Navigating change: Marketing 101 during recession
In light of the COVID-19 pandemic, many marketing campaigns have come to a halt – with a number of brands pulling their ad spend altogether. Out of fear and uncertainty, businesses are naturally cautious about where they invest their money in these troubling times. And with a recession looming over us, it’s unclear when things could get back to ‘normal’.
But what about this well-known adage? Since advertising began, research has suggested that maintaining and even boosting your ad spend during a downturn can be beneficial. You’re right to be surprised, we were too. But let’s look at the research.
For this we’re going back to the US recession of the early 1980s. The McGraw-Hill research study looked at 600 companies from 1980-1985 and analysed their ad spend during a downturn in the economy. “The results showed that companies maintaining or increasing their advertising expenditures […] averaged significantly higher sales growth.”
We’ve come a long way in the marketing world since the 1980s, but the reasons behind this trend still exist today. First up, your brand image. In a time of uncertainty, it’s more important than ever to portray an image of stability – to show how your business is adapting to the challenges presented and considering carefully how its customers’ needs may have changed. Strength, clarity and stability are qualities people crave when the world is turned upside down, so giving your customers reassurance could, in turn, boost your brand image.
Next, competitors. They may also be considering a cut back in ad spend, reducing the noise in your market and giving your business the opportunity to cut through with a new offer or launch. With all of this, it’s important to note sensitivity; at a time in which people are incredibly vulnerable, hitting them with hard sales is neither moral nor advantageous. Consideration needs to be given to your messaging – what can your business offer people in way of support? Consumer values have changed, purchasing decisions are emotionally led and expectations are higher.
“Brands able to meet consumer expectations and resonate with the changed values consumers actually revere right now will see long-term boosts in consumer engagement, loyalty, sales, market share, and profits.”
Adapting is survival.
As every kind of business looks to adapt to this ever-evolving situation, there may also be a reduction in advertising rates – making it a buyer’s market. So, as with your messaging, think about your formats. What’s the best way to reach your customers and what are they most likely to respond to? While TV advertising may just wash over people, the personal touch through direct mail or email can be a more effective way to communicate.
To wrap up, a great example of adaption in a time of crisis is Amazon. During the ‘great recession’ of 2009, Amazon introduced the kindle – a cheaper and more convenient way for people to enjoy books. “In the minds of consumers, Amazon became an innovative company by introducing a lower cost alternative to cash strapped consumers.”
Increasing ad spend isn’t for everyone and for some may be impossible during this time. But with ingenuity and a little bravery, many companies can adapt – interpret the shift in values, change the direction of their offering and support customers in a new way, while also maintaining a steady bottom line.
We finish with a quote from the founder of Wal-Mart, Sam Walton. He was asked what he thought about a recession. His answer – “I thought about it and decided not to participate”.
For more guidance on how to navigate your way through turbulent times, read our latest issue of the knowledge – available for ungated and free download here.