Importance of maintaining marketing activity in a downturn

Importance of maintaining marketing activity in a downturn

March 26, 2020         Read 359 times

As companies may feel they need to dial back marketing activities during the Coronavirus crisis, we take a look at the data to answer the question – how should you not only survive a recession, but how can you prosper?

During a recession or any economic downturn (we’re not in an official recession yet), the first thing companies usually look to cut back is marketing spend. However both history and data shows that advertising during a recession is actually a smart move to not only maintain your business, but grow it, both now and in the future.

The Great Recession was a global economic downturn that ravaged world financial markets. While the downturn officially ended in the United States in June 2009, the effects were predominantly felt across Europe from 2010 to 2014.

In the wake of the 2008 recession, advertising spend in the US dropped by 13%. Advertising segmented by medium:

  • Newspapers dropped by 27%
  • Radio dropped by 22%
  • Magazines dropped by 18%
  • Out-of-home dropped by 11%
  • Television dropped by 5%
  • Online dropped by 2%

Online advertising is a much larger market in 2020 than it was back in 2008. US online advertising revenue totalled $23.4 billion in 2008 vs $107.5 billion 10 years later in 2018 – so it’s reasonable to predict digital advertising will dip by more than 2% this time around. Don’t be a part of that new statistic!

When a recession comes, don’t stop marketing

There have been numerous studies going back nearly one century that highlight the benefits to maintaining or even increasing advertising and marketing spend during an economic downturn to increases sales not only during the recession, but afterwards too.

There are good reasons to continue marketing activities during a slowdown:

  • The level of competition will decrease despite the information presented in this post, so the cost of online advertising will drop
  • Lower competition means less ‘noise’ your brand needs to cut through, making it easier to be seen and heard
  • Brands can instil the image of stability to consumers and retain plus improve their ‘share of mind’, increasing the possibility of current and future sales. ‘Share of mind’ typically leads to an increase in ‘share of market’.
  • Increase brand loyalty by maintaining a presence and pivoting offering to consumers to suit the current economic climate
  • Digital channels are more prevalent than ever with over 4.5 billion internet users worldwide, allowing advertisers to reach their audience even during a lockdown

Does the real-world evidence back it all up?

During the 2009 “Great Recession” Amazon’s sales grew by 28%. The now tech giant continued to innovate and push forwards with new products during the slowing economy – most notably with the new Kindle e-reader products – which helped to grow their market share. On Christmas day 2009, Amazon customers bought more e-books than printed books.

Another example going back to the 1990-91 recession, Pizza Hut and Taco Bell capitalised on McDonald’s decision to drop its advertising and promotion budget. Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.

Let’s get digital

Digital has never been more important than right now in the midst of a global crisis. With advice for businesses amid COVID-19 changing every day, there’s growing concern for marketers, from the team working remotely through to long-term impact on customer relationships.

Digital will be an imperative channel to maintain presence over the coming months – especially when your competitors begin to slow activity. For the wise, this gives opportunity to get in front of a captive audience, fill the space and develop brand advocates.

There’s vast opportunity to solidify online presence and engage with a wider customer base to build brand affinity. With customers demanding personalisation, listening to their needs and planning content providing information on your brand’s reaction to Coronavirus and latest government guidelines / support will position you as the authority voice in your industry.

A review and refresh of brand messaging will be important to cater to customers new priorities – while customers aren’t travelling, plans will be postponed, and they may still want travel advice for when they can re-book. Customers who can’t visit restaurants will still crave their Sunday roast and brands can be creative to meet customers’ needs despite restrictions. Whilst adjusting your brand messages to face a crisis, looking inwards to communicate ongoing community support and CSR also provides a great platform to maintain engagement and bring positivity when day-to-day news brings the public into a negative spiral.

There’s an added benefit to advertising during periods of low sales outside of brand affinity and share of voice – user data. Driving users to online channels (website, social) at a reduced cost allows you to collect more data, more efficiently.

  1. Take learnings from on-going digital campaigns, both paid and organic to monitor customer interaction and engagement, using this to inform ongoing strategy.
  2. Build audiences, retargeting/remarketing audiences to be utilised once people are able to return to normal life.

Is digital the answer?

The data points towards yes. And data doesn’t lie!        

About KVA

KVA are here to help and can work with you to develop strategic adjustments that enable your brand to cater to the changing economic climate.

We’re experts in digital advertising and strategy and we’ve been helping our clients to prepare for the worst.

With steady, maintained digital activity, customers will be there for you once restrictions are lifted, and you’ll have the data and learnings to best serve them in the future.