You might think the prudent move during a recession is to cut back on market spend and re-allocate those funds to the other soaring costs of doing business. According to the experts, and to a recently issued report from Analytic Partners (top dog in commercial analytics), just the opposite is true. While other companies are being fiscally conservative, you have the opportunity to get a leg up on the competition and get greater ROI by increasing your market spend during times of recession. The flip side of that coin is also addressed in the report – that cutting back on your market spend during a recession carries a number of hidden dangers, and some of these may impact you on the other side of the recession.
Maintaining advertising effectiveness in a recession
During the last recession this country endured, more than 60% of the companies which increased their advertising spend saw significant increases in their ROI. Those brands that bumped up their advertising investment realized on average a 17% increase in sales, while those companies that cut back on advertising experienced on average a 15% drop in sales. These figures were arrived at after analyzing the impact of hundreds of billions of advertising dollars spent during that recession, and the conclusions seem fairly obvious.
Organizations that cut spending during difficult economic times generally lose ground to companies that maintain their same level of investment or increase it by some amount. The most successful organizations were those that invested more money in improving efficiency, because that positioned them to emerge from the recession in much better shape than their rivals, who did nothing to improve their operations. The bottom line is that old school thinking that says costs have to be cut to maintain profit margins is just plain wrong – or at least it no longer fits the business model of modern times.
How to make your marketing strategies recession-proof
Here are some of the best tactics you should be using to make your marketing strategies recession-proof, so they will be effective regardless of the prevailing economic situation:
since brand advertising almost always exceeds gains made by performance advertising, it’s much better to focus on brand messaging, and realize all possible benefits at least 50% of all brands that increased their marketing spend during the prior recession experienced increased return on investment for two or more successive years it’s wise to use as many marketing channels as possible, because statistics show that the cumulative advertising impact achieved by companies adopting this strategy was 35% greater than for those who used only one or two channels in terms of the effectiveness of video advertising, 66% of the opportunities available come as a result of increasing creativity and innovation of production methods
Primary factors leading to advertising success
The report issued by Analytic Partners identified five main areas that contribute most heavily to advertising success:
investment amount – it’s almost impossible to enjoy any kind of continued success without making a significant investment in your advertising spend. This is probably more true now than it ever has been in the past.
creative quality – consumers these days are not impressed by the same old humdrum messages, no matter how they’re packaged. Creativity and innovation are needed so as to present something unique to consumers, while still addressing their wants and needs.
the power of one product to popularize another one (the halo effect) – it has always been a good strategy to borrow against the popularity of one product to boost another one, partly because it’s an inexpensive tactic, and partly because the positive association acts as a powerful agent for a new product
media mix – as long as your target audience actually spends time on the various types of media, you should too. It’s essential to have a presence wherever your audience is, because that’s when your message is most likely to fall on receptive ears.
channel representation – there are a great many channels available to a modern marketer, and you should be making use of all of them to reach your audience. Unless you know that your ideal customers simply don’t spend any of their time on a specific channel, you should incorporate all of them into your overall strategy.
The best approach
For the vast majority of today’s businesses, the best approach to marketing during a recession is to view it through a long-term lens. That means you should be thinking about in investing in your brand itself, because that kind of messaging is typically the most successful and resonant with consumers. You should also consider investing significantly in customer relationships, because that will position you for success both during the recession and long afterward. If you decide instead to adopt a more short-term approach and just start cutting costs, that might make your shareholders happy at the next meeting, but it will almost certainly get you in trouble over the long term.
That’s because it runs counter to company growth, and restricts your ability to grow and enjoy increased profits. An advertising strategy that is really sound and beneficial to company growth is one that contributes strongly to the success of your brand, and which constantly works to improve relationships with your loyal customers. To survive and even prosper through times of economic difficulty, you need to avoid the temptation to reduce your advertising spend, and instead increase it in those areas which are most likely to lead to company growth and success.