Why turn up your brand activation during a downturn
It’s been proven, time and again, that during periods of economic downturn one of your most valuable strategies is to increase your investment in brand-related marketing.
2022 was a challenging year for businesses, marked by rising prices and supply delays due to uncertain conditions around the world. Further tough times are forecast throughout 2023 with a recession looming over most markets.
But there’s good news: it’s been proven, time and again, that during such periods of economic downturn one of your most valuable strategies is to increase your investment in brand-related marketing – resisting the urge to simply make cuts – in order to defend your share of voice, so your business is well-positioned to benefit from recovery when it comes.
Right now, your intuition might be to reduce your brand activation spend or focus increasingly on sales tactics, such as promotions. Your intuition might also be to reduce your marketing budget in general to redirect more money to support your bottom line. Your intuition might even be to cease all marketing activities completely and simply sit this recession out. History shows that the winning countermeasure to a recession is to counter such intuitions and do the exact opposite.
Jump in while competitors jump out
If you’re feeling that urge to scale back your brand marketing spend or switch mainly to sales promotion tactics instead, you’re far from alone. The good news is that your competitors will be feeling the same way, and you can use that to your advantage. Because when they cut back on their brand activation, yours will be amplified as a result.
This means that by maintaining the same spend on your marketing you can benefit from an even greater share of voice. Better still, you’ll be able to buy more media coverage too because the cost-per-impression will be dropping too.
Data shows that businesses which maintain their marketing spend in a recession gain a return on investment significantly greater than the cost of that continued spend. As your business’ share of voice begins to exceed its share of market, it will statistically be more likely to grow.
More brand marketing, less sales activation
That’s not to say that sales activation tactics are not important too. During a business’ first year, the B2B Institute in '5 Principles Of Growth In B2B Marketing' recommends that activation ads outweigh branding ads by 65% to 35% of the overall marketing budget for optimal impact.
Once that brand has matured and become a leader in its market, they recommend that balance shifts to only 28% of the marketing budget on sales promotion and 72% on brand activation. Ideally, the most fruitful balance over time is shown to be around 38% on sales activation and 62% on brand-building for most businesses.
This is especially true during a recession. The reason for this is that sales activation is great for generating short-term spikes, but these quickly collapse once the campaign has ended. Brand activation builds longer-term associations and beliefs that increase the overall likelihood of customers preferring your brand over another – such activity then strengthens your position to capitalize on the general return to growth once the market recovers.
Fit your message to the moment
Maintaining your share of voice in your category doesn’t mean saying the same thing in the same way, to spending the same way in the same places. You need to adapt your proposition to match the real-time challenges that your audience is facing, from higher prices to longer supply-chain delivery times. It’s crucial then that you fit your message to the moment, ensuring your brand offers a tangible and relevant value exchange so your business remains essential.
When demand outweighs supply
A key part of the crisis manufacturers are facing is the difficulty of obtaining the parts needed to make their products – making it difficult for their customers to deliver. Compounding this challenge are the increasing demands on suppliers in some sectors who aren’t agile enough to adapt their production and delivery systems quickly enough.
You may wonder why you should advertise if you can’t meet demand – it all comes back to share of voice, staying front of mind, and being ready to capitalize on the eventual recovery. Many brands have successfully taken the opportunity during a recession to leverage a build-up of demand to reinforce awareness of their brand: reminding customers why they like the brand as much as they do. In this way, they still manage to create a value exchange even though they are unable to deliver the product at that time. It’s all about how you respond to the situation that counts, not how you avoid it.
Are you ready?
Not all brands will grow in the coming year. But the ones who grow in a recession tend to consolidate those gains afterwards. Brands that survive a recession often emerge with fewer competitors, a more loyal base of customers or even a new purpose. If you understand the changes and challenges in your market, stay aligned with your customers priorities, and stay seen and heard as a brand, you’ll find your investment was money very well spent.
If you’d like to discuss your situation and options in detail, you can call Managing Partner Ralph Krøyer on +45 35 25 01 75 or drop him a line at email@example.com.