Why brands should be bold amid economic uncertainty
As we begin to brace for a possible recession in 2023, brands are preparing to cut back on their spending. Ben Nilsen, head of media strategy at Droga5, provides five reasons why they should do the opposite.
Nilsen argues that brands should continue to invest in 2023 / Credit: Adobe Stock
As we step into 2023, a looming recession, or simply fear of a looming recession, seems to cloud every headline, meeting and decision being made all around us. Everywhere I look, I see brands cutting their budgets and scaling back ambitions – but are we all being short-sighted and overly reactive?
With fewer marketing resources, the entrenched behavior is to seek near-term gains and think of our customers as short-term transactions. As marketers, it curtails our opportunity to experiment, invest in the long term and feel confident in risk.
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Of course, I empathize, as inflation, subsequent pressure on pricing and widespread economic uncertainty will be some of the biggest challenges for businesses to contend with this year – but as Winston Churchill once said, “Never let a good crisis go to waste.”
Below, I make a case for boldness in the face of economic uncertainty, and arm brands with five tips to tackle 2023 on the front foot.
1. The power of brand buildings holds true even in times of economic hardship
In the strategist’s bible, The Long and Short of It, Peter Field and Les Binet describe the long-term value of brand marketing in lifting the ceiling for sales growth beyond short-term sales activation efforts.
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2. Remember, share of voice = share of market
According to the Institute of Practitioners in Advertising (IPA), share of voice (SOV) – defined as the amount of media spent compared to the total media expenditure for your business – is the key driver to securing your market share. So much so, that the relationship is almost 1:1. Also, advertising either above or below your respective market share will either grow or shrink your relative share.
3. Pay no mind to what your competitors are doing
Relevant to the previous point, the opportunity to catch SOV or share of market only goes up if your competitors reduce their ad spend. Or, conversely, you choose to punch above your weight. In fact, in a recession, the ad market also dips, meaning the same marketing spend can go further, therefore worsening opportunity.
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4. The proof is in past examples
These concepts get borne out and found to be true, time and time again. Marketing professor Mark Ritson does a great job of highlighting these theories in action. In a piece from 2021, Ritson points out that during the pandemic, Coke – like many other companies – cut and re-allocated spending, while Pepsi did not, resulting in a 5% gain of sales for Pepsi in 2020 and an 11% loss for Coke over that same time period.
5. Even Henry Ford thought cutting spending was a bad idea
He once said, “A man who stops advertising to save money is like a man who stops a clock to save time.”
There will, in fact, be opportunities for us to achieve more than we usually would at other times. Defend brand budgets and use them to build provocative, interesting and dynamic work. Do not rely on only the bottom of the funnel to do all the heavy lifting. Go forth into 2023 and be bold – or at the very least, cautiously optimistic.
Ben Nilsen serves as head of media strategy at Droga5, a global advertising agency headquartered in New York City. For more, sign up for The Drum’s daily US newsletter here.