We all are witnesses to end of the era of easy profits in Latvia and to the rapid rise in the cost of living. This quickly results in a shortage of disposal funds which in turn causes a more pronounced tightfistedness, which again leads to pragmatism. In the future, when considering communications ideas and brands, both company CEOs and buyers will look for not only emotional benefits but also rational justification, added value and efficiency.

As the economy cools down, the competition gets tougher and this process will gradually weed out the less professional and creative marketing firms. Accordingly, acquiring new clients and maintaining business growth will mean taking them away from weaker competitors instead of simply “skimming them off” from the growing purchasing power and rapid growth of the sector in Latvia. Thus strengthening the loyalty for market leaders and an aggressive acquisition of the market share for smaller firms will become a vital necessity to ensure further development and to overcome stagnation. In this situation, reduction in marketing investment would be an extremely short-sighted and even risky step to take.

I am sure that, although not as rapidly as during the last few years but this year and in the next three years as well, the overall advertising market will continue to grow (by at least 20% annually). Yet, at the same time, the need for higher returns from advertising will grow much faster. Marketing and advertising investment will be more thoroughly reviewed both before the campaign and after it. This means that more time, attention and money will be spent on studying the target audience and developing the communications strategy, there will be demand for a more professional assessment of campaign results through assessing not only sales figures but also the achievement of specific communications goals.

Likewise, the cooling economy will require a serious review of the growth potential of companies, a more thorough search for uniqueness in products and brands, more active and faster offering of new and innovative solutions. The use of narrower and more targeted media channels (Internet, mobile marketing, other digital media) will increase, just as the development of more individual communications content, which might resultin a slower growth rate of the overall media budget, but at the same time the growth rate of communications planning and the development budget might increase. So far, the most successful and effective were the ideas that achieved a significant effect and business result by using relatively small media investments through involvement of the target audience in creating the message, progress of the campaign, involvement of friends and active word of mouth.

Thus the cooling down of the economy or even a scenario of “hard landing” in the Latvian advertising sector could introduce several rather very positive changes. In order to achieve an excellent result with limited resources, the idea must be more exciting and the advertisement – more creative, the selected communications channels must be more precise and results – even more measurable. All the marketing managers and ad-makers who will continue along the beaten track may experience increasing difficulty in justifying the usefulness and efficiency of their work.