• by Cory Treffiletti , Featured Contributor, April 2, 2008

Whether you're an economist or not, and whether you want to full believe it or not, the U.S. economy is in a recession. The leading economic indicators point to the fact that consumer confidence is down, the housing market is unstable and the Fed has steadily been decreasing interest rates to battle the credit crisis over the last few months. Unemployment rates have gone up -- and even our business of online advertising is seeing our major brands make cuts while they battle their uncertain futures.

Ad agencies can confirm what's going on by examining their clients and seeing that many of them are reducing their forecasted budgets and/or making their campaigns more accountable to key performance indicators like direct response metrics to rationalize their spend. This last indicator is one that I find interesting, because every experienced person I know in advertising or marketing suggests that the best way to build and maintain a brand is to spend money during an economic downturn -- and this recession will be that prime opportunity!

No matter how you think about it, it tends to make sense. From one perspective, spending during a down period allows you to gain leverage you might not have had in a highly competitive marketplace. If you're in the market with a substantial amount of money, you can negotiate more bang for your buck, garnering lower rates, stronger, more impactful placements -- and in some cases, category exclusivity.

Of course these are primarily media practices, but what about the creative considerations? From a creative stance, the messaging you convey should resonate more with a targeted consumer. For example, in an economic downturn or in a full-fledged recession, consumers tend to spend less on personal items, and they have fewer dollars to spend for discretionary purchases. Additionally, they tend to be more value-conscious and focus on special offers and opportunities as they are presented.

Strong creative messaging can serve two purposes here: if you are a challenger brand, you can break through with promotional messaging that introduces value over your competitors, thereby encouraging trial for your brand over the market leader, which may be less price-conscious than you. If you're a leading brand, you can defend that price-conscious messaging by continuing to convey a message of superiority over the competition, thereby attempting to create more brand loyalty during this key period when consumers will evaluate first based on price, second on their emotional tie to your brand, determining if this outweighs the price differentiation!

Another way of explaining this is to consider the value of trust. When consumers trust a brand, they are willing to pay a little more. When media dollars are spent in a less competitive environment, like that which we are entering now, you can rise above the clutter for a lower out-of-pocket cost and resonate more deeply with your intended consumer, creating a sense of trust. As long as your price isn't completely out of the ballpark, then trust can be the deciding factor. In a typical economy it's the reason many consumers buy name brands more than store brands. The products, for the most part, are the same, but the packaging is that of a brand they trust, which outweighs the price. If your brand is not sufficiently differentiated, than brand trust is not applicable -- and consumers will make their decision based on price.

When your dollars go further, as they will over the coming months, it's easier to build trust than when prices are being driven higher.

Of course none of this matters if you don't deliver on the promise of your brand. The promise must match the experience. So regardless of spending and the competitive nature of the marketplace, you must maintain consistency on customer service and CRM. You can't afford to lose customers during this period, because it will cost you twice as much to keep them when the indicators turn north once again -- as they always do!