As the prospect of a recession in 2023 looms, the debate about short versus long-term, brand versus activation spend is about to heat up once again.

By now, we're all familiar with Peter Field and Les Binet’s 60:40 rule which says advertisers should invest 60 per cent of their budget into brand and 40 per cent in activation.

Despite that, and all the research advising us to pump money into brand during periods of economic uncertainty, the message often gets lost in the stress of fighting over budgets.

If history is anything to go by, it's easier to get away with activation spending because advertisers – and CFOs – can quickly see the results from these investments.

The 2008 financial downturn coincided with the rise of big tech and we saw a 20 per cent swing to digital – largely activation-based spending. But that looks unlikely to happen again. As we move into 2023, digital mainstays such as Meta are already seeing a reduction in advertising dollars.

Instead, retail media is poised to step up to the plate.

Increasingly, marketers will put their budgets into retail media because it is measurable and most likely to have a direct impact on sales.

With this shift in investment, we’ll likely see an adjustment to the 60:40 balance.

An activation channel?

Most people's perception is that retail media is used for activation because it’s close to the point of purchase, at the end of the funnel. But that underestimates the power of the channel and the way it allows for the deployment of brand and activation spend.

Yes, retail media enables brands to activate and influence customers. In a measurable way, at proximity to purchase. But it also enables suppliers to have a brand conversation with their customers knowing they are in-market.

Advertisers should be looking at the channel thinking brand as much as activation.

When you buy retail media, you’re essentially buying against the customers of that retailer whether they are viewing earned or social assets or even the digital panels at the front of the store. There is no reason these assets have to be used for activation.

With retail media using first-party data, it provides the opportunity to reach customers at a granular level based on customer needs or segments. You could buy a segment that is new to your brand and build that brand affiliation first. Then, over the course of the campaign, start moving into more activation-based messaging and then retargeting.

But this is a relatively new way of thinking. Until digital retail media reaches the next level in its maturity cycle, many marketers will continue to put retail media in the activation bucket. That’s likely to tip the balance further toward activation than brand.

Thinking beyond digital

When we talk about retail media, everyone gets excited about digital channels because they are fuelled by first-party data and so are highly measurable.

But only 10 per cent of FMCG sales are actually occurring in these channels. Yes, it’s increasing. But we shouldn’t forget the physical store environment.

Research from retail industry association Shop! highlights that up to 80 per cent of decisions to buy are made in-store. That’s an awful lot of sales and decisions to influence from in-store screens, display, merchandising and even staff.

Building out omni-channel brand experiences within retail media ecosystems is going to be important for brands to win. And to do that, you need brand investment as well as activation which will eventually tip the scales back in the other direction.

Could 60:40 become 40:60?

With all of this in mind, we are likely to see the 60:40 split move closer to 50:50. We could even see a more extreme recalibration. A swing toward 40:60 isn’t unthinkable.

The beauty of retail media is that it allows you to wrap brand and activation spend and use it in a much smarter way. But there’s still an education piece required to get brands thinking this way and using the platform accordingly.

The economic downturn may well be the tipping point for retail media and it should certainly be the catalyst for the way we view brand versus activation in the channel and beyond.