With the economic downturn in full swing, today's CMOs are under pressure to drive greater results with decreasing budgets. At the same time, media owners are under pressure to address
advertisers' changing needs and a sudden decline in demand. As a result, both sides of the advertising ecosystem need to think about new ways of doing business.
marketers, the impulse is to cut advertising spend during a recession, but history shows this is not always the best approach for good companies. A McGraw-Hill Research analysis three years after the
1981-82 recession found that companies maintaining or increasing ad spending during that period enjoyed 256% higher sales than companies that had decreased their budgets.
Recessions are a
unique opportunity to differentiate your company from the competition and grab critical market share. Companies with strong business models that are aggressive in a recession can even knock a
competitor out of business in the right circumstances.
Recessions create an atypical business environment that carries disproportionate risks and rewards. However, by employing some smart
marketing strategies and navigating this time period well, companies can emerge much stronger in the end. These strategies include:
- Reevaluating your entire marketing plan in the context
of a down market. Will your product deliver strong value in a market where consumers are watching what they spend and eliminating many discretionary purchases? Determine what needs to change now;
don't wait to find out the impact of a drastically changed landscape.
- Focusing aggressively on accountable media. This doesn't just mean online but also looking at the new
ways to measure and track results in traditional media like TV and radio. Make sure you have visibility to positive ROI on your marketing spend and reward media owners that deliver results with more
- Remembering that advertising is a key tool to growing or maintaining market share. Don't make the mistake of just seeing advertising as a cost, evaluate the cost
structure of your entire business.
- Understanding the competitive landscape. The amount of total disposable income is now shrinking which means that to even maintain your current
business metrics you have to take market share from your competitors. In an expanding market companies can grow significantly without impacting, or being impacted by, other players in the space. In a
down economy it is all about taking business from your competitors. Again, understand now what you need to do to beat the competition.
- Sitting down with your team and making it
clear that the world has changed. Make sure that team members change their mindset and realize the key to coming out ahead is a renewed focus on the fundamentals, a strong emphasis on understanding
your competitors strengths and weaknesses and competing hard against them, what worked yesterday won't work tomorrow, that these are challenging times, but that the potential to put the business
ahead is great.
- Not being afraid to take risks. Uncertain times are scary, but contraction alone is a questionable strategy. Be prudent with your financials but aggressive with
The macroeconomic effects of a recession haven't changed over time, but advertising certainly has. If a business' fundamentals are sound, a down market can be a
unique opportunity to capture market share and improve competitive position. In a recession, it becomes much easier to reach an audience with less clutter from the competition, and foster belief in
the stability of their business and strength of the brand.