COVID-19 induced a sudden economic slowdown that spread throughout the world at record speed. Combined with the uncertainty around the continued effects of the virus, the slowdown has all but made a full-blown recession a foregone conclusion. Much uncertainty remains about the length and depth of this particular economic contraction, and that uncertainty is what’s creating the biggest challenges for business leaders who are scrambling to preserve cash for maximum flexibility.
There have been and will continue to be many strong arguments on why brands should maintain marketing efforts during a downturn. One would be to recover more rapidly on the other side of the downturn, another would be to steal market share from category leaders and still another might be to harness the power of creativity to uncover what demands still exist despite the downturn. Even so, at the end of the day, we know that every company, category and balance sheet is different, as will be their priorities.
Which leads to the question for every company facing a recession: Is marketing a fundamental business element that drives sales or an expendable discipline that can be cut to curb spending? For most companies, the truth lies between those two ends of the spectrum. That’s why we’ve crafted some considerations for those charged with continuing to generate sales on slimmer budgets.
1. Re-evaluate What You Know About Your Target Audience
At Hiebing we believe everything starts and ends with the target. We counsel our clients to make decisions based upon a core target audience, but a recession is a period when that audience is likely to be undergoing significant changes – and undergoing them in a short span of time. COVID-19 further exacerbates this dynamic, as we’re currently watching the fluctuations of a recession collide with the physical and emotional challenges of a worldwide pandemic. Because of that, everything you think you know about your target needs to be reframed to meet the moment.
Target Audience Considerations
- How has the current climate affected their income and purchasing power?
- Is your product still relevant in a down economy, and if so, how has the frequency of relevance changed? Also, how have their media habits changed? And based on those answers, what adjustments need to be made to your media plan?
- Last but not least, how must you evolve your brand’s creative to ensure your visuals and messaging support and align with the current emotional state of your target?
- Netflix more than doubled its projection of new subscribers in Q1 2020 [CNET]
- 47% of internet users aged 16-64 across 17 countries are spending more time on social media [WARC]
- 16.4% drop in retail spending in April 2020 [WSJ]
- 14.7% U.S. unemployment rate as of May 8 [BLS.gov]
2. Your Brand Doesn’t Change, But Your Story Does
While your brand positioning is not likely to change with evolving economic times, the tone and manner in which you tell your story should change in a COVID-19-induced recession. If you understand and have empathy for your target audience, you’ll be able to identify the current role your brand plays in their lives. From there, you’ll have a platform to develop a creative strategy that leads to compelling yet relevant storytelling that matches the emotional mood of your target during this health crisis and season of economic distress.
While larger brands and category leaders can lean on incremental creative campaigns that offer messages of broad support, e.g. Nike, Facebook, many companies will need to find a creative strategy that leans into more tangible offerings than just inspiring goodwill.
- Can you adjust your message to align with the times, and if so, how? Or do you need to develop an entirely new campaign?
- Does your brand allow for offer-based messages as an approach to spurring sales, or would a shift to promotional messaging dilute long-term brand equity?
- Can your brand be a part of the solution in a believable way (e.g., as an economically relevant product or service or as a welcomed distraction)? If not, how can you communicate with your target in a way that rings true and feels genuine?
- 92% of people think brands should continue to advertise during the crisis [The Drum/Kantar]
- 77% of people think brands should create solutions to be helpful in the new everyday life [The Drum/Kantar]
3. Reprioritize and Focus Marketing for Greater Impact
Changes to budgets are often generated from the C-suite without specific marketing objectives in mind. Sometimes recession-based budget cuts lead to proportional reductions across marketing programs. While there’s some comfort to be found in the familiar during a crisis, what’s familiar may not be for the best, as you might be spreading your budget too thin to have any impact. While it may be less comfortable to sort out amid a crisis, sometimes a large shift toward fewer tactics with more support – versus maintaining all tactics with reduced support – will prove most beneficial. And, on top of that, what additional tactics should be pursued given the unique circumstances.
As soon as you can, take time to re-evaluate how your company’s objectives and marketing programs sync up, assuming they still do. Whether they do or don’t, this exercise will confirm what’s mission critical, what tactical adjustments are needed and where funding should be allotted to actually make the biggest difference.
- How should you adjust your 2020 business objectives (and beyond) based upon current market forces?
- Which marketing tactics are most essential and should be prioritized based upon your recalibrated objectives?
- Have your target audience’s media consumption habits shifted? Are you present where and when they are? If not, can you get there? And do you have a budget that will help you make a meaningful impact in those spaces?
- Are there new category opportunities you can take advantage of during this recession? Can you steal share from category leaders who have likely decreased marketing spend in certain areas?
- 4% YOY increase in affiliate marketing programs through April 2020, as marketers seek immediate sales [PepperJam/MediaPost]
- 33% YOY decline in TV upfront ad spending, as marketers seek flexibility to redistribute budgets [MediaPost]
- 50% of marketers think linear TV GRP weight can be replaced by OTT [MediaPost]
4. Balance the Lower Cost of Retention With Your Pursuit of Customer Acquisition
Customer acquisition can be an expensive proposition even outside of a recession, so if budget cuts are on the table, make sure you’re earmarking some funds to retain your core audience of current customers – as they’re the ones driving the revenue that keeps the business functioning.
You know your existing customers more intimately than those you are seeking to attract. Use this knowledge to give those customers what they need in this moment – and go the extra mile to delight them. There are still opportunities for revenue increases among this audience, including strategies that increase their use frequency or encourage word-of-mouth marketing and referrals – making it possible for you to grow your organic revenue along with your audience.
- How can you use your customer data to increase engagement and frequency during this time?
- What first-party data could you use to enhance your communication with your customer base in a way that’s unique to your business?
- Are there interesting ways you could reward and motivate your customers and get them to recommend your brand to their inner circle?
- 92% of consumers trust their family and friends over brands [Nielsen]
- 5x more expensive to acquire a new customer than retain an existing one [OutboundEngine]
- 5% increase in retention can increase profits by 25%-95% [Bain & Company]
5. Use Data to Share Results and Identify Next Steps
Modern marketers must be fluent in data to show the returns on their initiatives, and the need for this increases exponentially during a recession. In times of stress and crisis, executives are looking to preserve cash on every level. As such, providing data-informed results to CMOs is a way to put marketing on equal footing with other disciplines.
But data alone is not enough. In a downturn, every dollar spent needs to be accountable, thus showing ROI is just the first step. The second and more difficult step is to generate insights from the data accrued from marketing activity and then turn that data into actionable improvements.
Creativity and ingenuity have the power to exponentially drive a business. While marketing often owns those attributes within a company, if marketing is disproportionally affected by budget cuts and is unable to translate its successes into C-suite-friendly data, that will result in an opportunity cost that cannot be measured in a single line item on a balance sheet.
- Can you shift budgets to digital channels that offer more metrics? If not, what alignment can you gain for measurement of offline channels?
- Are there frequency adjustments you can make to your reporting cadence?
- Can you re-evaluate potential ROI based upon decreased media rates during recession?
- Are you maximizing A/B testing opportunities for campaign optimization?
- Are there also stories of engagement and impact that are more qualitative, but underscore loyalty, referrals, etc. in a tangible way?
- Only 5% of CMOs say they can move immediately from insight to action (CMO Council)
- 3% of CMOs say their organization is effective at turning data and intelligence into action (CMO Council)
- 23% of CFOs think CMOs collaborate effectively [HBR]
Want to learn how to develop a recession marketing plan for your brand? Email Ted at email@example.com to set up a call.