Why is that strategic marketers spend during a downturn?
It’s been a challenging year of politics and a tough economy for most this year. I have discussed such woes with many marketers and agency owners, I’ve consistently heard murmurs of hesitation lurking in the air. That hesitation has lasted most of 2019. Marketing budgets and innovations have been put on hold, as we wait. Wait for more certainty, wait to see what competitors are doing.
We saw a similar kind of drawback in spend in the 2008 recession. Advertising spend retracted by approx. 13%.
Yet many studies have shown that slashing marketing budgets during a downturn isn’t the wisest move.
Certainly, we must be sensible with our budgets, but should we be following the herd? CFO’s are looking to make cuts, but they might not be considering the long term effects of such a move. As the adage says “When times are good you should advertise. When times are bad, you MUST advertise."
Here are a few reasons why:
1. With overall ad spend lower during a recession, the share of voice and cut through of your brand will be stronger. This is a rarity which should be taken advantage of.
2. A side benefit of ad spend dropping is that advertising prices drop too. This is particularly evident in self-serve bidding platforms like: Google, Facebook or Twitter. It makes sense that when a media auction has less bidders it creates a ‘buyers’ market’ and a reduction in cost per clicks.
3. With instability in the air, a voice of reassurance goes a long way. Consumers seek a refreshing shift from news about economy. In the 2008 recession in the UK, sales of lipstick actually went up. People wanted to treat themselves and companies like Dior did an excellent job of projecting brand strength and a re-injection of fun.
4. When a brand goes ‘dark’ and stops advertising they start to lose ‘share of mind’; they are not remembered, thought of, or considered. This tends to lead into a reduction in market share and a dismal effect on sales. Growing brand awareness is a slow build over time. Brand equity can be quickly destroyed by halting communications. It is worth telling your CFO that it will typically take longer and additional advertising money just to get the brand back to the position it was in previously.
5. Bargain hunters will be receptive to price reductions, sales or promotions you advertise. During a downturn, people want to feel like they are getting a bargain and will happily tell their friends and families if there are deals to enjoy. This could be an opportunity to introduce new customers to your products or services through a promotional discount.
In case you still need some convincing, let’s review the ninety’s recession whereby McDonalds decided to drop their advertising spend. Taco Bell and Pizza Hut used this movement in the market to strike and increase their spend and promotions. In fact, Pizza Hut increased their sales by 61% and Taco Bell increase sales by 40%. McDonalds sales sadly declined by 28%. (Source: Forbes Brad Adgate, 2019).
McGraw-Hill Research conducted a study of U.S. recessions from 1980-1985. Out of the 600 business-to-business companies analysed, the ones who continued to advertise during the 1981-1982 recession hit a 256-percent growth by 1985 over their competitors that eliminated or decreased spending.
The argument certainly bares weight enough to consider. Rather than hesitate, I believe that this is a time to double down on creativity and advertise your core products and services with a fresh approach.
Going dark will only hurt sales in the long run.