Recession-Proof Your Brand
Escalating inflation and economic constrictions have been the popular refrain of 2022 and as much as you might like to, stuffing your fingers into your ears and loudly proclaiming ‘I’m not listening’ will do little to help your brand weather the ongoing storm.
Luckily, previous recessions have given us a playbook for handling economic hardships.
Keep building that brand, baby.
It’s easy to see marketing as a cost, advertising as a luxury and brand building as an exercise in vanity. With that mindset, the first thing we usually see cut during recessionary periods is the brand budget, not performance marketing with its proven and immediate ROI.
That’s exactly the wrong move.
Countless case studies throughout history show the same thing: companies that maintained (or even increased) ad spend during a recession saw little immediate advantage.
However (and it’s a big however): as soon as the economy began its recovery, their growth was astonishing compared to their competitors who cut back during the recession.
What kind of black magic causes this growth, you might be asking?
The answer is ESOV or Excess Share of Voice.
Originally identified by John Philip Jones, ESOV can be defined as the degree to which your brand’s share of voice exceeds its share of the market.
Countless studies have looked at this relationship and consistently found that an excess share of voice over share of market is likely to result in brand sales growth.
In layman’s terms: increase your share of voice and your market share will also grow.
In a recession this becomes superpowered.
Many—or even most—of your competitors will reduce their advertising spend (especially the brand-building stuff).
For example, if everyone in your space halves their ad spend and you maintain yours, your ESOV gets a rocket up the bum without you needing to lift a finger.
Compounding this is the drop in media cost that occurs when multiple industries cut back their spending (as they often do in times like this), meaning your comparatively big ad spend is now stretching to even more media value.
BAM. Two rockets up the bum.
Basically, to summarise: the reason you should maintain your brand-building budget during a recession doesn’t really have anything to do with the recession itself or consumer behaviour.
It’s because your competitors lose their nerve.
If you can keep your head and your brand budget while those around you lose theirs, you’ll reap the long-term benefits.
Maybe focus on the short term too.
This one’s a little harder to give you a solid answer on because it depends on your industry.
If you produce a consumer staple, keep your performance spend firing on all cylinders.
But if you operate in a sector that tends to take a beating in a recession (we’re looking at you luxury retail and restaurants), it might make sense to reduce shorter-term marketing spend while the recession impacts your target customers.
Yeah, I know—this is the opposite of traditional (read: boring) corporate logic that will tell you to maintain short-term marketing spend at the expense of longer-term branding.
Find that elusive balance
During a recession, smart companies learn where to cut and where to maintain their spend.
Former Harvard Business School Dean, Nitin Nohria’s assessment of the 2008 global financial crisis found that firms that cut back dramatically on everything performed the worst.
Those who performed best? Companies that implemented a combination of cost reductions whilst simultaneously investing in growth strategies.
“These companies,” Nohria concluded, “reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets.”
So what does that mean?
Balance is key.
Assess every aspect of your business and find where you can cut the operational fat whilst (intelligently) investing in brand building.
Will your target change?
Common rhetoric will have you believe that a recession simply shuts down some categories because they’re too trivial for dire economic times.
Almost every established market has tiers.
Your marketing strategy should clearly define where your business lies in this landscape (if it doesn’t, we need to talk).
Yes, a recession may see some of your traditional customers trading down and away from you, but don’t spend too long mourning them.
Instead, look up to see which premium customers may be on their way down to greet you with open arms.
Supermarkets and their private labels are a great example of this.
They lurk on the shelves, waiting for the winter of recession to arrive before finding themselves suddenly piled high in the shopping baskets of the middle-class.
And when the snows finally melt and economic recovery is once more upon us? Their presence, value and quality have been proven and they remain a regular purchase.
Maybe that’s you.
There’s a certain breed of marketer who eulogises failure as an essential precursor to success.
It can be.
But it doesn’t have to be.
In recessionary times, it becomes paramount that it’s not.
The added stress can make an otherwise teachable moment a potentially fatal experience.
Now is not the time for drastic pivots or hail marys.
Keep your head down.
Stay a student of history.
And wait for the light at the end of the economic tunnel. It will come.
Oh, and if you’re increasing your prices (which might well be necessary), for the love of God, stop euphemistically referring to price “reviews” or “alterations”.
You’re increasing prices.
Call it what it is, explain why it’s happening and be clear on when the change will happen.
We can’t promise your customers will be happy but they’ll sure as hell respect you more.
We’re pretty biased but when it comes to creative thinking, we reckon we know a thing or two. If you want a coffee and a natter, drop us an email