A strategy for uncertain times: why now is the time to strengthen marketing activity
A wise man once said: “If I was down to my last dollar, I’d spend it on public relations.” It’s a quote often attributed to Microsoft founder Bill Gates, though there’s some debate over whether he actually said it. Whatever the truth, it’s fair to say the comment has become a marketing world urban myth with origins dating back more than a decade.
And while they might not be down to their last dollar, many businesses are under unprecedented pressure to better manage costs, due to a storm of economy-shaping events including Brexit, the war in Ukraine, threat of chronic unrest in the labour market and looming recession.
Faced with such realities, there’s never been a greater need for clear thinking and a plan.
That’s because in addition to winning over customers, more than a few marketing managers may also have a battle on their hands to convince C-suite colleagues of the need for continued investment in brand awareness as we head into a period of existence justification and belt tightening.
It’s time then to prioritise resilience, flexibility, the ability to pivot and re-think approaches, not to mention polishing up one’s powers of persuasion.
Recession: is it really the moment to increase marketing spend?
There’s plenty of evidence to show how maintaining or even boosting marketing budgets ahead of a downturn is a sensible thing to do, even if it might appear counterintuitive to some. As the old adage says – when times are good, you should advertise; when times are bad, you must advertise.
According to the Institute of Chartered Accountants in England and Wales (ICAEW), research on past recessions has shown that businesses which invested in marketing experienced more growth than those competitors who shrunk or cancelled their budgets.
During the 2008 recession, businesses that maintained marketing output enjoyed 3.5 times more brand visibility than peers who allowed advertising expenditure to drop.
According to a recent report from Analytic Partners on ROI data, pulled from international clients, 60% of brands that increased marketing investment during the 2007-08 recession enjoyed an improved ROI.
Separately, the ROI Genome report found that brands which boosted media investment during the recession experienced a 17% increase in incremental sales. However, companies that reduced media investment in the same period, suffered an 18% loss in incremental sales.
Nearly a century earlier, a study by marketing sector legend Roland Vaile, who monitored 250 firms while completing a masters at Harvard in the 1920s Depression, yielded similar results. Following the companies through the downturn and into the subsequent period of growth, Vaile tracked advertising investment and annual revenues.
He split firms into three groups: those who didn’t see value in advertising, those who slashed advertising budgets and those who boosted spending. He found that those who invested in marketing enjoyed faster sales growth than rivals both during and beyond the recession. However, those who cut back saw their sales fall too.
It’s worth bearing this in mind when talking to company decision makers about budgeting. Harvard Business Review recommends that marketers take a segmented approach, offering some areas where spending reductions would be useful while ‘holding the line’ on necessary investment and robustly making the case for targeted increases.
Time to sharpen your sword: focus on key messages before battle commences
Heading into a downturn is also an important time to review the key messages and the positioning you’ve developed for your products or services. This will ensure you remain relevant during a time of shifting priorities for individuals and businesses.
If you’re working with an external agency, one of the added benefits will be their ability to look at messaging and your user journey afresh and from an outsider’s perspective. They will also bring a wealth of cross sector knowledge and examples of how other firms are navigating today’s challenges.
On that, ICAEW says the post pandemic Great Resignation, also known as the Big Quit, in which large parts of the workforce voluntarily resigned, coupled with the financial downturn, could make it harder for firms to recruit and retain sufficient in-house marketing staff. The answer in this situation, they say, is to outsource to a marketing agency with a diverse skill set for a more tailored, cross-media approach.
Seeking out opportunities when it feels like there is none
When Sam Walton, founder of Walmart, was asked for his view on the 1990 recession, he replied: “I’ve thought about it and decided not to take part.” As corporate quotes go, it’s an inspiring rallying cry and worth holding in mind when faced with an economic downturn.
While you may not be able to avoid many effects of the recession, with the right marketing strategy in place it’s possible to play a key role in ensuring your firm survives and even prospers. This is particularly the case if your closest competitors succumb to the urge to cut back.
The team at Financial Services Partnership comprises a wide range of marketing experts, with skills covering development, review and execution. In fact, we’re currently doing exactly this with a range of fintech clients, who are thinking about ways to protect growth in the short- and long-term. In our experience, those who make the right preparations almost always thrive.
We understand the landscape and the challenges you face and always recommend that if you are down to your last dollar, it’s best to spend it on the activity that is most likely to generate new sales. And that is a quote you can attribute to us.