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#BigQ2018: Strained budgets, profit margins to impact in various ways

by MarkLives (@marklives) What are the expectations for the marketing and advertising Industry in 2018? We emailed a panel of key industry executives for their take on the macro environment, budgets, changes in messaging, movement in the industry and any consumer and communication trends they’ll be looking out for. Next up is Xola Nouse of The Odd Number.

Xola Nouse

Xola NouseXola Nouse, a former management consultant at Ernst & Young, holds an MA in business management and a BCom honours in marketing. He is the co-founder and managing director of The Odd Number — voted small advertising agency of the year in 2017 and ranked among the top 12 agencies in the country. The Odd Number was also voted joint 2017 One to Watch in Jozi and joint runner-up 2017 One to Watch in South Africa in our 2016 MarkLives Agency Leaders’ Most Admired poll.

Macro environment

According to the South African Reserve Bank, growth in our economy is projected to recover from 0.9% in 2017 to roughly 1.4% in 2018. While this may be the case, we continue to lag behind global growth and remain a dual economy with one of the highest inequality rates in the world, perpetuating both inequality and exclusion in the mainstream economy. The nett effect of our decreasing per capita GDP growth, reduced foreign investment appetite, credit rating downgrades and overall insufficient economic growth has resulted in us also falling behind our emerging market peers.

Essentially. what this means is that we’re not completely out of the red and that we’re still in for some tough times ahead, clients and Agencies alike. The glaring reality is that client budgets, as well as agency margins, will continue to be strained, specifically for small and emerging agencies.

Strained budgets and profit margins will have an impact on the creative industry in a number of ways:

  1. Smaller budgets will challenge agencies to become more agile and tactical in their plight to communicate to consumers and appeal to their interests.
  2. Clients will continue to split their business across the agency spectrum whereas, before, big brands were handed to big agencies to manage the capacity of outputs. Legacy agencies are now competing with smaller entrepreneurial agencies that are able to deliver sharp, innovative creative work in quicker turn-around times.
  3. Lead times for ideation and implementation of work will require on-trend understanding of market shifts that influence consumer behavior from agency side. Clients will require agile responses in a proactive manner; it will be up to agencies to always remain preemptive of looming shifts and trends. Agency operating models, as well as revenue streams, will need to be adapted in order to remain sustainable, profitable and ultimately remaining relevant to both clients and consumers.

Consistency of trends and patterns

In the year ahead, we’ll continue to see a consistency of trends and patterns, such as the rise of increased communication platforms, as well as new technologies and innovations that have contributed in the shift of doing business in adland.

In addition to these, the competitive landscape is also likely to continue to change. The emergence of management consulting firms such as Accenture, Deloitte and EY will continue to shake up the advertising industry. The narrative that these firms have successfully sold to clients is around their in-depth understanding of client centricity and the consumer experience, and how they (consulting firms) are best placed to build and grow brands through big data and a better holistic understanding of the consumer. Data, analytics and relationship-building with the target consumer will be key in remaining relevant.

With this said, creativity and the proverbial Big Idea will always reign supreme. Successful campaigns will always be driven by powerful nuanced ideas that resonate with the intended audience and deliver on a business challenge or need. What more will happen if you couple this with powerful and meaningful data?

Transformation

The pink elephant in the room will always be transformation in adland. This needs to come to an end. The MAC Charter will go some way in forcing the hands of those who refuse to play ball. Prioritising black and female ownership to achieve the mandated 45% ownership will continue to be a priority for most agencies and, possibly, a challenge for others. Either way, transformational change beckons for marketers, procurement departments and agencies alike.

In closing, 2018 is set to be another bumper year, requiring all of us in the communication value chain to operate somewhat differently in order to adapt to the changing market conditions. These adapted ways of working can only further strengthen the industry.

See also

  • Big Q 2017: Xola Nouse’s expectations for the SA ad industry

#BigQ2018 series

  • Tara Turkington & Tiffany Turkington-Palmer: #BigQ2018: World of marketing & advertising a sea of complexity
  • Wynand Smit: #BigQ2018: Security at forefront of consumers’ minds
  • Mpange Chapeshamano & Mthunzi Plaatjie: #BigQ2018: The year the ‘new’ independents keep on disrupting
  • Peter Khoury: #BigQ2018: Blend talent diversity, operational transparency to grow
  • Lebogang Rasethaba: #BigQ2018: Brand films are TVCs that aren’t scared to be overly sexy
  • Odette van der Haar: #BigQ2018: Creative effectiveness is channel-agnostic
  • Mike Abel: #BigQ2018: 2018 is not the ad industry’s Kodak moment
  • Johanna McDowell: #BigQ2018: Marketers to take digital in-house at unprecedented rate
  • Ashish Williams: #BigQ2018: Brands adapting comms to be part of consumer journey
  • Melina McDonald & Lorraine Smit: #BigQ2018: Production sees smaller teams, integrated offering
  • Joshin Raghubar: #BigQ2018: Marketing evolves from campaign activity to a service

MarkLives logoLaunched in 2016, “The Big Q” is a regular column on MarkLives in which we ask key advertising and marketing industry execs for their thoughts on relevant issues facing the industry. If you’d like to be part of our pool of panellists, please contact editor Herman Manson via email (2mark at marklives dot com) or Twitter (@marklives). Suggestions for questions are also welcomed.

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This post first appeared on Marklives.com, please read the originial post: here

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