“We’re Really up against It” The Business Landscape for 2023

The recent flurry of headlines forecasting economic headwinds has created a certain degree of uncertainty in the market. While uncertainty creates challenges for brands, it also creates new opportunities. Our client data at Ogilvy shows time and time again that companies that invest in meaningful brand building during a downturn see gains in the long run – from increased shareholder value to customer loyalty. We've even seen a negative impact on sales when brand spend has decreased. We saw this during the downturn at the onset of the pandemic, and I expect we will see it again.  

  

If there is one area where brands should direct investments, it is shifting from focusing on the image they project to the impact they are having on consumers’ lives and the world at large. It is especially important to demonstrate this kind of value during inflationary times. Agencies are here as business partners to help brands do that in creative and effective ways. Creativity is the superpower that can solve some of the world’s most complex problems. At Ogilvy, in addition to our incredible creative teams, we also have Ogilvy Consulting – an agile team of strategists, analysts, and consultants that can help clients identify the known needs, unmet needs, and unknown needs to help drive growth for their businesses.   

 

We have to start by recognising what clients face going into this year. I don’t need to repeat what we all know about the immense disruption and continuing headwinds all brands and businesses face. But as an optimist and champion for growth, I see a world of opportunity. For our clients, I see a need to avoid managing decline and to bravely explore and invest in thinking ahead to how to grow long term; towards innovation, new audiences, new products and services and all the other ways to stay relevant and win. The temptation will be to entirely focus on short-term wins, and small wins now can be big wins later. Agencies need to help clients do this by bringing outside perspectives in, by providing sharp predictive analytics and by using creative thinking to help clients see their way around the next few corners. And speaking of creativity, this continues to be the best weapon any brand can use to step-change their destiny in a matter of a moment - a growth multiplier if done right.

 

So, there are many rays of sunlight there for us as agencies to do important future proofing work with clients.This is why, at M&C Saatchi we are building a partnership platform for clients to seamlessly access and connect specialists, planning tools and creative talent across all their needs in order to make sure we support their growth far beyond the chaos of now.

For agencies, the ‘already-started 2023 downturn’ will require a shift not seen since the dawn of the covid lockdown.

Agencies will need to rely heavily on their long-term, often-taken-for-granted, core clients for stability to ride out the uncertainty. Agencies should expect fierce competition for all new work from their peers and pricing pressures as clients recognise their leverage over a shrinking market.

Most agencies should forget the technology, fintech, crypto and start-up sectors in 2023 for growth. They’re all reeling from higher interest rates, budget cuts, reorganisations, and headcount reductions. Industries like healthcare, energy, professional services and even not-for-profits should provide new growth opportunities.

On the positive side, agency leadership should expect an overdue shift in the employer/employee dynamic. For the past three years, employees have enjoyed a strong upper hand with a shortage of workers, non-negotiable expectations of working from home, and hefty salary demands. Many agency heads have struggled with this and likely find themselves today saddled with higher salaries than they’d like, uncomfortable working arrangements, and diminished cultures due to turnover and remote workers.

Economic downturns favour the employer. What that means for compensation packages, retention, and working from home will be interesting to observe. I suspect a return to something more balanced for employers and employees. Will we go back to pre-2020? No. And will we return to 2021? Also no. But in 2023, we will likely see a newly defined balance of the employer and employees’ needs being met.

To thrive – not just survive – agency leadership should prioritise workplace culture, competitive positioning, work product excellence, and focused business development to weather the storm.

The UK’s creativity is world class and with its pool of diverse skills, global talent, and creative capabilities, it is now the time for its advertising industry to secure a second decade of growth.

The UK Advertising Exports Group (UKAEG) – the industry’s global new business drive – works in partnership with the Department for International Trade (DIT) to boost the reputation of UK advertising on the global stage and accelerate its growth in export performance. UKAEG’s strategy is based on data from its annual export report. The report showed that international trade in UK advertising and market research services was worth £11.7bn in 2020, sustaining the same level as the pre-pandemic conditions of 2019. It also showed the US remains the largest recipient of UK exports, followed by Spain and Germany.

The UKAEG continues to raise the profile of British creative, media and digital companies around the world at global events. To ensure the UK’s role as a global hub, this year, the UKAEG will build on work with key markets such as the US, Europe and China, curating content and networking opportunities at key events such as SXSW, SHIAF, Cannes Lions and Advertising Week. The DIT and UKAEG will also launch a new marketing campaign aimed at North America, promoting members at the forefront of creative innovation. 

UKAEG’s new business programme went from strength to strength in 2022 and we want every company across the UK to be part of our drive for international growth in 2023. 

We are really up against it. Crisis upon crisis economically and culturally, with increasing societal polarisation.

It is going to get worse before it gets better, as the cost of living flows through to higher unemployment and also the continued decay of the service infrastructure, all of which will impact on clients and therefore agencies.

We recently published a report called ‘The Outperformers’. The research showed that the most successful brands are those with a stable core with fast tactical reflexes, and a holistic approach to marketing that is capable of extracting growth from increasingly complex environments. This kind of marketing takes creativity and collaboration, an understanding of data and an appreciation of purpose. And as the era of cheap capital has come to an end, and rising inflation threatens consumer spending power, it’s going to become more vital than ever.

At this time of uncertainty, 2023 may not be plain sailing for anyone trying to grow a brand. But those marketers who shift their focus away from solely traditional recessionary tactics and learn instead from the ‘outperformers' of today’s digitised, consumer-centric world will be better placed to spot opportunities, bring new initiatives and ideas to life, and retain that all-important competitive edge.

 

For any business, predicting the year ahead is a challenge. In fact, based on recent world events, you could say it’s an impossible task. As an industry which has long banked on the constancy of sport and entertainment, covid taught us that even the biggest moments in the calendar weren’t immune to a pandemic. There will always be an Olympics, a Euros, a BAFTAs, a Glastonbury… until, well, there isn’t. But as economic uncertainty once again clouds brands’ vision for the year ahead, lessons from the pandemic offer a reliable strategy for how brands and agencies can continue to thrive. 

The pandemic exposed an incredible resilience in our industry. More importantly still, it proved the persistence with which consumers value the things that make them happy – their passions. Overnight, we became a creative sport and entertainment agency faced with no live sport, no live music & no new TV and film productions. Fast forward three years, and those same industries are back to pre-pandemic levels of demand. Why? Because people are, and always will be, most invested in the things they love. The key for brands and agencies is to adapt to meet this demand when times are tough.

As an agency, our offering now is unrecognisable from 2019; it’s upheld by a clear positioning, driven by the power of passions, and more varied than ever before. It is proof that with the right strategy and creative, investing in passions delivers significant brand, commercial and societal impact, which ultimately drive growth. For us, it’s also the bedrock of our continued investment into our strategy and creative teams, as well as new digital products and offers.

Unlike with the pandemic, brands and agencies have the inside-line in foreseeing the inevitable economic headwinds of 2023. No-one is recession proof, and we’d be foolish to even whisper it, but the resilience and speed with which both we and our industry adapted in 2020, instils our confidence in the power of passions. We might lack clarity looking ahead, but brands can hold onto a confidence in passions – one which was proven by the pandemic and will persist even through the toughest of times.