At A Jubilant Cannes Lions, Marketers And Agencies Quietly Prepare For Recession – The Drum

After three years, Cannes Lions has returned – and it feels like it’s never been away. The rosé has been flowing, the beach parties bouncing and the stages packed once more with media moguls and ever so slightly perplexed Hollywood celebrities holding court about the future of advertising. Here, among the industry’s top creative and marketing talent, the mood is one of celebration. Everything is right with the world again, then? Let’s not be too hasty.

Lurking above the sun-soaked Croisette there looms an ominous economic cloud that, in public here at least, few have been eager to acknowledge. In private, however, the impending threat of recession and the turmoil that could wreak on an industry still recovering from Covid-19 is something marketing’s powerbrokers have been deliberating. Will the adage that ‘marketing is the first thing to get cut’ be shown to be true once again?

Cannes Lions

The mood in Cannes has been one of celebration but tougher times may be on the horizon

The agency view

At ‘WPP Beach’, the holding company’s temporary Riviera headquarters, its chief executive Mark Read says he is confident clients will continue to invest in marketing and there will be no repeat of the short, sharp shock of 2020, when many stopped spending altogether.

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“While consumer spending remains strong in most parts of the world – albeit it’s under pressure in the UK – I think clients will continue to spend,” he tells The Drum.

“I do think clients learned during the pandemic that the best course of action is to invest in marketing when they can and to try and sustain that investment. I certainly don’t think we’re back in the situation we were at in 2020 where clients pulled spending in significant amounts as the pandemic unfolded.”

Speaking earlier this week at The Drum Arms, Read’s WPP predecessor Sir Martin Sorrell conceded “the rest of the year – and next two years – will be challenging”.

“I think the mood is quite realistic,” said Sorrell, who now runs rival outfit S4 Capital. “Clients are very focused. One of the things that surprised me in Cannes was a CMO saying to me that he was more concerned about awareness and brand than he was about tactical and measurement and lower down the funnel.

“But generally, people are very focused on performance, very focused on measurement, very focused on media mix modelling, very focused on first-party data and the signals and bringing them together in a meaningful way. So I think [advertisers] will become more tactical.”

This potential shift in budgeting from playing the long game to shorter-term, sales-led efforts is one consequence, repeatedly hypothesized in the terrace conversations here, of brand marketers becoming unsettled about economic uncertainty. Agencies and suppliers, in turn, would be left with shorter contracts and all the insecurity that brings. But WPP’s Read warns this may not be the economical solution that it appears. “Given the pressure on input prices, promotions sometimes make less sense given the margins you need to give up,” he says.

Pip Hulbert, the chief executive of one of Read’s agencies, Wunderman Thompson, agrees we could see a shift in how clients manage their budgets. “But hopefully we won’t get that naivety that we would stop all of the [brand] discussions by narrowing in on the here and now,” she says. “I think it’s about trying to encourage having that short-term reactive and that balance for longer term as well.”

For some clients, however, the need to focus on the here and now will be inescapable.

“If there is a recession as people are saying there may be, for some businesses it will actually be important to hunker down and get the short-term sorted,” says Tom Roach, vice-president of brand planning at Jellyfish. “But of course, there is evidence – quite a lot of evidence from the brand-building word – that the brands that cut back too much might leave that recession later and in a worse position than brands that maintain their spend.”

Roach cautions against making generalizations about how brands will react to recession and sympathizes with those that will be forced to make the tough calls that agencies might not want to hear. “If a business needs to survive then it needs to survive, and it will do whatever it needs to do to do that. So preaching about how you need to be spending a certain percentage on your brand-building activity when there’s survival at stake of course doesn’t make sense.”

The brand response

For agency leaders in Cannes, this week has been an opportunity to look their clients in the eyes and get a handle on their thinking. As one senior holding company figure put it to The Drum: “We’ll be spending much of our time here with existing clients, rather than courting new ones. It’s an opportunity to gauge who’s happy and who’s not.”

But as Sir Martin Sorrell admitted in his interview at The Drum Arms: “Clients don’t like to give agencies bad news. I mean, it’s very rare that a client will say, you know, I’m going to cut my spend, or I’m going to limit my spend – maybe until the very last minute. So it’s very difficult to really figure it out.”

For their part, major clients have continued to talk bullishly about investing in their brands. At the front of this pack is the highly influential Procter & Gamble chief brand officer Marc Pritchard, who has been on a two-week tour from Viva Tech in Paris to Cannes Lions imploring his peers to spend their way through the headwinds to come. “Double down” on marketing has become his repeated refrain.

Bram Westenbrink, global head of the Heineken brand, does not relish recession. But like Pritchard, who described “creativity as a superpower” here at Cannes Lions, he believes those brands that invest in creativity during economic strife can find a competitive advantage.

Westenbrink says: “At the end of the day, we’re a company that’s long-term. We’ve been here 150 years, so we always focus on long-term. The beauty of a recession, if you flip it, [is that] creativity only gets more important. Because the beauty of creativity is that every project has its values – money, time and people. But there’s one thing that can cut through all of them and that’s creativity. It’s the ultimate problem solver.

“I truly believe we’re always going to keep investing in brands. We’re there for the long-term. We learned a lot during Covid, we kept our investments and we will do that [again]. It’s also a greater opportunity for creativity when things are a little bit more constrained again.”

For all that Cannes Lions may not have changed since the industry last converged here in 2019, the growing consensus is that it will be those that best heed the lessons of the last three years that will return in the most celebratory mood in 2023.

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