As the risk of a prolonged slowdown continues, it is clear that marketing spend is under scrutiny – a lot of scrutiny. A recent report from the World Federation of Advertisers (WFA) and Ebiquity found that three-quarters of top global advertisers surveyed, collectively managing more than $44bn in ad spend, “agree strongly” or “agree” that 2023 budgets are under heavy scrutiny. But despite this scrutiny, 2023 could be the year that marketers stand in the sun.
Ongoing talk about a recession after a lengthy period of inflation has seeped into our bones like the cold and wet British winter. Businesses are understandably concerned. CFOs are reviewing their costs and, sadly, marketing always seems to be seen as one of the easiest ‘discernable costs’ to be cut.
Of course, marketers know this to be the furthest thing from the truth. It doesn’t need to be this way, marketing needs to be seen as an investment in future success.
Making the case for investment in a downturn
There are many studies proving that retracting marketing investment during a downturn is detrimental for longer-term business resilience and growth. Now is the time for marketers to hold their nerve and focus on the opportunity for growth that a downturn provides.
There are good examples of brands that prove this to be true. Unilever, for example, noted when it reported its quarterly results last year that it was its investment in brands during the last year that had driven its strong performance, enabling it to maintain strong pricing across all of its five business groups. It reported 14% growth for its third quarter of the year.
In the last recession of 2008, Taco Bell gained market share from its closest competitor (McDonalds) because it increased marketing spend ahead of the global burger giant. And it continued to gain share for more than five years, according to Euromonitor.
But it’s not just about maintaining share of marketing. It’s also about the right messaging.
More than a decade ago, Audi US had success with Shock the Sheep, which challenged the perceptions of luxury car buyers. Audi emphasized its ability to retain its value better than any other German luxury brand, and increased sales by 22%, ahead of the overall market.
Similarly, the Hyundai “Assurance” program allowed new-vehicle buyers or leasers to return their cars for up to a year after purchase if they lost their job. Perceptions that Hyundai was different from other brands increased and sales jumped 24% in 2010.
During the same downturn, UK supermarket Sainsbury’s addressed the perception that it was more expensive than its rivals with its ‘Feed your family for a fiver a day’ message. This delivered £540m in direct sales with a payback of £5.55 profit for every £1 spent and helped improve price perception.
Marketers are taking a different approach in 2023
This time around, more marketers seem to understand the principle of investing during a downturn instead of slashing budgets. In the WFA study, less than a third (29%) of the world’s largest advertisers planned to cut ad dollars next year.
That’s good news. Finding and keeping customers is at the heart of good marketing, highlighting the importance for CEOs of leaning into their marketing leaders now more than ever.
Now is the time for marketers to show the business how important it is to build brands that connect with customers not just now but for the long term too. Businesses can then justify the value that brands deliver to businesses with premium pricing and continuous loyalty.
Understanding how best to connect with customers during a recession with the right value proposition and messaging is critical. AI-based research models can ensure how much small changes in pricing strategy will shift market share or loyalty, for example. Research can also help to sharpen messaging so that brands don’t alienate customers when they do make changes.
Marketers are ideally placed to show their businesses how investment in brand performance will help them grow in both the short and longer term too. It can be particularly powerful if competitors may be dimming their lights, leading to even greater return on marketing investment and growth.
It’s time to stand in the sun marketers. You are needed now more than ever.
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