As CEOs of major corporations enter a year with fears of recession, high interest rates and uncertainty around consumer spending, their first reaction is to tap the brakes on spending. Unfortunately, marketing is often first in line for spending cuts. This is happening at a time when marketers are already quite shorthanded, struggling to keep pace with the constantly changing media landscape that requires new skills, personnel and funding.

At first glance, it may seem like a daunting task for marketers.  I would argue however, that this is a great opportunity for marketers to take a hard look at where they can become more efficient using technology and automation to do some of the things that are being done manually and through expensive people resources. This will quickly help them “find” money to continue delivering on what their company expects from marketing.

On a call this week, I was heartened to hear one such executive who had just faced cost cutting using the words “efficiency” and “automation” several times in our conversation. I think she is onto something.

Many marketers are now proudly announcing that over 50% of their media spend is digital.  P&G made this announcement at their recent earnings conference saying “We now have more than 50% of our media spend in digital. We are increasing our first-party data and our digital capabilities to increase precision of reach, not only in the US or in Europe, but around the world. And that is allowing us to drive significant productivity while increasing reach, while increasing quality of reach, and while more precisely targeting our consumers.”

While this shift to digital marketing is admirable, it is not just about shifting dollars – that’s the easy part. The important question marketers should ask themselves is: have they also changed their ways of working for some of the key activities of marketing to fit the digital world, or are they simply using the age-old processes and blindly applying it to digital. If it is the latter, they should be prepared for a very challenging 2023 as marketing budgets are trimmed.

Let’s take creative development for example. In the non-digital world, every piece of creative was manually built by creative developers from scratch in each market for the exact same brand/product. Oftentimes the only difference between one market and another was a small difference in the ad copy – perhaps in a different language. Yet, those ads were treated as entirely new ads to be built from scratch.

One of our largest brand customers over the last two years completely eliminated several boutique creative agencies they were working with. These agencies essentially were just replicating the same creative development again and again, in each market, for exactly the same products with only minor changes in the copy. These manual efforts took a long time, and they billed this customer for the full creative development like they were doing for TV and print. 

This smart brand realized that using creative automation technology, they could essentially use master creatives built once and dynamically customized for local markets with changes in copy, local images and so on – all of these being done automatically via Dynamic Creative Optimization (DCO) technology. This resulted in cost savings of over $15M a year while enabling them to create more dynamically personalized creative at scale. Importantly, the brand responded to market trends both globally and locally by being able to adjust messaging quickly, something they had been struggling with using the manual, people-powered way of doing things in each market.

If you look on the media front, the idea of “media buying” which used to be a largely human process has become completely automated and along with it media optimization. So, why is it that some brands still pay their agencies for armies of “media planners” and “buyers” – what is it exactly that they do when media has shifted to digital – programmatically bought media? Have agencies reduced the number of people being paid for by the brand to do this as they shift to digital? Has all the automation modern media buying platforms like DSPs bring to the table been used to reduce costs?

The same with measurement and optimization of creative, armies of “analysts” seem to pore over reports printed out or plugged into massive and unreadable excel spreadsheets to determine “the best performing creatives” or “the best performing media channels or audiences.” Again, why is this still human powered when DCO software not only provides such insights in pre-aggregated dashboards and analytics, but DCO-based platforms like Jivox even have AI driven algorithms that automatically optimize towards the best performing creatives and media channels.  

An awareness of these inefficiencies is what created the in-housing trend a few years ago. Brand marketers felt that leaving key marketing functions in the hands of agencies inherently created inefficiencies because yesterday’s agencies were, afterall, largely people-driven and not tech-driven. 

Traditional media and creative were both people driven. While some forward thinking agencies have embraced technology, many still follow the non-digital model of people-driven creative production and media services, rather than embracing automation. Embracing technology and automation often threatens the very business model of yesterday’s agencies – where traditional creative production methods and manual campaign optimization were the money makers.

Unfortunately, the knee jerk reaction some marketers have had when faced with budget cuts has been to outsource even more and push marketing activities to agencies where such costs could be folded into media provider fees or agency media fees. While this in itself is not an altogether bad strategy, not all agencies have pivoted to adopting automation to deliver efficiencies to their brands. The reality is that without automation the costs and inefficiencies don’t go away. They have simply been recategorized, and all it serves to do is reduce the amount of the budget being spent to reach customers.

Smart marketers on the other hand are realizing that the best way to manage through leaner marketing budgets is to lean even more heavily into technology and automation. Any other solution is a losing battle because the manual, human powered ways of producing creative, buying and optimizing media and creative will only get more and more expensive as tech savvy labor costs continue to increase and media channels formats and options continue to expand and proliferate.

There is a lot of money hiding with marketing and media budgets in the form of human powered processes and ancient workflows that need to change. A cut in the marketing budgets may be exactly the impetus for smart marketers to require their internal teams and external agencies to use automation. Why? Automation driven by technology will ensure that, despite cuts in marketing budgets, the marketing team can continue to deliver on sales and revenue by becoming more efficient. Marketers that do so swiftly will be well prepared to handle whatever form the economy takes and any demands the business will place on them.  As for any agencies continuing to procrastinate on embracing such automation, I want to share this thought: we haven’t even fully entered the era of AI driven automation when generative AI technologies like ChatGPT and Dall.E will become fully assimilated into marketing technologies. And when that happens, it will become very challenging for such agencies to survive.