Marketing during an economic downturn or a recession can be challenging for a business and its people. Both economic conditions are characterised by a decline in economic activity and reduced consumer spending. However, there are opportunities for businesses to not only survive but also thrive during tough times by adopting the right approach. One of the critical challenges for marketing during an economic downturn is how to maintain and increase revenue whilst costs are redeployed. Quite often areas like marketing as well as R&D are the first to be cut, which is often where the greatest value can be generated. The focus should be on providing value to customers and to reconcile with the fact that people are doing it tough. This may come in the form of discounts or promotions, brilliant customer service or rewards programs such as Qantas offering rewards points to customers that were vaccinated.
Whilst it may be reactionary, the worst thing to do is to stop advertising altogether. Take the case of Kellogg’s during the Great Depression, which outspent their largest competitor through radio and launched the now famous Rice Crispy, becoming the category leader during a time of significant unrest. Economic downturns present unprecedented levels of consumer attention and demand amongst a media backdrop where inventory is likely to become available by brands pulling back. This presents areas of white space, which, unlike white lights, should be run towards. The upside? Investing in share of voice and brand building activities during a recession drives long term profit growth:
Brands can also differentiate themselves by expanding into new markets or product categories that their competitors may not have considered. Take AIR company for example, a CO2 transformation business that pivoted during the COVID19 pandemic to create hand sanitiser:
Independent Marketing and Advertising Professional Peter Field puts it best, with seven guidelines for advertising in a recession:
- Do not hit the panic button and withdraw brand advertising, unless short-term survival depends on it.
- Resist the pressure to switch advertising spend from brand solely to activation – it makes very little sense to do so, even in the short term. Customers, in many cases are not reluctant to buy, they are unable to buy.
- If the resources can be found, aim to maintain your share of voice, ideally at least at the level of your market share, where SOV equals SOM. You may even be able to reduce your budget if others are cutting theirs but be ready to adapt quickly to developments. You will need to monitor competitive activity regularly.
- If the resources can be found, consider the opportunity to invest in lower-cost long-term growth by increasing share of voice during the recession.
- Do not abandon your existing brand campaign unless it is clearly unsympathetic to the mood of customers. There may be more value and reassurance in continuity than in change.
- Do not be frightened to use emotional brand advertising during recession – but ensure it is appropriate to the mood of customers. System1’s live research findings are right now supporting the use of advertising that demonstrates humanity through warmth, generosity and humour.
- Look for tactical opportunities to create goodwill through acts of humanity and generosity, especially if you were proclaiming these virtues before the emergency.