The UK advertising industry has entered a period of uncertainty; one, which could, and should, make industry players look at how they can ensure certain survival in uncertain times. Steve Latham (pictured below), general manager, Encore by Flashtalking, tells ExchangeWire that such disruptions can serve to create significant future value within the media industry.

During times of economic uncertainty, advertisers may have some difficult decisions to make.  Even just the fear of recession can sometimes prompt kneejerk reactions to cut marketing spend across the board – often cutting muscle along with the fat.

For advertisers, economic uncertainty represents a threat and an opportunity. They must learn to do more with less and focus on efficiency, transparency, and accountability. The decisions made today can pay dividends for years. I won’t argue that advertisers should spend more during uncertain times. I will argue they should spend smarter.

The US energy industry is a good analog for finding the silver lining in an ominous situation. Industry experts were convinced US oil producers could not make money under $60 per barrel. When oil fell to the $30s in 2015, producers responded by tightening operations, removing slack, and improving efficiency. They used data and analytics to make better decisions. In doing so, they reduced production costs by a third, allowing them to break even on $40 oil. To OPEC's chagrin, most are now profitable at $45-$50. While there were some dark days and restless nights, the long-term benefits outweigh the costs 100-fold. In the end, the oil glut crisis was a blessing in disguise.

This same scenario exists today for advertisers in the UK and Europe. The near-term uncertainty can be the catalyst for long-term improvements in media efficiency, effectiveness, and profitability. Best of all, it can be achieved very quickly.

Steve Latham, General Manager, Encore by Flashtalking

For starters, there is plenty of fat to cut. Over the past eight years we've measured digital media performance for more than 100 brands and agencies around the globe. In every single case, a substantial share of the media budget was largely wasted. In a typical campaign, 60%-90% of the results (sales, leads, or engagement) are produced by 15-35% of the media spend. Conversely, 20-50% of media spend produces very little (if any) return.

Forward-thinking advertisers have been using machine-learning models to measure the contribution of each media buy for years. Through attribution-based measurement, they have cut waste and optimised media spend in ways not possible using older KPIs.

But most advertisers are still behind the curve. They use outdated metrics and enjoy the lift from the rising tide of digital media consumption and commerce. If their overall objectives are being achieved (often set at a low bar), they turn their attention to other problems. As we often say, “if it’s not broken, don’t fix it”.

Today, the scenario is very different, as UK brands are reassessing budgets and seeking ways to become more efficient. If Peter Drucker were still with us, he’d say it all starts with solid analysis of good data. As he eloquently stated: “What can be measured can be managed.”

The stars are aligned to enter a new era of smarter advertising. All that is required is the resolve to do it. Now, more than ever, brands should invest in the tools and resources needed to achieve the next level of efficiency in data-driven advertising, measurement, and optimisation.

Here is a roadmap for raising the bar in any environment:

1. Get serious about data and analytics to improve the accuracy of media measurement
2. Use data-driven insights to identify the fat in your media budget
3. Commit to act on these insights by reallocating wasted media spend
4. Make transparency a priority: data, insights, and processes
5. Instil a culture of accountability in a constructive way: reward team members for identifying waste and taking action to address it

If you do these things well, you’ll have an edge on competitors and gain market share – in any economic cycle.

Disruptions often serve as a wake-up call to reassess and improve how we operate. Within the media industry, there is still significant value to be created. If advertisers will lean forward today, they can weather the near-term storm, while building a foundation for long term success.