Right now, your news feed, email, TV, and personal conversations probably all center around one topic—COVID-19.
Thankfully, this isn’t one of those posts.
While this virus has caused an immense interruption in our daily lives, and with the platform of social media to broadcast everyone’s ideas, we’ve seen just about everything at this point.
But what we haven’t seen much of is sound marketing advice based on facts and statistics.
So let’s dive in.
What Happens to Advertising Budgets During a Recession?
According to Samuel Scott, ad spend during the Great Recession in 2008 decreased by 13% overall.
Broken out by channel:
- Newspaper dropped by 27%
- Radio dropped by 22%
- Magazines dropped by 18%
- Out-of-Home dropped by 11%
- TV dropped by 5%
- Digital dropped by 2%
It’s interesting to see newspapers drop so far, since people tend to flock toward the news during times of crisis. On the other side of the spectrum, it’s also interesting to see digital barely take a dip at all.
Upon further analysis, it seems as though top-of-the-funnel channels are the ones that see the biggest cut. Newspaper, radio, magazines, and Out-of-Home are all geared more toward branding than they are direct response.
Digital, on the other hand, consists of a large portion of Google search ad spend, which catches consumers in the exact moment they’re looking for a product or service. People tend to stick with these ads during tough times.
Is This the Correct Thing to Do?
Nope, not really.
One of the beautiful things about history is that there’s plenty of it.
We’ve got about 100-years-worth of data that shows cutting your budget during hard times tends to prolong the negative effects.
That sucks, right?
Everyone wants to cut expenses right now.
But consider this (all taken directly from the aforementioned data):
- A MarketSense study concluded the best strategy for coping with a recession is balanced long-term branding with promotion for short term sales.
- The study shows brands like Jif and Kraft Salad Dressing experienced sales growth of 57% and 70% respectively after increasing their advertising during the recession.
- McGraw-Hill Research analyzed 600 B2B companies and found that those who maintained or increased advertising grew significantly…both during the recession and the following three years.
- In fact, by 1985, sales of companies that advertised aggressively had grown 275% over those that didn’t.
- An American Business Press study showed that companies who advertise and market aggressively can maintain and increase sales during a recession and in the following years.
- Buchen Advertising tracked advertising dollars vs. sales trends for the recessions of 1949, 1954, 1958 and 1961.
- They found that sales and profits dropped at companies that cut back on advertising and, that after the recession had ended, those same companies lagged behind the ones that maintained their ad budgets.
- Advertising executive Roland S. Vaile tracked 200 companies through the recession of 1923.
- He reported in the April, 1927 issue of the Harvard Business Review that companies that had continued to advertise during the economic downturn were 20% ahead of where they had been before the recession, while companies that reduced advertising were still in the recession, 7% below their 1920 levels.
- Frankenberger and Graham, two Oregon professors, studied 2,662 firms over 16,000+ ‘firm years’ (1970 – 1991) to determine the effect of advertising on a company during a recession.
- The results? Firms that advertised during a recession increased in value and got more marketing bang for their buck…in some cases for up to three years after the recession had ended.
Pretty telling, right?
Okay, So I Shouldn’t Cut Marketing Budgets, but Where Are These Increases Coming From?
Great question, and again we have another answer backed by research.
- The “noise level” in a brand’s product category can drop when competitors cut back on their ad spend. It also allows for advertisers to reposition a brand or introduce a new product.
- Brands can project to consumers the image of corporate stability during challenging times.
- The cost of advertising drops during recessions. The lower rates create a “buyer’s market” for brands. Studies have shown that direct mail advertising, which can provide greater short-term sales growth, increases during a recession.
- When marketers cut back on their ad spending, the brand loses its “share of mind” with consumers, with the potential of losing current–and possibly future–sales. An increase in “share of voice” typically leads to an increase in “share of market.” An increase in market share results, with an increase in profits.
It’s similar to the stock market. Do you want to sell your entire portfolio right now after it’s already lost so much value?
As the old adage goes, you have to spend money to make money.
Who profits the most on stocks during a recession? Those that hold onto their portfolios, and those that buy on the dip.
I’m Sold, But What Can I Do for My Business Specifically?
Now for the fun part, taking all of these statistics and doing something about them.
Here are some ideas:
There are multiple ways to do this, but one of the most effective is to donate a portion of your proceeds to a foundation that needs it. People want to help each other right now, and you should too.
This helps with increasing sales and boosts your brand perception, all while actually helping those in need. While you may be in no position to donate right now, the projected boost you’ll receive from this strategy should put more money in your pocket while also putting food and medicine in the hands of those who need it. Big win-win.
Offer a Gift Card Promo
Need cash reserves to make it through an extended lull in business?
Offer up $50 gift cards for $40.
Give away a free $5 gift card for every $25 sold.
However you choose to do it, gift cards are a great way to keep customers coming back to you both during and after this whole thing blows over.
Plus, everyone always wants to spend their entire gift card, so consumers often spend more than the total amount. For those that don’t, well, that helps you too.
Ramp Up Social Media
What is everyone doing right now? According to Parse.ly, they’re flocking to social media in droves to read about COVID-19.
That means you want to be there.
Be the sound mind in their feed—everyone wants to read about COVID-19, and everyone is posting about COVID-19.
What can you post that will be different?
What will make them pause and read your post, not scroll past?
On the advertising side, you’re likely to see less congestion and competition, so make it a point to be the brand they remember—while you can do so at a reduced cost.
Take Things Digital
Again, speaking on COVID-19 specifically, many people are cooped up in their homes at the time of this publication.
That means no bars, no restaurants, no movie theaters, no gyms, etc.
If you own one of these types of businesses, there’s no doubt you’re hurting. Consider what you can do to take things digital to stop the bleeding.
For example, some restaurants are offering “Date Night” packages for takeout with a bottle of wine and romantic setting included.
Some workout classes can be moved online. Maybe you stream for free on Facebook/Instagram Live or YouTube and encourage others to sign up for more through a paid subscription portal like Patreon.
No matter what you do, there’s a way to take it online somehow. Those that can innovate here the best can position themselves to be in a better place once things return to normal.
Amazon did just that with e-books during the 2008 recession.
Some things are too hard to take digital. Maybe you don’t have the cash flow right now, and it would be too much of a strain to bootstrap it.
Playing off the same idea that consumers are locked up in their homes, direct mail campaigns can be a great idea. And to top it off, some print shops are offering big discounts right now— especially for those in highly affected industries.
Remember, These Are People
Whether you’re B2C, B2B, or B2G, at the end of the day, you’re selling to people.
Remember that, and they’ll remember you.
And remember this, as Bo Bennett so calmly put it, “As sure as the spring will follow the winter, prosperity and economic growth will follow recession.”