What you need to know:

• Dentsu’s global boss cited research at Cannes that suggests two thirds of Americans plan to cut discretionary spend. It’s not hit yet, but a consumer spending downturn is surely in the post.
• Australian marketers, agency and platform leads say a crunch may be looming. “It’s a 2023 problem,” per Suncorp CMO Mim Haysom. But she’s not about to pull brand spend.
• LinkedIn ANZ boss Matt Tindale agrees brands pulling back has not yet materialised. But he senses “nervousness” in market conversations.
• Yahoo’s ANZ Sales GM, Rachel Page thinks Australia will see less wild swings should a downturn or recession eventuate, with marketers tapping experience honed through Covid to remain consistent and avoid going dark.
• In the meantime, brands are pushing harder into pragmatic or 'practical purpose' – actually tackling social problems rather than ‘glib stunts’ that just raise awareness, reckons Thinkerbell’s Adam Ferrier.
• The panel also thinks brands – and the big platforms – could learn a lot from Ryan Reynolds.

Brands are realising it’s better to first walk then talk on purpose-driven marketing. The likes of P&G CMO Marc Pritchard told Cannes growth has to come first – because it allows brands to fund ‘practical purpose’: Washing powders that work at lower temperatures save people money and reduce energy use, cutting carbon in the process. 

Pritchard spoke a day before Greenpeace activists scaled the Cannes Palais urging the ad industry to get out of fossil fuel marketing.

Yet sustainability and social good was probably higher on the festival agenda than ever. Suncorp won two awards for delivering on those fronts via AAMI’s Rest Towns and One House. CMO Mim Haysom thinks brands need to get the basics right – and put in the legwork to drive results in areas that align with their core business, or risk being called out. ‘Practical purpose’ was a phrase being bandied around the Cannes traps.

“Brands have to be authentic. There are a lot of conversations now around sustainability, climate change – the recent election shows how much Australians are starting to care about those things. But I think the watch-out for brands is you can’t just jump on the bandwagon and say it,” says Haysom. 

“If you are going to do work in that space, it has to be core to your DNA. Otherwise you’re green-washing. I think it is fantastic that brands are using creativity and innovation to solve big global and social problems. But whatever they do has to be core to their DNA or consumers will call them out. It's got to be authentic and true to a brands' core …  Or it's a bit of bullshit.”

Thinkerbell’s Adam Ferrier thinks the gaming industry is making strides in delivering practical purpose.

“I think sexism has been tackled in gaming, dyslexia – a whole lot of different issues are being tackled within the platform … And I love that it's not purpose for purpose's sake but there's a context of the purpose,” says Ferrier. “So you can stop bullying in the context of gaming or you can stop sexism within the context of gaming. If you take the context of what you are tackling, you can make the purpose actually meaningful. Rather than just glib stunts to draw attention or raise awareness - doing something to actually tackle it.”

What would Ryan Reynolds do?

Both Haysom and Ferrier were impressed with the “intelligence’’ of Ryan Reynolds – the Hollywood A-lister turned mobile network owner, adman and football club buyer – who said brands have the best IP, but no film to carry their stories.

“I love the IP comment and I love that framing for brand owners to try to figure out their brands and their inherent values. But I also like [Reynold’s] comments around speed and keeping up with culture and the fact that advertising is so slow, that it takes six months, twelve months... to two years to make stuff. And by the time we've made stuff, the culture has already moved on,” says Ferrier.

Reynolds also tapped the truism that necessity is the mother of invention when it comes to advertising and marketing. 

“I really like that,” adds Ferrier. “Having low budgets, having no time, creates really good work. Can you compare that to the gaucheness that is Cannes Lions and how much money is here? It's getting really big, really gauche.”

By way of example, Ferrier referred to an after-dark amble along la Croisette, the Cannes seafront bedecked by free-spending agencies and platforms paying stars to perform.

“It was quite late, I was walking past the Google YouTube tent and there's about 30 people watching Kylie Minogue play live in this exclusive tent. That's a long way away from necessity,” said Ferrier. “So I like the scrappiness of Ryan Reynolds and I like comparing that to the gaucheness that is here now.”

That’s not to say moving slowly and investing significant sums is bad, as innovation Grand Prix and Media Gold winner Mim Haysom can attest.

“It depends on what your objective is, what you're trying to do. But, yes One House was 18 months to produce and then in-market for a year, and now we've built on that with the next iteration of the campaign. That was a slow burn, but if you're going to innovate and actually prototype, test, learn and innovate again, then you need a bit of lead time,” said Haysom. “I think what [Ryan Reynolds] is talking about is that a lot of the best ideas that really resonate are the ones that are sparked by a cultural moment – and if you're playing in that space, you've got to be quick.”

Headwinds incoming: Will brands pull back?

