The Power of Advertising in a Recession
In today’s UK, businesses face unprecedented challenges. The BBC are reporting that the UK was dragged into a recession at the end of 2023 and with insolvencies at their highest rate since 1993 (Source: City AM), the economic pressure is palpable. As the UK grapples with the harsh realities of a recession, businesses find themselves at a crossroads. The instinct to tighten budgets, including marketing spends, is palpable. However, history, backed by insightful market research, suggests a counterintuitive truth – cutting back on advertising in a recession can be a costly mistake.
The A-B Test That Speaks Volumes
In a compelling A-B test conducted by Kantar, a renowned marketing insights firm, the impact of marketing spend on long-term sales became glaringly evident. A beer brand faced the scrutiny of a complete cessation of marketing, resulting in a significant 13% drop in long-term sales. Intriguingly, when the marketing spend was halved, the decline reduced to a mere 1%, underscoring the resilience of strategic marketing even in challenging times.
Echoes from the 1980s: McGraw-Hill Research
Taking a journey back to the 1980-1985 recession, McGraw-Hill Research analysed 600 companies across diverse industries. The findings were striking – brands that either maintained or increased advertising during the recession experienced significantly higher sales growth. By 1985, those that embraced aggressive advertising during economic turmoil saw a staggering 256% growth in sales compared to their conservative counterparts.
Pizza Hut, Taco Bell, and McDonald's: A Tale of Marketing Impact
A closer look at the 1990-1991 recession unveils a story of missed opportunities and strategic choices. As McDonald’s opted to cut advertising and promotions, Pizza Hut and Taco Bell seized the opening, gaining substantial market share in the US. The results were telling – Pizza Hut achieved a remarkable 61% sales growth, Taco Bell followed suit with a 40% increase, while McDonald’s faced a decline of 28%.
Additional Examples of Marketing & Advertising Triumphs Amidst Recession
While the instances above provide compelling evidence, they are not isolated cases. Numerous businesses have demonstrated that strategic marketing during recessions is not just about survival but a pathway to thriving. Brands like Kellogg’s, Procter & Gamble, and Toyota have historically increased advertising during downturns, positioning themselves for remarkable rebounds when economic conditions improved.
This guide draws on past wisdom and adapts it to our current reality, providing marketers with strategies to not only survive but thrive.
Adapting to Changing Consumer Behaviours
As disposable incomes shrink and consumer confidence wavers, understanding and adapting to new consumer behaviours is crucial. Marketers must revisit their audience segmentation, prioritising value, and trust over luxury and indulgence. Tailoring messages to consumers who are cautious with their spending, prioritising essentials and economise where possible will be key in maintaining relevance.
Leveraging Out-of-Home (OOH) Advertising in a Recession
OOH advertising, especially in transport sectors, presents a unique opportunity. Despite being seen as ‘old media,’ OOH remains dynamic and effective. By targeting high-traffic areas and capitalising on the captive audience of commuters, brands can achieve significant visibility and engagement.
Digital Integration and Targeted Retargeting
Combining traditional broadcast channels with digital advertising allows for sophisticated retargeting strategies but remember that Cookies will be made redundant soon so marketers need to think about how these strategies will work across all digital channels.
Marketers can create cohesive, cross-platform campaigns that engage consumers at multiple touchpoints, enhancing the overall impact and efficiency of their advertising efforts.
Creative Resilience and Emotional Connections
In times of economic hardship, creative resilience becomes paramount. Brands that maintain their advertising presence, adapt their messaging to reflect current consumer sentiments, and build emotional connections will be better positioned for long-term success.
Investing Wisely in Marketing & Advertising
Cutting marketing budgets in a downturn can be tempting but is often counterproductive. Instead, brands should focus on maintaining and even increasing their marketing investments where possible, targeting areas with the highest potential for ROI. Emphasising online and direct marketing can offer more measurable results and higher efficiency.
However, in a downturn there is often media value to be had from broadcast channels, including Television, OOH, Print and Radio, which can help to significantly raise brand awareness and engagement which may have a longer-term benefit for your brand, product or service.
And don’t forget you can protect your working spend, the budget you are investing in media, by reusing assets to create the ads in the first place. If you have a great advert with an awesome set of assets, the wear out from repeat showing isn’t as much of a thing as marketers think it is. The number of available media channels, even probably for your specific target audience, has massively increased and the frequency of your ad is perhaps lower than anticipated.
Supporting the Community and Building Trust
Brands that use their platform to support community initiatives and demonstrate genuine empathy will foster deeper consumer trust. Marketing strategies should reflect a commitment to societal well-being, aligning with contemporary values of sustainability and corporate social responsibility.
Thriving in Adversity
The key to marketing success during and after an economic downturn lies in agility, empathy, and strategic investment. By understanding the changed landscape, prioritising consumer trust, and leveraging both traditional and digital channels creatively, marketers can navigate these challenging times. The current climate calls for innovation, resilience, and a deepened connection with the audience, turning potential obstacles into opportunities for growth and engagement.
