Gas for $4 per gallon. Milk for $5 per gallon. $6.15 for four ears of corn?! We just can’t catch a break in this economy.
And while consumers are hurting, many brands are also struggling to weather the current economic downturn and plan for a possible recession. While no two economic downturns are alike, we can (and should!) learn from past recessions. Much has been written about how brands who have maintained or upped their marketing investment during past economic downturns have seen success. One recent study found that brands who cut spending during the 2008 recession risked losing 15% of their business to competitors who instead boosted their marketing spend.
But of course, just maintaining or increasing spend isn’t enough to ride out a recession. Marketers must analyze and adjust their strategies with an increased degree of precision and agility during these turbulent times.
So, if you’re a marketing leader, how can you make the most of your ad spend and even discover an opportunity or two amidst all this uncertainty? We've got three recommendations to share with you:
As CMOs fight to defend their marketing budgets heading into 2023, brands would do well to strategically reallocate spend to maximize its efficiency during this economic instability. This will look different from brand to brand, but we’ve got a few considerations to keep in mind:
1) Forgetting about your current consumer base is a big no-no. For many brands, loyal customers are the main source of revenue and growth. However, those customers' behaviors are likely to change under economic stress. It’s of utmost importance to nurture your customer pools, solicit feedback from them whenever possible, and offer communications that show both your appreciation and your sensitivity towards their economic circumstances (a loyalty discount never hurts!)
And don’t forget about leveraging their first-party data: Trusted partners like TransUnion, for example, can extend your data’s reach by categorizing it against their own and creating new audience pools to tap into—which brings us to our next point:
2) With all the changes in consumer behavior that come during a recession, there’s an opportunity to branch into new markets. Marketing in a recession is all about balance: while nurturing your current customers is a smart defensive move, identifying and branching into new audiences is a strategic one for those brands looking to maximize future success.
Marketers should also make a habit of looking at performance metrics and using that data to reallocate spend between channels and tactics accordingly. Low performers should be cut or revised, while high performing tactics can take on some of that newly freed-up spend. It’s also important to prioritize tactics that are measurable, targeted, and precise, so that you can continue to pull actionable insights to revise your strategy and prove out the impact of your work to stakeholders. Again, in that spirit of balance, marketers should allocate spend between tactics that are reliable, like paid social and linear TV, and ones that represent calculated risks, like CTV PMPs or even augmented reality.
There are several strong arguments in favor of investing in brand awareness during a recession. Back in 2008, during the Great Recession, brand messaging outperformed performance marketing 80% of the time.
Maintaining brand awareness messaging during a recession is a savvy long-term play: Consumers may choose to forego investing in your product while budgets are tight, but once they have a bit more wiggle room, your brand will be front-of-mind. And when we say “long-term,” we’re not talking decades—the average recession in the U.S. has only lasted one to two years.
Additionally, in times of economic upheaval, many companies will opt to deprioritize brand awareness campaigns in order to focus on driving revenue more directly. With fewer competitors crowding the space, there’s an opportunity for your brand’s media to make emotional, memorable connections with consumers.
Still, an effective brand awareness campaign during a recession won’t look like a brand awareness campaign in times of economic stability: personalized messaging that meets consumers where they are is critical. Consumers in a recession are experiencing stress, upheaval, and financial difficulties. As a result, they’re looking for reassurance, connection, and empathy.
In 2020, TV viewers joked about how every COVID-19 commercial looked the same—and although the "we're in this together” message quickly became cliché, the marketers behind those ads knew what kind of consumer they were trying to reach! Leaning into the factors that specifically differentiate your offerings during economic upheaval, demonstrating empathy, and even using humor can be powerful ways to personalize your messaging during a recession. (Need some inspiration? Here are five ads that got inflation messaging right.)
While we can make educated guesses, there’s no real way to predict what the economy will look like in 2023, or how consumer behavior will shift as a result. Since 2020, it’s seemed like all we have been able to count on is an ever-changing landscape. In order to simultaneously meet changing consumer needs and future-proof your marketing operations, it’s critical for marketing organizations to prioritize agility.
Even in times of economic stability, the ability to monitor and adjust live campaigns based on real-time insights is quickly becoming a must-have for brands and agencies. From misinformation, to developments in consumer privacy regulation, to the rise in consumer demand for brand authenticity, there are a variety of factors that make the ability to “turn on a dime” a lifesaver in today’s marketing landscape.
At the same time, many marketers have little free time for things like manual campaign optimizations, because they’re bogged down by the complexity of today’s media landscape. In fact, marketers use an average of nine different platforms to run a typical campaign. That’s a lot of different tabs to toggle between! Advertising automation platforms that streamline and simplify the media buying process—from planning, to buying, to reporting—can help to minimize the chaos, free up time for marketers, and save money at the same time. With automation, advertisers can rapidly adapt while maximizing their resources—and if those outcomes aren’t game changers during economic upheaval, we don’t know what is.
While none of us can do anything about the 100% increase in egg prices, advertisers do have some agency when it comes to optimizing their marketing strategies in times of upheaval. Looking for more insights and advice on how to advertise in these wild times? Check out our webinar, Advertising Through Uncertainty: How Marketers Can Navigate Economic Downturn, to learn more about what the current state of economic instability looks like in the US, new consumer categories that form in times of economic hardship, and best practices for advertising in an unpredictable marketplace.