Why Maintaining Marketing Spend is The Most Strategic Path Through Tough Economic Times
Just as we thought we were entering the greener pastures of a post-pandemic world, economists are sounding the alarm on a possible recession. As a parent, I worry. As a consumer, I share the frustration of higher prices at the gas pump and dinners out with friends. But as someone who works in media and is talking to marketers every day, I’m constantly thinking about what this means for brands and their media investment strategies, and how to help them continue to grow their businesses in spite of these challenges.
In times of economic difficulties, it’s natural for brands to react by pulling back spending altogether, and the marketing budget is often the first to go. However, with consumer spending yet to slow down—recent research from June shows 37% of consumers say they’re spending even more while just 24% have reported cutting back on weekly spending—it’s critical to remember that sustained marketing spend is essential to the survival of a brand.
In fact, there are decades’ worth of research that show that maintaining or even increasing ad budgets during a weaker economy can actually ensure short- and long-term advantages for brands. Think about it: When it’s too expensive to dine out every night, consumers will be spending more time flipping through their TV options and scoping out retail sales for their next DIY home project—all of which is influenced by advertising.
During times like these, there are a few key strategies that brands can use to attract consumers and grow their business, while being even more mindful of their marketing spend.
Manage investments and spend smarter
At any sign of economic trouble, marketers are quick to assess their investments and evaluate what is really needed for survival. Marketers may make hasty decisions to cut costs, but pulling back entirely can be detrimental to brand performance in the long term. Maintaining a strong brand presence that consumers recognize, trust, and gravitate toward is essential for the vitality of a brand and can ultimately ward off risk during an economic downturn.
Instead of freezing marketing spend entirely, marketers should prioritize smart spending and invest in solutions that drive efficiency and help reach their intended audience without waste, such as cross-platform addressable solutions across linear and streaming. Marketers should also focus on awareness and consideration to measure success rather than sales outcomes, especially for larger ticket purchases.
Expand market share in a shrinking space
As competitors cut back on advertising across the board, there’s an opportunity for brands to maintain—and even increase—their share of voice in the market. In June 2022, one in four consumers made a purchase from a brand or retailer they wouldn’t normally buy from, with price (72%), product availability (51%) and product quality (41%) ranking as the leading reasons why.
By expanding SOV, brands can reach audiences beyond brand loyalists, which is particularly important when many consumers prioritize new brands based on lower prices and more product availability. However, knowing that many consumers will switch brands, marketers also need to keep steady loyalists from being tempted to switch. They should double down on their unique value proposition, including first-party data and loyalty programs.
Reaching target audiences with relevancy
Brands should also consider strategies that more precisely deliver relevant and personalized messages to their target audiences. Research shows this matters: 89% of people respond positively when ads present something relevant that they didn’t know before. On top of that, 74% react well to advertising that fits into the content they are already watching, listening to or reading.
Marketers can ensure this kind of relevancy in their messaging through audience-based buying, since a consumer’s spending likelihood varies based on household income, geography and age. Whether through addressable or data-driven linear solutions, or flexible buying across digital video and connected TV (including programmatic), this precise relevancy in messaging is extremely important during times when brands need to attract new customers and keep loyalists coming back.
Adapting messaging to today’s environment
According to Deloitte, nearly four in five American consumers are concerned about the economy and how rising prices will affect their everyday purchases, and it’s imperative that brands adapt their messaging to succeed. If a brand’s marketing fails take the temperature of the room and evolve its messaging, it risks coming across as out-of-touch, opportunistic or even uncompassionate.
As consumers are increasingly worried about the costs of goods and how far their paycheck will stretch, brands can create strong emotional connections with viewers by being authentic, empathetic and transparent and avoiding any marketing that reads as thoughtless.
And, while brands may be used to highlighting their discounts, promotions and product availability in their messaging, emphasizing these deals during times of economic instability will attract customers both new and old.
Although a recession is likely on the way, it’s still possible for brands to effectively market to consumers and do more than just weather the storm. By increasing share of voice, prioritizing precise relevancy in messaging and adapting content to today’s environment, brands can set themselves up for success.
Credit: Ad Age