just another shiny new toy.
If you enjoyed reading this, consider signing up to receive Solve for X before it's published.
.png)
.png)
