Notable advertising executive Bruce Barton once said: “When times are good you should advertise, when times are bad you MUST advertise”.
First expressed more than 100 years ago, this maxim has since become a staple of the marketing sector, and is as relevant now as ever, as the economic impact of COVID-19 is being felt all over the world.
It is a common instinct for businesses to cut their advertising spend in the wake of an economic downturn, believing that consumers are spending less and it is most important to save money during this time.
However, research has found that marketing during a recession is key to business survival.
In a study of U.S. recessions, focusing on 600 companies over the period from 1980 to 1985, McGraw-Hill Research found that businesses who maintained or increased their advertising budgets during the 1981-1982 recession saw greater profits overall.
In fact, by 1985, the research showed that profits of companies that were the most ambitious with their recession advertising saw an average of 256% more growth than those who decreased their advertising spend.
Benefits Of Advertising During A Recession
There are plenty of reasons that a business might want to step up their advertising efforts during the incoming recession. Some of the key benefits are:
Visibility. As mentioned above, the instinct for most businesses will be to reduce their advertising efforts, meaning that the companies who do continue to advertise have better visibility in their own sector. This is the perfect time for brands to reposition themselves in their market, or introduce a new product or service.
Stability. When other brands go quiet, businesses who remain visible project an image of stability to consumers, who will be more comfortable spending money with a company that they see as secure.
Cost of advertising. During times of economic crisis, the prices for most things go down to encourage people to buy, and advertising is no different. More affordable advertising can open new avenues for brands to explore and thus reach new customers.
Mind Share. Mind share marketing means developing your brand so that it is the first company a consumer brings to mind when thinking about a specific product or service. For most people, this will occur because of an emotional connection they have with the brand. Tied in with visibility, if your brand can take over the ‘share of mind’ from another brand that has decreased ad spending, you should also be able to increase your ‘share of market’ and thus boost sales.
A Recession Is The Perfect Time To Gather Data
Economic downturns are inevitable. Whilst huge, global recessions are not very common, there have been smaller periods of economic decline roughly every four years since around 1900. The current recession provides smaller opportunities for advertising and sales, perhaps, but much greater opportunities for gathering data and learning about your customer base.
Through tracking and monitoring your marketing strategies, you will learn more than ever about how your target audience behaves in times of difficulty, allowing you to plan for the worst and have quantifiable strategies in place for the next time the economy falters.
This is why advertising strategies that offer opportunities for observation and documentation are key during this time. Some of the best opportunities include:
Search Engine Optimisation
This is the perfect opportunity to rank higher in SERPs, using your understanding of how user behaviours are changing, and using newer keywords and updated strategies for organic search.
Paid Ads & PPC
As demand for certain services declines, so to do the brands vying for attention on search engines. If you choose to use some of your advertising budget for paid advertising, those ads will receive more visibility than ever before.
Social media advertising is often the cheapest and easiest to manage, but it is also the area which advertisers most often drop in the wake of economic uncertainty. This is the perfect outlet for your brand to focus on if you don’t want to spend too much money but want to interact with and reassure your customers.
How To Market During A Recession
As described by the Harvard Business School in 2009, the average consumer falls into one of four groups:
The ‘slam on the brakes’ consumer style refers to those most affected by the recession. This will apply to some of the lowest-income consumers, but also to higher-income consumers with high financial anxiety. This group will reduce all types of spending immediately, and are the hardest for advertisers to reach.
‘Pained-but-patient’ consumers reduce their spending in the same way as slam-on-the-brakes consumers, but less aggressively, remaining optimistic about their financial position and abilities to maintain their current standard of living.
‘Comfortably well-off’ consumers have a steady and comfortable income stream, and are able to negate the majority of the difficulties caused by the recession. They are most likely to maintain their current spending levels without making major changes.
‘Live-for-today’ consumers tend to be young and urban, and feel unaffected by the recession. These consumers tend to spend money on experiences rather than material items and are unlikely to change their spending behaviours unless they become unemployed.
All four sectors will sort their purchases into four main groups:
Essentials – items that are central to their health and standard of living
Treats – luxury items that the consumer considers a justifiable purchase
Postponables – luxury items that the consumer can wait to buy
Expendables – unnecessary or unjustifiable purchases
With the exception of food, rent, utilities and medical supplies, in what category each consumer sorts purchases is largely individual.
Brands can take this knowledge and make it work to their advantage in marketing to consumers during a recession.
Evaluate Product Lines
Now is the best time to start assessing your products and services, looking for any weak spots and cutting out unnecessary items. During times of economic positivity, brands sometimes hold onto product lines that are struggling, in the hopes that they will pick up later on. A recession is not the time to do this.
Many brands have found success with streamlining their output and reducing the complexity of their broadest product lines. This gives you the opportunity to focus all of your marketing efforts on a smaller range of products.
It is important not to ignore innovation during this time, however, as often companies are able to change their products in a way that reflects the current market and needs of consumers, to make themselves more relevant than ever.
Be More Competitive
It is important to remember that all but the ‘live for today’ consumers will be cutting back on their spending for every purchase that they can, so making your product affordable and being more competitive in your market is crucial.
This is a good time for discounts and promotions, offering more to potential customers for less, whilst balancing this with the understanding that cutting prices too far can reduce customers’ perceived value of your products.
The most important thing for any brand to remember with regards to marketing during a recession is that this is not ‘business as usual’. Adapting your strategy and employing a deeper understanding of your customer base is essential to taking advantage of the new opportunities offered by a recession.
Here at An Accounting Gem we can help you gain extra visibility into your finances and see if you are safely able to increase your marketing budget in order to grab more market share. To see how we can help, please call us on 01473 744 700 or send us an email at email@example.com. We are here to help you every step of the way.