The COVID-19 crisis is sweeping us into a global recession and businesses large and small are facing increasing financial pressures. While there are some obvious exceptions (notably supermarkets, online retailers and digital entertainment providers) the majority of brands are switching into ‘survival mode’ and reviewing their budgets accordingly.
Thankfully, we’ve endured multiple periods of economic downturn in the last century and this is the perfect time to revisit the lessons that have been learned. In this article, I’ll explain why marketing is not optional, how you can understand changes to your customers' behaviours, and where to spend, save and adapt to manage your budgets effectively.
As businesses suffer slowing sales and project continued revenue losses, a number of brands will be inclined to focus on the short term and consider slashing their marketing spend to compensate. The latest survey conducted by Marketing Week reveals that around 90% of marketing budgets have been delayed or are under review.
This trend is concerning for three key reasons:
1. Customers expect to be hearing from you
In their recent global consumer study, Kantar found that the majority of consumers think that brands should continue to advertise during this period of crisis. While it’s important not to exploit the situation, your audience does expect to hear from you. 75% of consumers believe that brands should keep them informed of what they are doing and half of those surveyed think that brands should continue to use the same tone ‘as they have always done’.
2. Advertising activity has long term effects
Building brand awareness and equity takes time. The marketing communications you are sharing now can take months and years to generate their full impact among your target audience. The implication of this is two-fold. Firstly, by cutting spend now, you’ll suffer the consequences later down the line.
Secondly, the tactic of ramping up marketing activity at the end of the recession will take time to create results. It won’t provide immediate gains in a newly revived and noisy advertising landscape.
3. Periods of recession offer great opportunities for some
Brands that maintain their advertising budgets will have the advantage against their competitors who have either reduced or ceased advertising entirely. Brands that are able to actually increase their marketing budgets stand to gain huge ground in the share of voice, and therefore share of the market, as others clear the stage for those who increase their volume of communications. There are countless examples of famous brands who have made incredible strategic gains in previous recessionary periods including Kelloggs, Procter & Gamble, Target and Lego.
Unsurprisingly, making decisions for the short term inevitably has profound impacts on longer-term success. Any savings that can be made now by reducing campaign activity will pale in comparison to the impact that maintaining, or even building brand equity would generate for your pipeline.
“Businesses that maintained comparably strong brands in the 2008 financial crisis recovered nine time faster than those who didn’t.”
Marketing is not optional. Data shows that following 2008’s financial crisis, the businesses that maintained comparably strong brands recovered nine times faster in terms of their stock market value.
Even if a brand is able to weather the storm of COVID-19 and the resulting recession by surviving with minimal marketing efforts, they will find themselves be in a weakened position for longer. These businesses will likely remain in survival mode, unable to thrive, for a longer period of time that those who maintained their level of marketing activity.