In difficult financial times, business leaders are often looking at where they can cut costs without affecting normal operations too much; and the first to go is usually the marketing budget. While this makes sense on the surface, if you take a step back and look at the broader picture, advertising during a pandemic-led recession might end up being one of the smartest business decisions you can make.
Join us as we take a quick look at why you might want to reconsider chopping your marketing spend, the different types of recession consumer psychology and how best to communicate during a pandemic.
What the IPA says
The Institute of Practitioners in Advertising (IPA) have carried out investigations in the past about the dynamics between marketing budgets and recession. In their 2008 report, they found that:
- Cutting budgets during an economic downturn will only defend profits in the very short term.
- Ultimately, businesses may end up weaker after the recession, with lower profits
- It’s better to maintain Share of Voice at the same level or above that of your Share of Market to ensure that your long-term goals are still viable.
- Other brands may be cutting their marketing spend, so there’s no better time to increase your Share of Voice. For instance, take a look at the graph below, created with data from the last major global recession:
Why you should continue with your marketing spend
The lessons from the last recession are clear: you can still come out ahead if you invest in the right areas.
- As other companies reduce their spend, the overall ‘noise level’ in your industry will drastically reduce. This means your messaging will have less competition overall and may be the perfect time to reposition your branding or announce a new product or service.
- Advertising costs are likely to drop alongside demand, meaning that you can get a lot more bang for your advertising buck.
- Instead of disappearing from the view of your consumers, your continued presence will portray a stable and trustworthy business during a recession.
- Without any form of marketing or communication, you risk losing your Share of Mind, meaning that customers will forget about you entirely – leaving the door open for competitors.
What recession audiences look like
Increased sales and profitability aren’t just down to clever marketing; they are heavily dependent on the various target audiences and their spending habits during a time where they are tightening their own financial belts.
The hunker-downers. People in this group are usually the hardest hit by recession and are doing everything they can to save and survive. They are not necessarily only made up of lower-income households; high-earners will have their own personal reasons for cutting out all unnecessary spending.
The patient optimists. These audiences are more or less positive about the return to normality but are still economising on areas that they don’t deem to be essential. This is the largest segment and is likely made up of households who have not suffered unemployment. Their spend may be less, but they aren’t too worried.
The no-worriers. Typically made up of urban and younger consumers, this group mostly carries on as usual and aren’t too worried about their savings. They live for the day and prefer to enjoy themselves. The only time their consumption habits change is if they face unemployment, where they will likely move over to the ‘hunker downer’ group.
The well-offs. This is the smallest segment who continue to feel secure even during a recession. They have the savings or income to ride it out and continue to consume at their level before things changed. They typically have high incomes, but can also include average-earners who are very sure that their situation is unlikely to change.
How to market to each group
Each group will have their own motivations, fears and needs. Here are how you can adjust your messaging for them:
What do audiences really think?
Kantar is a global leader in data and carried out a survey of more than 35,000 customers from around the globe to understand whether or not it’s appropriate to market during a pandemic. Of that number, 78% said that brands should continue offering solutions to improve the lives of the customers, but should not be exploiting the situation. Only 8% said that advertisers should stop marketing entirely.
This indicates that customers are still likely to be responsive to advertising, but that advertising needs to have a different focus. Instead of preaching about how good the service or product is, people are expecting organisations to show what they are doing for the greater good, and how they are helping their staff, consumers and wider society during a difficult time. For instance, from the same survey above, just under 80% of respondents believed that the safety of staff should be a top priority for brands, with 60% agreeing that flexible working is a must.
How should your company communicate?
The recession and pandemic are uncharted waters for businesses who want to continue their advertising. Where is that fine line between being positive and just trying to sell things? Now, more than ever, company marketing is likely to be under a bigger spotlight than ever and any missteps are going to be seen as being opportunistic or inappropriate.
Here’s how you can avoid that:
Most audiences are already quite cynical about marketing in general and are quite aware that it’s ultimately to the benefit of the brand. During a crisis, it’s more important than ever to be your most ‘real’ self. Don’t be slick or clever; be clear, sensitive, empathetic and transparent.
This is a great time to have your brand associated with good things. Think about what your company can do to help others during this time. Offer giveaways, advise on how to deal with isolation, or partner up with a local charity. Maintain a good flow of helpful and relevant content from your channels and make sure that you’re contributing to something instead of just selling.
Don’t lose sight that people’s lives are becoming harder and they might have even lost loved ones to COVID-19. Keep your messaging positive but avoid using too much humour or lightness in regard to specific topics. Also adjust your frequency: don’t bombard audiences with messaging. Give them space.
Whatever marketing plans you had from 6 months ago are now out of the window. You’re going to have to be a lot more agile when it comes to your marketing. Be ready to post the latest advice or news just days in advance. Audiences will instantly spot generic or pre-planned messaging, so make sure that you’re engaged, present and active.
Sooner or later, things will get back to normal and you’re going to need to be ready for it. Have a plan in place to continue the goodwill and momentum that you built during the crisis. Learn from the lessons of a difficult time and enjoy a better, more responsible brand message.