Some of the most well-known brands in the world were created during difficult economic times. Coca-Cola, for example, was first introduced during the Panic of 1873. McDonald’s opened its doors during the recession of 1955. Microsoft started during an economic downturn. And, most notably (to me), Red Door Interactive started in 2002 at the trough of the dot-com bust.
The Impact of Marketing Investment
How were these companies able to succeed while others failed? You guessed it: They invested in marketing even when times were tough. In fact, maintaining or increasing advertising investments while competitors cut budgets can drive your brand’s share of voice (ESOV), helping you gain a competitive advantage (WARC, 2022).
In times of economic challenge, it is important to keep a long-term view, which is understandably easier said than done. Sustaining investments in marketing requires organizational buy-in, faith, and fortitude because the horizon for improvement is inherently uncertain. So, brands need to make the necessary internal budget adjustments within the business to preserve external outreach, messaging, and promotion for the long haul.
Brands that cut their marketing budget during a recession leave themselves at a long-term disadvantage because the disruption caused by recessions—and subsequent resurgence—is when market share tends to shift. This period of disruption is an opportunity to seize market share from slumbering competitors.
Either you deliberately take market share or someone else will.
This effort can be hard to stomach because while the market for your product or service is depressed, it takes more effort to realize gains in share and that may not be a gain in revenue over prior years. We naturally expect to see more returns if we spend more. However, this is about the long view: As the market returns, your brand has the momentum to increase growth velocity over competitors.
Thankfully, the data supports maintaining or increasing spend.
Looking back at the last recession, Analytic Partners identified several insights that support the case for maintaining or increasing, marketing budgets in a downturn. In fact, 54% of the companies that adopted this approach saw a return on investment (ROI) improve, 52% of brands recorded an ROI uptick over a two-year window, and 60% of marketers who raised their outlay realized better ROI (WARC, 2022).
Buyers Prioritize Value
In a recession, customers look for value above all else. Brands that can provide value – through innovative products, excellent service, and/or compelling marketing – will come out on top.
With that said, value is a moving target. What customers value today may not be the same tomorrow. Our advice: Stay nimble and adjust your messaging, being mindful of what your audience is going through.
"Our advice: Stay nimble and adjust your messaging, being mindful of what your audience is going through."
That’s exactly what Virgin Atlantic did in 2008 when a deep recession loomed overhead. They pivoted to bold brand advertising, while key rival British Airways (BA) focused on price promotion. The result? Virgin Atlantic’s campaign led to a reversal in their percentage of passenger share versus BA (WARC, 2022).
Don’t make the mistake of thinking that marketing is a luxury you can’t afford during a recession, it just takes perspective, planning, preparation, and patience. It’s a worthwhile investment and effort that can help you weather the storm and come out even stronger.
By Your Side: RDI
You don’t have to weather it alone. Let our experts work with you to create a successful marketing strategy, so your brand not only survives — but thrives. Contact us today.