First, there was the global pandemic, then the war in Ukraine, followed by a recession topped with major bank failures… Who knows what’s coming next.
These are certainly challenging times to survive, let alone thrive. Tempted to go dark and cut your advertising spend? Huge mistake, multiple studies suggest. In fact, you should maintain and even increase your ad budget during an economic downturn.
Intrigued? Let’s dive deeper into the subject. We have selected some of the best strategies to help you navigate through difficult economic times:
- When others go quiet, be the one who is always on. We have previously discussed the importance of ESOV, or the Excess/Extra Share of Voice, a brand achieves through its advertising. According to a recent analysis, Les Binet and Peter Field proved that the ESOV rule applies to B2B marketing strategies just as much as it does to B2C ones. They discovered that, for every 10% increase in a B2B brand’s relative share of voice, its share of market grows by 0.7%.
Data from the downturn that followed the global financial crisis shows how this plays out in practice. Analysis by Peter Field found that businesses that managed to increase their relative share of voice by 8% or more achieved 4.5x more market share growth. Over a third of these businesses (38%) reported strong growth in profitability during the downturn. None of those with a flat share of voice did.
- Achieve better visibility and project an image of corporate stability. Remember what famous American author, advertising executive and one of America’s most prominent ad agents Bruce Barton once said: “In good times, people want to advertise; in bad times, they have to”. When other advertisers reduce their advertising activity, there is less competition for ad space. This means that advertisers who continue to advertise can get more ad space for less money. According to Brad Adgate, an independent media consultant, the “noise level” in a brand’s product category can drop when competitors cut back on their ad spend. It also allows for advertisers to re-position a brand or introduce a new product. Another advantage is that “brands can project to consumers the image of corporate stability during challenging times,” as Adgate explains. Amazon is an example of such modern-day success story. Adgate notes their sales “grew by 28% in 2009 during the ‘great recession.’ The tech company continued to innovate with new products during the slumping economy, most notably with new Kindle products which helped to grow market share”.
- Split your advertising budget wisely. Spend 46% of available budget on brand building activity and 54% on more direct demand generation that’s aimed at persuading prospects to take action now. This is the optimum marketing mix for B2B brands according to Peter Field and Les Binet, as per their analysis of the most impactful B2B marketing campaigns. According to research from the Ehrenberg-Bass Institute, only a small proportion of B2B buyers (5%) are in-market, actively seeking to buy from a category at any one time. For marketing to have a chance of influencing the purchase choices of the 95% of buyers who aren’t making a purchase right now, it needs to be memorable and influence future choices. The importance of brand increases during a downturn, when buyers are more likely to defer purchases – but those purchases can still be influenced by the brand advertising they encounter now. For a deeper dive into the importance of long-term brand building and its effect on short-term sales activation, check also our previous article here.
- Plan for growth in uncertain times. Analysis of the last few downturns reveals a clear division between winners and losers. Research from Bain & Company demonstrated how businesses that head into uncertain times with the right strategy achieve 17% growth – while those that aren’t prepared see no growth at all. It argued that investing sensibly in commercial growth was a key element in the strategies of winning businesses. That investment has to include continued advertising, and it’s all the more effective when you deploy your ad budgets in a smart way.
Even more enlightening on the subject, research conducted in 2018 by the Ehrenberg-Bass Institute proves that an advertising hiatus not only leads to notable sales declines, but cannot easily be recovered from. The research finds that on average, brands saw their sales fall 16% after one year without advertising and by 25% after two years. By three years the drop reaches 36%, though as the years continue the steady decline eventually tapers off:
- Offer short-term incentives. According to Brad Adgate, another strategy used by marketers in difficult times is changing the ad message and using short-term price incentives to match the economic climate with consumers who are seeking a good deal. Some advertisers will offer interest-free loans, coupons or special promotions to boost sales and market share. When the economy bounces back, regular pricing can return. For some advertisers that don’t give cost incentives, they can change the ad message to being expensive but worth it. Another creative strategy is pointing out the value the brand provides. For even more ideas, check also our previous publication on the subject.
- Content is always king. According to the Digital Marketing Institute: “No matter what kind of digital marketing you engage in, you’re going to need great content. Great content doesn’t involve plugging your products endlessly. Instead, it offers real value to people – and most importantly, it serves a purpose.” According to Marketing Insider Group, this remains true even in crisis, your purpose just has to adapt to what kinds of content people need right now. Even without direction when your production, sales, and services may be limited, content marketing can deliver ROI in any market and set your business up for better days. As Harvard Business School findings prove, during difficult times, all businesses should make time and space in their budget and schedule for content marketing. Investing in content marketing now can win the loyalty of an audience who will become customers later.
As Brad Adgate points out, perhaps the best quote about advertising in a recession came from Sam Walton, the founder of Walmart. When asked, “What do you think about a recession?” he responded, “I thought about it and decided not to participate.”Novelty Media, via SmartAdd, provides a truly transformative solution for brands to reach consumers at all times, where they are, harnessing their undivided attention in a particularly human-centric manner. Our innovative mobile media channel endorsed by Mobile Operators delivers your ads and content as a one-to-one type of experience on the mobile’s screen. Your brand gets noticed by real humans – 100% verified mobile subscribers – who view and engage exclusively with your content at predefined moments of peak attention. We make sure that your brand message is memorable and your hard-earned ad budget is invested wisely. Reach out to us for further details on how exactly our solution can help you win – even and especially – in turbulent times.