Inflation Cools but Rates Go Up – What This Means for Marketing

0:00All right. So inflation has cooled a little bit, but rates have gone up. and we're going to talk about what that means for marketing. But Neil, you're better with remembering numbers. Do you remember what the recent numbers are? This is recording as of July 30th, by the way. It's around 4 % the last time I checked CNBC. 4.1%, right? It's foreign change, I think. I don't know what the exact number was. And then rates are... It's been so low since 2021. The rate's at 5.25 % now, correct? It's usually a range. I don't know what the exact rate is, but it would be like 5.25 to 5.5. Or the Fed funds rate, I mean.

0:37Yeah, the Fed's fund rates is typically a range. So it would be, I don't know what the rate is, but if it was 5.25, it would be somewhere around like 5.25 to 5.5. Okay. So for those of you that don't really follow this stuff, I mean, we want to bring this up because all interest rates affect the entire economy, which affects marketing at the end of the day. And we kind of gave our predictions, maybe, I don't know, 10-ish episodes ago or so. I still think it's a 50-50 chance of recession, but we're not here to predict the economy. We're more so here to talk about what this means for marketing. My take on this is that I think at least for the next quarter or two, at minimum, people are still going to be a little, call it, a little gun shy when it comes to marketing, advertising in general.

1:23What Neil and I have reported is that our sales cycles are longer. So what used to be maybe a 30 to 45-day sales cycle, at least on the ad agency side, is now maybe anywhere from like a four to six month sales cycle. So it's not like people are saying no, it's more so they're kind of tiptoeing around and waiting to see what happens with the economy. I think at least this increased rates are going to continue on for the next maybe year or two at minimum, if not more. And so, you know, I think people are being cautious to be more efficient, which I think is a net win for the longterm. Yeah. And you're right.

1:534.1 according to CNBC and then I started looking at details. So, that brings a benchmark borrowing rate range from 5.25 to 5.5. So, yeah, rates are going up. They're probably going to increase another 0.25 % summertime this year. And their plan is working. It's causing inflation to slowly go down, slowly or fast. It depends what, how you actually want to look at it. And the way I see it from a marketing perspective is put a lot of pressure on marketing. A lot of people have cut back, but with GDP growing, a lot of marketers are having, companies are having confidence again, and we're starting to see companies starting to move forward with marketing projects, marketing spend.

2:45And if this continually happens, you're going to see more competition. Google and Facebook's earnings weren't bad. They both saw sentiment starting to come back when it comes to advertising. And this is going to cause marketing becoming more competitive for anyone pretty much listening just because more people are going to be willing to spend. I think Facebook did their quarterlies recently. I think Google reported as well and they all crushed it. I don't know what the numbers are. But also speaking of GDP, I think... So GDP GDP increased at an annual rate of 2.4 % in the second quarter of 2023.

3:22And it was in 2022 where it went down for two quarters. But I think it's not an official recession, quote unquote, until it's like three, I believe. I could be wrong there. But the fact of the matter is like, what does this mean for you again? Like this stuff you can't really control. But what you can control is just to be aware of how people are approaching marketing right now. In the next couple of episodes, we'll talk about who's offering discounts and things like that as well. Yeah. And what you should end up doing is whether rates go up or down, if your marketing is positive and you can generate ROI, continually double down.

3:55Don't stop. If you can't make your economics work, whether rates go higher or lower, doesn't matter. Move on and try a different marketing tactic. Yep. And the other thing too is if you know that a lot of these platforms are already offering these discounts and you're already hitting good numbers, you should try to reach out to them and see if you can get a second discount. And so that's from our mutual friend, Syed Balki. And his thing always is when he goes to... Let's say he goes to a hotel, for example, there's an initial discount. But he's like, Eric, there's actually a second discount. So always go for the second discount if you can find it.

4:29And it is what it is. So don't be afraid to ask. It's free to ask. And let us know how it works out for you. Let us know how the second discount works out for you. We're keen to know. And that is it for today. Please Don't forget to rate, review, subscribe. Five stars, please. And we'll see you tomorrow.