Interest rate hikes: How will it affect South African Marketers?

South African interest rates are going up with the effect that consumers spending will go down. In US consumer spending is also dropping and it is hurting both US and global brands. How is marketing managers reacting to the economic downturn? Forrester Research has conducted research and on the marketing implications of economic (spending) downturn.

Forrester asked its CMO Panel how the downturn would affect their budgets. More than one hundred panel members, with an average marketing budget of $83 million, responded that they expect their CFOs to demand an average cut by 3%. They said they would save on branding, advertising, and traditional media, while keeping budgets for loyalty programs, marketing technology, and new media mostly untouched.

Jaap Favier the Vice President and Research Director of Forrester suggest the following strategies to survive the downturn.

1) Employ agencies that connect with consumers. Traditional agencies excel at above-the-line mass marketing -- the line items you want to cut. Forrester believes that the agency of the future will excel at understanding your consumers, involving them in defining the brand and spreading the message, and in making them loyal brand advocates -- supporting those budget items you are keeping strong. Some agencies are on the path to connecting with consumers via social networks.

2) Start experimenting with online video. Traditional media is getting into the perfect storm: Consumer attention and trust is at an all-time low, and advertisers are cutting both ad budgets and old media budgets. To survive, they need to target ads and content to individual households and consumers. By experimenting with Web video, to understand which processes, content, and customer intelligence you will need when television offers the same functions.

3) Invest in intelligence. The name of the new marketing game: targeting. Marketing leaders have voted with their wallets to reduce the two large budget items that show the biggest waste. To get the most from their reduced budgets, they need to understand their clients better - their (media) behaviors, attitudes, needs, and social connections.