With retail turnover in Australia falling by 0.6 per cent in Q2, the forecasted retail recession has arrived. Under challenging economic conditions, consumers are tightening their purse strings and becoming more considered about their purchases. 

When CFOs and board members see this decline in sales, and to better manage efficiencies, they tend to measure overall financial performance by using metrics like EBITDA (earnings before interest, taxes, depreciation and amortisation), something marketers often have little day-to-day visibility on. 

During these challenging periods, it’s common to see strategies pivot from revenue growth toward profitability. This means examining all fixed and variable operating expenses, to increase profits without having to sell any additional goods. When this happens, long term brand-building and awareness efforts are the first to be reduced as retailers switch their attention towards short-term cost savings.

With the current retail recession in Australia, we’re seeing the beginnings of extreme cost-cutting measures across almost every industry in attempts to survive. Retailers must think not only about short-term goals, but long-term ones too. 

Les Binet’s brand-building and sales activation analysis perfectly illustrates how there are different timeframes for sales activations versus building a brand. Sales activations are generally short-term goals, while building a brand is a longer-term strategy. To get the greatest ROI, they must work in tandem.

If we’ve learned anything from past economic downturns, they don’t last forever. Research shows investing in advertising amid a recession can lead to long-term profits and growth. With this in mind, it’s imperative to stay top-of-mind for consumers – so that when spending does revive, your brand remains relevant. 

So, how can marketers measure advertising ROI and use it to their advantage?

Measuring digital marketing ROI – and maximising efficiency

All marketing channels are intrinsically linked. This has made attribution and measuring marketing ROI particularly challenging – and even more so now Google UA has been retired and transitioned to GA4. 

Last-click attribution used to represent the ‘be all and end all’ for marketing ROAS. Now, we need to move to a more nuanced approach that acknowledges multiple touch points – for example Data-Driven Attribution (DDA). 

DDA will help you understand how customers respond to your campaign, where you can improve, and have a firmer grasp on the overall ROI. Based on real-time data, you can then adapt campaigns, scale successful strategies, and adjust targeting parameters for optimal results.

Ultimately, marketers need to look at marketing ROI holistically and evaluate all channels as part of a mix. The aim is to maximise the efficiency and lower the cost per acquisition across the whole mix by ensuring the right balance between paid, owned and earned media.

To that point, owned channels, like email and text, are the most cost-efficient. Rather than ‘renting’ a third-party audience you’re leveraging your owned assets. This is the best way to bring customers back to your site, re-engage lapsed contacts, and maximise retention and long-term loyalty. If you want to maximise marketing ROI and have a cost-efficient marketing mix, owned channels form a vital pillar of this strategy.

C-Suite collaboration is key 

As the marketing function has traditionally been viewed as a cost centre, rather than a revenue generator, it’s essential for CMOs to work collaboratively and intrinsically with the C-suite team.

As marketers and brand guardians, we’re wired to showcase this through storytelling, but understanding is going to be delivered through quantitative, data-driven rationale to showcase the business benefit. 

As brands continue to invest more in technology, it will be crucial CMOs, CFOs and CTOs align to ensure the tech stack measures up across all business functions. This will ensure all teams are working together, rather than in silos, and there will be more streamlined processes and transparency across the organisation.

This requires all functions to be open and transparent. 

The time is now

Performance marketing gives businesses a results-oriented approach, ensuring every marketing dollar spent delivers measurable outcomes. By understanding the fundamentals, exploring different channels, implementing best practices, and continuously measuring and optimising campaigns, you can harness the power of performance marketing to drive growth and achieve your goals. 

Whether it’s to foster loyalty or encourage a purchase, every positive engagement with your customers has intangible benefits. Awareness, reach, influence and loyalty are all important factors to consider. 

Regardless of an economic downturn or reduced consumer spending, the best chance for sustained success and future growth is to continually, effectively, and responsibly communicate with your customers. 

Marketers who set a foundation for sustainable growth and scalable performance will be positioned for success in the new era of marketing. 

Jamie Hoey is Australian general manager at Wunderkind.