Businesses and their stakeholders experience economic instability in several ways. However, the challenges this brings for a media buyer is a conversation we have never had.
Economic upheaval, especially inflation, has been a global challenge since the outbreak of the pandemic for every economy, including Pakistan’s. On top of that, the current economic instability in the country has pushed inflation further. Consequently, companies have become risk-averse, curtailing their marketing expenses and becoming more conscious about their ROI. As a result, media buyers have to operate in an environment where the advertiser’s media investments may thin out in the near future.
The outbreak of the pandemic led to lockdowns worldwide, wreaking havoc on to established and emerging economies. After the lockdowns were eased, the world witnessed a dramatic surge in inflation, leading to financial challenges that affected all industries, businesses and trade activity. As a result, the decline in advertising spends in Pakistan in the quarter following the Covid-19 lockdown alone was over 28%. For media buyers, it was a challenge to make ends meet, manage operations and deliver results despite budget constraints.
Then, when everything seemed to be falling back into place, sudden political disruption hit Pakistan, which resulted in inflation going up to 13.4% (source: State Bank of Pakistan). From multinational and local companies and businesses to the ordinary consumer, everyone was affected by the adverse effects of inflation, making brands even more risk-averse in terms of their media spend. Let me elaborate on this further.
As the prices of commodities continue to increase and the rupee depreciates against the dollar, even multinational companies are struggling; they function on a fixed yearly dollar rate as far as their profit and loss statements are concerned. As a result, their cost of doing business is rising drastically and given that marketing expenses constitute a large portion of their total expenses, companies are curtailing ad spends to ensure their profitability.
However, media buying houses do not see this approach helping businesses, mainly because no matter what the circumstances are, brands must constantly engage in top-of-mind wars to stay in the game, especially in an environment where populations grow, new markets emerge and more players enter a given industry and become potential competitors.
The smarter approach to win this war is to not stop investing in marketing and advertising activities. This ensures strong brand recall and helps build buyers’ preferences. However, brands seem to act in the opposite manner as they cut their budgets, all the while asking for the same ground-breaking performance from their ad campaigns, if not better. This is where the real problem starts for a media buying entity; in fact, for all stakeholders in the chain.
So what can brands do? To look for the answer, it is necessary to touch base with Pakistan’s media dynamics. For one thing, at one point, ad spend was allocated proportionately over traditional media such as TV, radio, print and OOH. Over time, major shifts took place, partially due to digital media. Today, the situation is that TV remains the core media platform for advertisers with a stable penetration rate of 92%, followed by digital with a penetration of 50%, which we believe is likely to grow exponentially. On the other hand, OOH offers limited scope and the penetration of radio and print stands at four percent and 12% respectively.
Given these facts, we can conclude that TV is king and along with digital media, this is the primary playground for advertisers today, especially in times of economic hardship – and if businesses do not spend in these areas, they will not be able to ace their communication game.
As media buying houses, we strive to create effective media plans and acquire the best advertising placements for our client’s brands. When we do not get the optimal budgets required to fulfil viewership KPIs and efficiencies, we are not able to reach our full potential nor are we able to negotiate win-win ad placement rates. In such a case, it is the media buying houses that bear the brunt from all sides of the chain.
As a media investment representative and a Pakistani, I only want the best. There is no denying that the times are challenging for every industry and individual out there. However, I am confident that there is light at the end of the tunnel and we will make it, but only if we move smartly. We must focus on taking small and consistent steps instead of jumping to sweeping conclusions. I believe that brands do not have to increase their marketing spends dramatically to ace their communication goals and that even small increments can go a long way. Because the currency of the media industry is not airtime, it is viewership and a key contributor to any brand health indicators.
Brands and media houses have to up their game and arrive at innovative solutions. For example, explore new avenues in relation to content marketing. They have to get on board with out-of-the-box thinking because if they don’t, they can hire the biggest media buying agency in the world and get the best rates possible, but if they miss out on creative viewership spots or time bands then they will miss out.
Abdul Aziz is Head of Media Investments, Starcom Pakistan.