Recessions bring with them a slew of problems that the global economy must contend with. The usual byproducts of recession – job loss and inflation – severely impact demand and the purchasing power of large swaths of people all over the world. In turn, this almost always results in significant revenue declines for many consumer brands.
First start with an Advertising Audit
With recent economic uncertainties putting a damper on financial expectations for the foreseeable future, businesses need to adapt various aspects of their organisation to ensure their survival. This is especially relevant when it comes to marketing. Brands must be careful when promoting their brand during times like these and simultaneously ensure…
- They aren’t tone deaf to the hardships facing consumers.
- They are demonstrating the need and value for their products or services.
- They are building long-term brand equity.
Moving forward during a tenuous situation like this can be accomplished by starting with an in-depth advertising audit. This audit takes a close look at a number of factors, including your target audience, your product category, and your current messaging and creative assets to determine not only what needs to change for a successful pivot, but how that can be done. This is also all done within the context of lessons learned from previous economic downturns.
Stay positive, stay focused
One key lesson we’ve learned when marketing during a recession is that brands should focus on the positives where they can find them. Yes, it’s important to still be empathetic to challenges facing many consumers, but you also don’t want to paint a “doomsday scenario” or be too pushy to try and make a sale. Don’t lead with depressing messaging; remain optimistic and demonstrate the full value your brand can provide.
Also, if you start to see your sales decline, don’t panic. Don’t pull your marketing budget from top- and middle-funnel marketing activities to solely focus on short-term conversion campaigns. You need to continue building brand equity and increasing awareness with new audiences. Brands that maintain their investments during recessions report higher sales, market share, and earnings afterward than those that don’t. They stay top of mind with consumers while the competition lags behind. Not only that, but if other brands pull back on their advertising, you end up getting even more value for your advertising spend. It’s no secret, but brands can sometimes forget, taking a full-funnel, long-term approach is the best way to foster sustainable growth well into the future.
An exceptional example of this is Samsung. During The Great Recession of 2009 – and even in the midst of reporting their first quarterly loss in company history – Samsung kept their investment stable and even brought in senior marketing executives to reshape their approach. And the long-term results? Well, those speak for themselves. In 2009, Samsung was number 21 on Interbrand’s global brand value list. In 2021, they ranked number 5. Similarly, the Harvard Business Review noted that when CPG brand Reckitt Benckiser increased advertising spend by 25%, they also increased profits by 14% when their competitors were seeing profit reductions.
Brands should allow for 4-6 weeks when pivoting their campaigns and messaging in these situations. You want to ensure you take adequate time to research and craft the most effective messaging and creative, but you also can’t wait too long and miss the boat. It’s important to stay vigilant and understand the current situation at hand, stay updated on the latest developments, and also consider how the position of your consumer and brand might evolve over the coming months.
Understanding your audience and value
During an economic downturn, there are four distinct consumer segments. The Harvard Business Review examined these during The Great Recession in 2009. These segments include:
- Slam-on-the-breaks: those who need to immediately economize.
- Pained-but-patient: those who will have to think twice about their spendings (the majority of consumers).
- Comfortable well-off: those who don’t really have to worry about their finances.
- Live-for-today: those who live for the moment and spend without regrets.
Harvard Business Review also identified four unique product segments, which are:
- Essentials: products that someone needs to survive or make a living, such as groceries, medicine, and transportation.
- Treats: products that are not essential, but are justifiable: lipstick, a birthday cake, and dining out.
- Postponables: products that have function, but could be postponed: a new refrigerator, a new sofa, or a laptop.
- Expendables: products that you don’t necessarily need and are a luxury: a jacuzzi, jewellery, and art.
The audit will uncover how these different consumer segments interact with the different product segments in the light of economic uncertainty. It uses this information to develop a strategy to react to those changes in behavior and drive growth, or prevent sales and revenue retractions.
By identifying which product segments will be important to each consumer segment, the advertising audit will help a brand develop a higher-level strategic concept around the sensitivities of each consumer group and the value of the different products. This concept will then serve as a guiding light to ensure messaging and creative assets are persuasive and influential. The audit will also capture what competitors are doing in regard to recession marketing and how that might impact your strategy.
DEPT® has experience helping brands within numerous industries succeed in all types of market conditions. Our expertise and outside perspective enables us to keep brands grounded through challenging times and always act with the end consumer in mind. Interested in conducting an advertising audit for your brand to ensure you’re hitting the right note with consumers? Reach out today and get started.
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Impact investor & Global SVP Growth – DEPT®