Sure, it’s a scary time, the world is in lockdown, people are confined to their homes and toilet paper is in scarce supply. While it may be instinctive to cut costs during times of economic downturn, your marketing budget should be the very last thing you curtail. Marketing in times of recession is an investment, both to maintain brand presence and more importantly, grow the brand once the economy stabilises.
600 B2B companies that increased advertising during the 2009 recession experienced a 256% growth in revenue only 4 years later, demonstrating how brands that lean into the downturn will experience exponential growth in the ensuing years (WSJ, 2020).
A 2002 study on the effect advertising has on sales looked at the advertising expenditure of over 822 businesses over a six-year period post the 1990-1992 recession (Kamber, T. 2002). The findings were:
Those businesses that maintained or escalated ad spend during the recession had a five-year sales growth which was 25% higher than businesses that did not.
Those businesses that increased ad spend during the recession had a positive and significant increase in short term sales.
The statistics also showed how the relationship between ad spend and sales growth is strongest during recession and times of economic hardship.
Clearly we can conclude that advertising during times of economic downturn is just as important and perhaps more beneficial than advertising during times of economic growth.
Supporting this is the recent trend in ‘revenge spending’ in countries that have successfully flattened the coronavirus curve. Store traffic in these countries are at an all-time high after falling as much as 80% at the virus’s peak earlier this year (Williams, R. & Jinshan, H. 2020). Managing Director of Agility Research, Amrita Banta, used ‘revenge spending’ to describe pent up consumer demand that was unleashed in the 1980s after the poverty of the cultural revolution in China. Marketers should look at economic turmoil as an opportunity – An opportunity to:
Innovate: introduce something new or recreate something established. For example, during the 2009 recession Amazon grew its sales by 29% by investing in new products, innovations and marketing.
Project an image of stability: ensure your customers are cared for and know that you’re not going anywhere. Guinness’s recent St. Patrick’s Day advertisement speaks to the longevity and resiliency of its brand by addressing the crisis face on – St. Patricks Day Ad
Dominate share of voice: during times of crisis there is less ‘noise’ from competitors making your brand more noticeable. An increase share of voice leads to an increase share of market, and an increase share of market leads to an increase share in profits. For example, in 1990-1991, Taco Bell and Pizza Hut took advantage of McDonald’s decision to drop its advertising. Pizza Hut’s sales increase by 61%, Taco Bell’s by 40% and McDonald’s sales subsequently declined by 28%.
Opportunity must be approached with care and cautious optimism in order to bounce back successfully.
Successful marketing is about being agile in the face of adversity; being able to harness the bad and drive positive outcomes. For some brands, they’re donating their media to the likes of the World Health Organisation. Others are looking at new types of services and messages that they can provide to support people through these tough times.
Take a stand and don’t quarantine your marketing strategy, you could just come out on top!