All-Weather Marketing Part 1: The business case for advertising in a downturn

Brand advertising is not about profiting in recession. It is about capitalising on recovery.

To succeed in difficult times, you need to keep calm, think rationally and make decisions based on reliable data. This is particularly true when it comes to the decisions that businesses make about marketing. The evidence of the 2008-2009 recession shows how businesses that stayed calm and kept investing in advertising grew at the expense of those that did not.

It’s relatively easy to take the decision to invest in marketing when times are good and the weather is fair. However, it’s the decisions that you take when the weather turns that have the biggest implications for the long-term sustainability of your business. In situations like that which we face today, businesses that have the freedom and the means to make decisions on marketing can gain hugely from making the right ones.

Not every business has that freedom. For those struggling to pay rent or pay their employees, investing in paid advertising is unlikely to be the right decision; either ethically or commercially. They are in survival mode.

However, many businesses do have more choice than they might think. It’s easy to assume that declines in short-term demand makes the decision to cut advertising investment easy for you. This isn’t the case. The business case for advertising actually becomes stronger during a downturn. However, it’s crucial to make the right, data-led decisions about which type of advertising you should deploy.

When demand falls away it’s natural to feel pressure to double-down on activation and performance campaigns to try and attract short-term buying. However, this type of advertising won't attract demand that isn’t actually there. Its effect is likely to be minimal. There’s a far stronger argument for continuing to invest in emotional, memorable brand advertising to capitalise on demand over the long-term.

Most marketers will be familiar with the concept of ‘Excess Share of Voice’ (ESOV). This is the principle, backed consistently by research, that when a brand grows its Share of Voice (SOV) relative to its Share of Market (SOM), it’s ‘market share’ grows in response. Data from 2008-2009 shows that recessionary periods are an opportune time to invest in ESOV through brand advertising that is memorable enough to influence customers when the recovery begins. It’s far more efficient and ultimately profitable to grow ESOV when others are cutting their budgets, than it is to attempt to regain market share during a recovery, when competition increases. Brands that invested in growing ESOV by 8% during the last downturn grew their market share by an average 4.5x more during the recovery phase.

When meaningful demand still exists, which is the case for many B2B businesses in particular, the advertising mix should be more evenly balanced between short and long-term campaigns. However, it’s the inclusion of brand advertising that has the most impact in multiplying ESOV – and delivering the biggest market share gains.

Brand advertising is not about profiting in recession. It is about investing in the future and supporting recovery. It helps to ensure that you regain any lost ground quickly when it’s first feasible to do so. That makes it one of the most reliable strategies available for offsetting the damage a downturn can do. It’s an investment in the near future that makes sense for any business that can afford it.

The Planning Perspective

Izzie Rivers, Chief Strategy Officer, Merkle | DWA

Why are you advising clients to continue with brand advertising during the pandemic?

The situation we’re in has extended the buyer journey by an estimated six months and this accelerates the need for deep relationships and loyalty. We’re advising our clients to nurture and support their customers. After all, this is a time when those customers are making decisions about the products and services they need to build a resilient business for the future.

How do you approach audience targeting in the tech sector that you focus on?

Audience dynamics are shifting, and so our intent-led targeting strategies are shifting too. There are challenges in the SMB market when it comes to buying new products and services, but surges among large enterprise organisations. There’s also more intent at senior level as transformational projects get the C-Suite’s attention, and we’re seeing more focus on functions like IT, Security and Operations.

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