Recession Marketing – Thoughts from our CEO
Downturn, mini-budgets, cost of living crisis. The news is a tough listen these days. Both individuals and businesses are being asked to make impossible decisions when it comes to where they prioritise their spend. As consumers tighten their belts, it’s inevitable that businesses will be reviewing costs, and working out how to cut outgoings while still seeking to future-proof their business and its profits.
After twenty-five years of working and running agencies, my experience suggests that one of the first items Finance Directors will look to cull is the marketing spend. It’s also my experience, and indeed the experience of over a century of business and recession administrations that maintaining marketing during a recession is advisable, if not vital to the long-term health and growth of any business. Here’s why.
If you decide to reduce or stop your marketing spend during a recession, you risk losing your market share to competitors, as well as allowing spontaneous audience awareness to erode. Canny competitors will be picking up where you left off. Gobbling up market share, dominating audience attention and gathering future-motion for after the downturn. So, while the business might save money in the short term by reducing spend, in the long run the investment you’ll need to get your brand back on track will significantly outweigh any benefit.
Statistics have repeatedly shown us that brands who bow out of marketing during a recession do worse than those who reinvest during times of economic pressure. From Kelloggs doubling its ad budget, moving aggressively into radio advertising and heavily pushing its new cereal to race ahead of the then packaged cereal market leader Post in the Great Depression of the 1920s, to Amazon banking a 28% increased market share in the downturn of 2009, there’s no question that recession marketers win out.
Even the accountants would agree in the Chartered Institute of Management Accounts (CIMA) ‘Managing Strategy in a Downturn’ report which opens with the statement “At times of economic upheaval and low availability of finance, there’s a real danger that corporate strategy can take a back seat to survival. But organisations that abandon strategic thinking not only run the risk of undermining their chances of advancing their business when the economy improves, they also endanger their ability to weather the storm.”
How does this work in practice? For companies fearing the squeeze and anxious about any spend, what do they do? We hear the concerns, and we understand them. Our advice is to think differently and spend consciously. Make your budget work harder rather than taking on extra liability. Marketing is a science, not a gamble. Any great agency will be coming to the table with expertise, data and insights that allow the right marketing strategy to be put in place to spend in the most intelligent way possible.
One example of this is experiential marketing and events, a sector where we’ve seen a very positive uptrend. Since Covid, consumers are keen for a spectacle, an experience that they’ve missed in recent years. Finding ways to offer individuals some added value is hugely attractive particularly in times of recession. When money is tight, offering brand sponsorship or promoted brand events can be a way to engage with your audience and nurture loyalty. By offering consumers something they could not access themselves you have found a cost-efficient way to promote your brand all while being compassionate and engaging.
My team and I are happy to talk you through any recession marketing questions you may have. Or to set up a meeting to help your senior teams weigh up the pros and cons of marketing spend during these difficult times – as well as the alternatives your business has rather than simply pulling the plug on all activity.