According to the major financial analysts we’re about to descend into another recession - driven by the cost-of-living crisis.
Having lived and worked through a number of previous recessions, I’m pretty confident I know what will happen. Finance Directors will look to batten down the hatches and cut costs within the business. And where do they find the biggest pot of ‘discretionary’ cash? That’s right, the marketing budget.
Whilst I have sympathy with the need to focus on efficiency at these times, cutting (or dramatically reducing) marketing spend is rarely the best solution. In fact, believe it or not, if your organisation is looking to grow, now could be the time to double down on your marketing investment. Here are 5 reasons why…
1. Keep your loyal customers happy
Your loyal customers will make up a significant proportion of your sales. In times of economic weakness, these sales are even more important to your business than ever. Therefore, to stop marketing to this audience would be commercial suicide. Not only will it lead to a reduction in revenues but in a worst-case scenario you may find they are poached by your competitors. After all - you snooze, you lose.
In any case, we all know that retaining customers is significantly cheaper than acquiring new. So, if you want to be efficient with what little spend you are left with – focus your efforts on these guys!
2. Less noise means more cut-through
Apparently 89% of all marketing isn't noticed. It simply passes people by. If you quantity this wastage it comes to many billions of dollars that are being thrown away. (I’ve written about this in a previous blog).
If you consider the number of advertisements, promotions and offers that we're bombarded with each day, then you begin to understand why this is the case.
Of course, in a recession, the noise in the market reduces as people pull their marketing budgets. And as a result, those that continue to advertise have a higher chance of being noticed.
In a world where share of voice is fought for tooth and nail, you could argue that a recession is actually a welcome gift to a marketer. After all, it allows you to improve your advertising cut-through and effectiveness at no additional cost. Fortune favours the brave as they say.
3. Cheaper media
I guess this is linked in some ways to the second reason above.
The less demand there is for something, the cheaper the price gets. So, in a recession you can expect the media prices to soften. This means you can make your budget go further – reaching more people for the same spend.
This might also open up new media channels that were cost-prohibitive before. During a previous recession, we managed to get a client on TV for the first time due to reduction in air time costs. The test we ran worked and DRTV now forms a critical part of that client’s marketing mix.
4. Position for recovery
Think of a recession like driving a car. If you slow down, the effort needed to speed up when the time comes is significantly greater.
I’ve seen companies cut their spend and find it hard to catch the market up when things recover. You can’t expect your internal and external support teams, who have been mothballed for months, to jump to attention immediately the budget is reinstated.
Plus you may find that media or creative partners are less reliant on you and their costs have risen as a result.
5. Show long-term brand strength
People always want to associate with winners. In the commercial world, these are the brands who demonstrate strength, bravery and innovation. Customers who see you retrenching may lose faith in your organisation and fear they are backing the wrong horse.
The fact is that big brands continue to advertise through recessions – Coca-Cola, McDonalds, Unilever etc. They’ve seen the commercial effect that bucking the trend in such situations can have on their businesses. But in so doing, they also reinforce their own long-term brand strength – “we’re here for you always”, “you can rely on us in dark times”. Those are powerful messages to land.
So, don’t be depressed about the latest downturn. See it as an opportunity. Build a plan to capitalise on the market changes it’ll bring. In that way, you could easily end up in a stronger position coming out of the recession than you went in.
For help formulating a recession-busting plan, contact Firespark today.
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