Brands that continue to spend on marketing during economic downturns will benefit in the long term is a proven maxim-and it bears particularly true for the current cost of living crisis, experts say.
There is little doubt that brands might be tempted to cut costs by slashing marketing budgets during the current cost of living crisis. Not only will this likely deliver short-term savings, but brands will also be concerned about the perception that spending on marketing will give the perception that they are going for the hard sell while consumers are suffering financially.
Brands that invested during the 1989 recession emerged stronger
However, slashing marketing spending during a crisis equates to a myopic approach, experts say. An often-cited MarketSense study found US brands that invested in advertising during the 1989-91 recession emerged stronger than those which cut back. Added to that, research by Kantar found that during the height of Covid, just six per cent of people thought businesses should stop advertising. Experts say there are a multitude of reasons brands should maintain spending during a downturn: media costs can be lower; consumers want to hear brand voices during a crisis; brands can genuinely offer tangible solutions to crisis and also provide a needed sense of normality during unstable times, to name some. Furthermore, marketing experts say uncertain times are not the period to change a brand's purpose. But, they argue, the reverse is true and it's the moment for brands to double down on what value they bring they bring to people's lives.
Consumers want to know brands are out there to help them
Even though brands can not always provide a magic solution during a crisis, marketing experts say consumers would rather hear that brands are trying to work to help them, than not at all. Matt Rhodes, chief strategy officer, House 337, said the fundamentals of continuing to invest in a brand during a recession are "almost certainly true". But Rhodes added a caveat to this, saying there was a "danger" in this orthodoxy. He said: "The last big recession in the UK was in 2008, when digital marketing made up less than 10 per cent of marketing spend; it now makes up more than 50 per cent. "The simple approach to maintain your spend dates from a time when most media was booked in advance and didn't have the abilities to target or learn in the way the current media landscape does.
Brands need to be "balanced" during crisis
"I'd say that today brands need to be more balanced – continue to spend but be ruthless about using data to understand what is working and where." Meanwhile, Sid McGrath, chief strategy officer, Wunderman Thompson UK, said that "absolutely" brands should keep on spending during a downturn. However, McGrath raises the question of what brands should spend on during crises.
Focus on what consumers want during challenging time
"Rather than deals, price, programmatic spamming or illusive purpose, brands would do well to focus on what people are really looking for in these challenging times," McGrath said. McGrath highlighted some Wunderman Thompson research which pinpointed the three Cs that people think their lives currently lack.
The three Cs
These are "control" (the money they had is worth less now than last month, prices are out of whack and none of it is their fault); "compassion" ( it seems that government and institutions aren't demonstrating much care or empathy and busy lives mean less time is spent ensuring people are doing OK) and "connection" (people are feeling isolated from country and community, and no longer feel part of something clear and tangible. McGrath highlights the role brands can play in helping with "control", "compassion" and "connection". He says brands can "create" a greater sense of control for people, bringing prices, services and opportunity within their reach; demonstrate "compassion" by better understanding, respect and service; and facilitate connection" to re-bond people back to brands, community and each other. "This is the smart place to spend money as it'll build brand equity which will lead to increased consideration and sales rather than simply awareness," McGrath said. Brands also face the question that, amid a crisis, whether they should alleviate the general mood of doom and gloom with humour in their marketing activity, or whether this would miss the mark. During Covid, there was a sense that brands sidestepped levity in their advertising, thinking it would backfire.
"Danger" that brands become melancholic in advertising
Rhodes said there is a "real danger" that brands adopt a common melancholy in these "difficult times" approach to their communications, similar to the strategy many brands adopted during Covid. He said this is not a good strategy and leads to "wallpaper advertising" that is not distinctive or memorable. Rhodes adds: "It also doesn't reflect the public mood or what they are looking for. We're not taking comedy shows off the TV; we're not replacing upbeat music with downbeat melancholy on our radio stations."And neither should brands adopt a common melancholy approach. What they do need to do is, understand the motivations, pressures and needs of the people they are speaking to. And talk to them about these. There is definitely a place for humour. We could all do with a bit of that."
Important to reflect audience
Rhodes also says that brands that act responsibly are "reflecting the ways their audiences are behaving". He adds: "The current macroeconomic and geopolitical environments are interlinked. For example, we're saving on our energy usage because of the cost of energy and energy supply issues due to the ongoing war in Ukraine. "Consumers are acting responsibly and sustainably, and brands should mirror that." But is it a bad look for brands to prioritise growth during a cost of living crisis? Rhodes said: "Brands should prioritise helping their audience to understand and make consumer choices. And if they do this and the consumer chooses their brand or product, the growth will come. So focus on the consumer first and foremost."