Downturn anxiety is infectious and can cause marketers to become too risk averse. But in times of fast-paced change and economic uncertainty, it is counterproductive to just stick with tried and tested strategies. Marketers need to balance risk responsibly or their company will suffer in the long term.
- Resist the temptation to make drastic cuts to ad spend
Brands that invest through a downturn come out on top.
Respected studies have shown companies that invest in brand advertising emerge from a downturn stronger and more profitable than before. Brands that can maintain marketing spend in the short term will likely increase their share of voice as competitors cut their budgets, capturing more of the market and leading to more effective ad spend. (When to start advertising again? Three months ago, IPA, Aug 2022)
- Don’t go into hiding
Marketers can be guilty of taking all the doom and gloom to heart. It’s easy when times are tough to flip from embracing the latest trends to raising the drawbridge. But marketing is changing at a greater rate than ever and those that stand still will quickly fall behind.
In periods of economic downturn, the natural reaction of CFOs and CMOs is to take fewer risks and spend less money, opting for marketing tactics they know are reliable and safe. And while this prudent approach has its obvious upsides, tightening the purse strings and eliminating risk should not be the go-to strategy. Marketing budgets should be seen as an investment, not an expense to be trimmed.
Outside of the recession, the marketing world is currently experiencing a period of significant and tumultuous change. To quote Keith Weed, quoting Landmark Ventures’ Shelly Palmer: “The pace of change will never be this slow again”. It’s crucial to adopt an agile approach and a culture of evolution, as failure to adapt could leave a brand with an outdated model that is no longer fit for purpose.
- Be the one who is focused on the future
Keep one eye on the long term—the recession will end, and the pace of change will accelerate.
Recessions tend to last 15-18 months, after which we usually see brand confidence returning, with marketing and efficiency trends that were suppressed now accelerated to make up for lost time.
The end of the 2009 Recession, for example, was the catalyst for the distinct shift to digital media channels. It is a trend that we have continued to see with YOY growth ever since (bar 2020), with non-digital media spend remaining pretty much flat to this day.”
- Manage risk to avoid mishaps
We must keep innovating, and minimizing the risks associated with innovation will make it more appealing during an economic downturn. Ensure you know where the risk is, create acceptable parameters, and lower the odds of the worst happening.
For example, carve out an explicit percentage of media budget that can be used for testing new channels, tactics and vendors. This should have defined parameters for success and failure within a reasonable testing period, and come with an acceptance that failure is ok.
Innovation risk can be significantly reduced using a robust testing framework with a rigorous hypotheses and pre-test assessment, and knowledge sharing with other teams that are also testing.
- Don’t get distracted by shiny objects
Concentrate risk and innovation on the hard things that will change everything.
Marketers benefit most from focusing innovation on areas that can elevate everything they do. There’s likely to be an acceleration of innovation following a recession, so start putting into place a framework of adaptability and testing in preparation for this.
Instill a culture of seeking to understand what’s new to separate the hype from the utility.
Allow teams the autonomy to explore, test and not fear failure to foster a culture of responsible agility. This is key when “the pace of change will never be this slow again.”
Thanks to James Coulson Managing Partner, Consultancy at Kepler EMEA for his insights.