In the uncertain times of economic decline, many business owners ask themselves, “Can we afford to keep advertising?” At Clearbridge Branding Agency, we ask, “Can you afford to stop?” On the downswing, many things can change in business. Budgets are slashed, roles are reduced, and even amenities like free company coffee are discontinued. Moral of the story: shift happens. But it’s how you shift that matters.
Too often, recession-reactive companies pump the brakes on their marketing and advertising spending—but is this the right path forward in the name of self-preservation?
The Cost Of Cutting Corners
Cutting back may appear the logical reflex to an economic downturn. Consumers spend less—therefore, businesses reap less. Marketing expenditures should follow suit, yes? Not if you want to maintain your position in the market as the economy shapeshifts around you.
In a recession, it can be expectedly onerous to look beyond the now and strain the eyes at the bigger picture peeking over the horizon. That bigger picture contains the long-term return on investment (ROI) and your business’s competitive position when the tide of a recession recedes (and it always does). What is done now will determine your position later. By pulling the purse strings and decreasing or even halting marketing efforts, that tide could sweep you out to sea. Contrarily, keeping up or even increasing marketing efforts helps to position the company for advantage later and can further magnetize the brand in the open space left behind by competitors who have halted their efforts.
Take the classic Post vs. Kellogg’s example from the Great Depression. While Post pulled back considerably on advertising, Kellogg’s doubled down, pushing its spending heavily on radio and introducing a new cereal: the beloved Rice Krispies. Their profits flourished, and the company took over as the category leader.
Economic downturns often free up the field of marketing and allow companies that continue to spend on advertising to attract more business. This creates an opportunity for brands to capture new customers and convert them from competitors.
During a recession, marketing investments and self-preservation aren’t the only things brands should have top of mind. Consumer awareness is paramount—especially in times of economic decline. Behaviors, attitudes and perceptions all shift among consumers as they become more cost-conscious. Your strategy and messaging should reflect that in your media plan.
Consider the customers. How might they perceive your brand’s current messaging, given a sizable shift in economic activity? Does the messaging contain a veil of empathy consistent with the current climate? Does it underscore the immediate value of your product or service for the customer?
This kind of questioning will help you examine messaging through the lens of your customers—who, coincidentally, are the ones who can help your company climb out of recession successfully. However, in order to reach them, marketing is a must.
By crafting messaging that is sensitive to these shifts in consumers and the current economic status, your brand stands to gain more loyalty and overall value. Doing so will also help maximize your ROI in advertising by sending the right message to the right people.
For The Love Of Loyalty
Loyalty programs bolster a brand’s connection to its core consumers and, in a downswing, can be a pivotal tool to generate business and strengthen consumer relationships. There may be no greater test of your customers’ fealty to your brand than in a downturn, and those who remain true may be more willing to keep their wallets open—especially if there’s something beneficial in it for them.
Nurturing loyalty programs can drive additional business from existing customers, encouraging them to continue spending with your brand through rewards, points and benefits. This can help maintain your core base while you continue efforts in new customer acquisition. Boomers are among the most engaged in loyalty programs. And younger generations are more willing to try new products and brands. An attractive loyalty program can help cement older generations already loyal to your brand while baiting younger generations who value reward systems.
If you haven’t already, consider adopting a simple rewards system that promotes value and convenience. You can offer sign-up incentives for new customers and incentivize existing customers with additional rewards for referring others, helping to cater to your core base while giving newcomers another reason to take an interest in your brand.
The Power To Pivot
The Great Recession from 2007 to 2009 left many markets at a standstill, leaving business owners to wonder if or how they should shift their strategies. The endurance of any business is reliant on demand—but when demand is frozen, how do you sustain it?
You may need to pivot. There is no greater example of the importance of this than the Covid-19 pandemic that shook nearly every form of business to the core. By adapting your business model to new market opportunities, you can optimize revenue streams. Reexamine the changing needs of your target market. How have they changed? How can you fill new demand? You may even need to shift your target market altogether.
It’s also a time to ramp up your digital strategy to further reach your customer base and boost brand awareness. Analyze your current digital efforts and utilize your social presence to target customers and push your refreshed messaging.
The long and short of it is: If what you’ve been doing isn’t working, you can’t afford to idle. Your marketing and advertising spending may appear to be the quickest way to cut costs, but it can also be the fastest way to collapse. Think critically, not reactively. Audit, reflect and make every decision informed. In times of economic uncertainty, it pays to keep on keeping on. And no matter how the tides turn, always remember growth is possible in a down economy.