Marketing efforts in 2020 will be taking place in a climate of growing economic uncertainty: 56% of U.S. CFOs are preparing for the possibility of a recession by the end of the year, according to The Wall Street Journal. Economic worries don’t necessarily translate into smaller marketing budgets. However, retail marketers will need to justify that their campaigns are cost-effectively reaching their targets and boosting key metrics like awareness, conversion and retention.
“Consumer confidence is starting to level out and even decrease, and we’ve seen that through recently published numbers,” said Tina Moffett, Senior Analyst at Forrester in an interview with Retail TouchPoints. “I think that there will be more awareness in terms of where marketing budgets are going, more reliance on a CMO to look at the numbers in terms of what’s working and what’s not working to really form future marketing planning.”
Moffett expects overall marketing budgets to stay on par with 2019 levels, though how those budgets are allocated is expected to shift as marketers try to keep up with changing consumer attitudes. Some of Forrester’s other marketing predictions for 2020 include:
- An increasing focus on authenticity: At least 10% of marketing budgets will shift toward influencer marketing as retailers seek to build brand authenticity — and marketers also will look for modern ways to improve perceptions of convenience, quality and trust;
- Streaming services as a source of partnerships: Netflix wants to remain ad-free in the face of growing competition, which will lead to beneficial partnership opportunities; and
- DTC acquisitions to build market share: Large retailers and CPG companies looking to refresh their brand image may purchase DTC newcomers to help them enter new channels and create new experiences.
Authenticity, Convenience, Quality And Trust Aren’t Just Buzzwords
Moffett noted that one of her colleagues believes the firm’s prediction of a 10% shift of marketing dollars from agencies to influencers is actually on the conservative end. The power of authenticity could become even more pronounced if the U.S. hits an economic downturn, with “relatable” brands like NYX exerting greater appeal than “untouchable,” high-cost brands like Revlon.
“We think the trend is going to be towards influencers that have more relatable, authentic experiences with specific brands,” said Moffett. “I think it completely depends on finding influencers that can convey the authentic experience of using a product from a specific brand. Given that, there may be more experimentation with micro influencers — really targeting a specific group of customers with influencers that can crack that authentic experience.”
Other areas where retailers may need to pivot their value propositions in order to navigate shifting trends include:
- Convenience: Convenience doesn’t just mean making sure Coca-Cola is always in-stock anymore. Moffett cited Trunk Club as an exemplar of modern convenience: the retailer’s combination of highly personalized boxes and easy returns for items shoppers don’t want goes a long way towards taking friction out of clothes shopping;
- Quality: This attribute is no longer about the intrinsic virtues of the product — it’s about the experience and connections the products inspire. For example, Tesla is one of the brands setting the modern standard for quality, by combining luxury cars with a powerful message of environmental sustainability; and
- Trust: While trust used to be about familiarity and legacy, shoppers are now more likely to trust a brand that has proven its transparency. Retailers also should present the message that they can meet the customers’ needs while also caring about their effect on the world.
Netflix Partnerships Create Fertile Ground For Cross-Promotion
Growing competition in the streaming space could present powerful new advertising channels for retailers, according to Moffett. Netflix in particular is expected to double its marketing partnership investments, which could provide a mutually beneficial advertising channel that helps both the streaming company and retail partners.
“Netflix, whether or not they will admit it, needs to find another source of revenue beyond subscriptions,” said Moffett. “I certainly think that there is opportunity for retailers. Burger King is one example [through the Stranger Things-inspired Upside Down Whopper]. They were a focal point of content that was on Netflix, and because of that they were able to create all of these promotions that not only promoted Burger King, but also had a downstream effect to Netflix as well.”
Similar relationships could become a two-way street, with Netflix offering product placement on major programs and retailers turning popular series into in-store events. Smart activations driven by these partnerships let retailers connect with shoppers in authentic and memorable ways, while avoiding potentially “creepy” personalization or disruption caused by traditional ads.
DTC Acquisitions Add A Fresh Marketing Perspective
Forrester doesn’t see DTC as a completely new go-to-market strategy, but these up-and-coming retailers do bring a fresh approach to marketing that has real value for legacy retailers, according to Moffett. Acquiring a small company won’t add much in the way of additional market share, but bringing its executives’ unique expertise in-house can jumpstart a larger retailer’s outreach into new channels.
“What they have is a deeper understanding of how to use channels like Instagram to create that authentic experience, to really build a value-based positioning and to really connect with the customer on the customer’s terms,” said Moffett. “That’s how I think a lot of retailers can benefit from a DTC brand.”
She cited GNC as a traditional retailer that could unlock great potential through the acquisition of a health or wellness DTC company such as Ritual or Noom. Ritual’s DTC vitamins and Noom’s emphasis on building healthier habits would fit right in with GNC’s existing value proposition, while adding new capabilities and helping the retailer break into new markets.
Ultimately, every retailer’s 2020 marketing strategy is going to reflect their overall business goals, whether that’s driving growth among existing customers, building awareness or reaching new demographics. However, regardless of their strategy, retailers will need to be efficient with their resources in uncertain economic times, and cognizant of ways to reach their audience through the right channels with messaging that resonates.
“What marketers really need to be prepared for in 2020 is this notion of omnichannel marketing and having a more holistic marketing campaign,” said Moffett. “We predict that it’s going to be paramount for retailers to be more efficient — they need to understand what specific omnichannel marketing strategies are working, are effective and can grow the right customers.”