Dentsu CEO Wendy Clark took to the stage alongside Ryan Reynolds, citing research that suggests 63 per cent of Americans are planning to restrict discretionary spending – but have not yet tightened their belts. “I don’t think we’re seeing the impact of this constriction coming through yet,” says Suncorp’s Mim Haysom. “I think it is going to be a 2023 problem, not a 2022 problem.” She also thinks the severity of impact is unlikely to be equal. 

“It will depend on what category you are in. If there is a downturn, things like grocery, wellbeing, beauty, they're going to do well. We've seen that happen historically. Things like entertainment that will suffer. There will be the discretionary areas that people restrict.”

Across the piste, Haysom thinks consumers will be seeking value. But she has no plans to alter how and where Suncorp invests its marketing dollars.

“Do I change the split of my budget? Absolutely not and I never do,”says Haysom. “My hope is that we've proved through Covid [the value in staying calm]. A lot of brands actually started spending more [during the pandemic] because they saw the value and the benefit in investing in their brand for the longer term – and that you need to be there.”

LinkedIn’s Matt Tindale senses fear brewing.

“From the conversations we've been having, people are nervous, but don't quite know what they're nervous about yet. There's a very tight labour market and record low unemployment, it's really hard to find great talent. You have that on one side and then you've got inflationary pressures, market volatility on the other side – and people are definitely conscious about that,” says Tindale. 

He thinks the B2B market is afforded some insulation, given that recent research suggests only 5 per cent of B2B customers are in-market at any one time, underlining the need to push harder into brand to attract the 95 per cent that are not yet in-market.

“B2B is sometimes less discretionary than consumer. There's an opportunity for brands to gain higher share of wallet and higher share of mind with their marketing over downturns, so it could be a really good opportunity for brands to continue to invest even at normal levels and actually steal market share,” says Tindale. “But I think there's definitely uncertainty there … and people are planning for it now.” He concurs with Haysom that any crunch is more likely to manifest itself in 2023 than over the remainder of 2022.

Yahoo’s Rachel Page takes the same view.

“I agree on 2023. We're not seeing or hearing of any changes to budgets at this point, but I do think we've got to be confident with all the information we do have, all the learnings in the last few years, that we can get through headwinds, without [over] reacting,” says Page.

“So I think we're going to be a less reactive market. I think consistency is really important rather than jumping in and out and we've got some amazing marketers that are backing themselves with a consistent long-term plan,” she adds. “If you can get through [Covid] you can get through anything.”

Thinkerbell’s Adam Ferrier believes the market is far more resilient to downturns than in previous negative growth cycles – and agrees that Covid lessons should help marketers hold their nerve.

“I think we're coming from a higher base of wealth – the recession before came from a lower base of wealth so therefore it had more people being impacted more negatively. But now it means I've got one less streaming service during a recession,” he suggests.

“On how marketers react, I think Mim is exactly right. I don't think marketers should necessarily change [strategies], because it's marketing whether it's a recession or not. I love Byron Sharp around you take the entire market rule number one: you spend as much money as you can on marketing. Rule number two, you divide that by twelve and spend across every month and I think that general principle will still apply,” says Ferrier.

“I don't think anybody's going to pull it out of brand building activity and try to go into performance... I think we're more sophisticated than that.”

Ferrier thinks brands have bigger picture fish to fry.

‘’During these times [it’s about] how businesses are trying to migrate their businesses into more pro-social business models, taking advantage of the circular economy and moving to clean energy,” says Ferrier. “I reckon that's probably the more interesting macro challenge than how they're going to deal with six to twelve months that may not be quite as good as the previous [period].”

Rebalancing ‘techification’

Matt Tindale’s big boss, LinkedIn global CEO Ryan Roslansky presented data at Cannes that blended LinkedIn’s data that maps the professional movement of people with those that regularly attend the Cannes festival. Over the last five years, Roslansky said there has been a 67 per cent increase in attendees with “hard tech skills” while the share of attendees with creative skills has decreased by 32 per cent.

“Clearly, there's a shift in what matters to the industry [underway],” Roslanksy said. “We see an even clearer view of this process of ‘techification’ when we look at overall job hires in the ad industry. In 2015, the ratio of creative roles to technical roles hired was one to one. In 2021, that ratio was one to 1.25 – a 25 per cent increase over the past five years,” he added. “Maybe that doesn't seem like a big change, but when you magnify this across thousands of roles and companies, we can see the makeup of the industry is fundamentally changing.”

Mi3’s Cannes panel agreed required skill-sets – and the breadth of skills now required of marketing teams – is shifting. But Suncorp’s Mim Haysom thinks creativity still comes first.

“There's huge demand for data analysts, architects, all of those things … because we have more data than ever. But when I’m building a team, my lens is always “are you a creative thinker, an innovative thinker?’ Not just having the core functional skills, it’s a mind-set thing as well,” says Haysom. “If you have creative thinkers, you can upskill them in some of those areas – if they are of interest to them.”