3 hard-earned lessons about marketing in a recession

There are some things we all know to be true. Like, Daniel Craig never should have made that last Bond movie. (The story arc after “Spectre” was perfect and done.) The Cheesecake Factory is the best restaurant in the world. Beyoncé is overrated. And perhaps the most obvious: We are in the midst of a recession. Technically a recession is defined as two consecutive quarters of negative GDP growth, which has already occurred, but no matter how you interpret inflation, the trend line of the economy is clearly going south. Plenty of profligate politicians will parse their language and avoid using the R-word until after the midterms, but anyone who’s filled up their tank, bought cereal or milk—or even considered going out to dinner—has felt their wallet get squeezed and their effective income slashed. This means consumers are able to buy less, forced to make tougher choices about what goes into their shopping carts. So what does a recession mean for brands, and how should clients and agencies navigate the rocky road ahead? The best way to prepare for the future is to study history, and there have been several economic downturns over the past few decades. Therefore, we know what successful brands have done—not only to stay afloat but to get ahead. To wit: Companies that keep investing in their brands during a downturn bounce back faster For everyday items, even “loyal” consumers switch their purchases when a competitive brand is on sale or their usual brand is out of stock, and these tradeoffs become common during a recession. Store brands or generics may replace premium brands. This might lead some marketers to think cutting back on the brand now is the right move, to save on media expenditures while demand is lower. That miser’s logic only leads to misery. Brand awareness builds familiarity, which leads to trust, so if you lose top-of-mind awareness, that precious bond you had with your customers is broken. Once wallets open up again, you’ll be spending your way out of a trough while your competitors build on a base of loyalty they never lost. See all of Ad Age's 2023 Agency A-List winners here Building your brand and driving short-term sales are not mutually exclusive All too often clients swing the pendulum from brand to retail—or TV to digital—based on whether they’re on track to achieve quarterly sales goals. Terms like “performance marketing” get tossed around like a panacea. How many decades of studies must be published for marketers to understand that zero brand support will erode performance, while no lower funnel support results in lower conversion? You need both, and the challenge amidst economic uncertainty is the chance to try different combinations to see what works best for your business. Historically, a blend of 70/30 or 60/40 for brand-versus-promotion has proven most effective over time, but try mixing it up and see what happens. But whatever you do, don’t abandon your brand, because the short-term effect may have long-term consequences you won’t like. When the going gets tough, it’s time to rethink your purpose through the lens of reality Brand purpose was once a natural extrapolation of the company’s mission, a clear articulation of where things could go if everything went according to plan. A computer on every desktop—that sort of thing. Then a few years ago, every company started to reimagine its purpose as being a bit more lofty—an ethereal blend of well-intentioned altruism, cynical virtue-signaling and a collective desire to save the planet (and/or humanity). For some companies this push was purposeful and genuinely aspirational. But for most brands it was a stretch, and surveys increasingly show that CEOs are more interested in activism than their customers, who really just want companies to deliver on their promises and produce a reliable product or service at a reasonable price. Inflation should be a wake-up call for brands to once again ground their purpose in pragmatism. Be the best at what I expect you to do, and set the standard in your category for something—performance, customer service or value. Focus on brand behavior and make the customer experience so seamless that you become essential. If that isn’t recession-proof, I don’t know what is. Ad Age has been compiling stories of cutbacks across the industry in a blog tracking “economic moves and news,” and it paints a picture worth a thousand words. (Or maybe it’s a picture worth only 800 words due to inflation, but you get the idea.) What we’re seeing is a collision of two opposing forces, a sudden tsunami of economic anxiety crashing into a post-pandemic undercurrent of optimism. Layoffs are already occurring at some companies, while other firms are snatching up talent and trying to build momentum while they can. It’s inherently contradictory, which is why even the most cocksure economists sound uncertain. In conversations with agencies and clients around the country, we’re hearing calls for austerity and prayers for organic growth. New business pipelines are slowing and clients are warning of reduced budgets and cost-cutting in the back half of the year. Are there exceptions? Absolutely. Is the fear of a looming recession actually making an economic downturn more likely? Most definitely. The free market may be rational, but policymakers, investors and media pundits are all prone to mass hysteria. The past two years proved that beyond any doubt. Which leads to the real lesson that history has taught us, time and again. Your brand is the bulwark of your business—the emotional connection that keeps you in someone’s cart when they’re cutting corners elsewhere in the store. That means marketing is an investment, not an expense to be cut at the first sign of trouble. So as this roller coaster of an economy takes us all for a ride, buckle up. And make sure the recession doesn’t lead to regression for your brand. Tracking layoffs and budget cuts How brands and agencies are bracing for a recession Click here

3 hard-earned lessons about marketing in a recession

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