It is well documented that these are crazy and unprecedented times. The world has not previously experienced a pandemic like COVID19 and in many aspects of our existence, we are in unchartered waters. However, when it comes to understanding how a business responds during economic hardship and the impact of that response, we have some very valuable data from the past from which can guide the decision making today.
Kis Marketing is in the business of telling stories and urge you to read this story about the value of investing in marketing at this time. It might just be the difference between surviving and thriving!
Essentially, all the research that exists demonstrates that companies which invest in marketing during a recession or financial downturn, come out ahead of their competition as the economy rebounds and recovers.
So what does that mean and how is it quantified?
Well, there are a few aspects to consider, firstly the investment. This includes traditional and digital advertising, social media and traditional marketing.
We know that a business that reduced their advertising/marketing spend during an economic downturn, experienced a growth rate just one-third of that of their competitor who continued to invest in advertising/marketing.
Meanwhile, companies that increased their marketing/advertising spend gained market share three times more quickly than their competitors after the downturn.
The following graph is the perfect visual for understanding the impact of this over a 5 year period.
The next thing to consider is visibility.
A reduction in investment in marketing and advertising naturally results in the brand and the business becoming less visible. A lack of viability in the market place reduces brand awareness, presence and ultimately sales. There is a real opportunity to increase visibility in the current climate because as a competitor cuts back on investment and loses viability, it is a great time to step forward.
The other key consideration at a time like this relatability.
Over the last few years, we have seen a significant change in the influencing factors of consumers. Consumers now have ready and instant access to all sorts of information, from social media, consumer reviews and news articles through to tax, employee relations and other data. So ensuring a business’s brand voice and communications are authentic and relatable has never been more critical.
In this world of instant access, messages move quickly and people’s time and focus are limited, so engaging your consumers in an interesting and evolving conversation, is so important.
Images, videos and infotainment is the new norm and people are seeking this from the businesses they wish to engage with.
During this time, an authentic, empathetic and real conversation with people, through social media, is getting great traction and those business doing this well, stand to reap the rewards.
It is said that when times are good marketing is nice, but when times are bad marketing is critical. It seems from the historical data available, this cliché might still have merit.
If this has prompted you to think about marketing for your business, there are a couple of other bonuses for investing in marketing and advertising now:
- If you are wanting to make an impact, there are fewer businesses in the market, so competition for position and presence is reduced.
- Advertising rates are likely to be more affordable as there are fewer people advertising.
- The psychology of the consumer is that if your business is present in the market during times of hardship, this is interpreted by the consumer as strength and dominance.
- COVID19 has more people are on digital media and social channels than ever before – lockdown has created a captive audience.
Following is a summary of a couple of case studies from previous recessions:
- In the 1920s, POST was a leader in the cereal market. During the great depression, they tightened their belt and cut back their advertising spend. Meanwhile, KELLOGGS doubled their advertising spend during this time and managed to grow profits by 30%, becoming the new market leader. While there are many factors at play, it is interesting to see that Kellogg is still a household name one hundred years on.
- In the 1990’s recession, fast-food giant McDonalds cut back their advertising spend and sales declined by 28%, meanwhile, Taco Bell & Pizza Hut took the opportunity to increase their investment in marketing and advertising. The results during the recession speak for themselves.
Taco Bell sales increased by 40%
Pizza Hut sales increased by 61%