Marketing in a Downturn

All the textbooks say spend up in a downturn to set yourself up for the inevitable upswing - but how many marketers are doing this? McDonald’s is one marketing company that certainly is looking to make hay whilst the sun is obscured behind the storm clouds with advertising spend tipped to increase by just under 5% this year according to the Australian Financial Review.

McDonald’s Australian chief, Peter Bush, was quote stating “We see an increased ad budget as a source of competitive advantage. At a time when other companies will be cutting back, we’ll be able to increase our presence, market share and sales.”

Research from the early 1980’s backs this up. Tracking the performance of 600 companies in the United States researchers found that the companies that decided to hold or increase their ad budgets during the 1981-82 recession had significantly higher sales after the US economy recovered. Companies that advertised aggressively during the recession had sales 256% higher than companies that did not continue to advertise.

When bottom lines are threatened it is tempting for companies to look for a quick fix by cutting costs. This then raises the age old question – Is marketing spend a cost or an investment?

I’m not suggesting that marketers should be reckless, clearly we need to ensure that we extract maximum shareholder value from every dollar that we spend but economic downturns can provide an opportunity to get a leg up on the competition and position our brands to extract maximum leverage from the current environment as well as the during the inevitable upturn.

Brand Strategy

Now is a good time to revisit your brand strategy (if you haven’t already). This is not to say that you should be reinventing your brand but you should consider tweeking the expressions of your core values to ensure that they reflect the current environment and maximise opportunities.

Accepted wisdoms of the last few years may no longer apply so question everything. For example, conspicuous luxury consumption is out, austerity is in. Foxtel recognise this in their recent promotions, positioning their service as a cost saver (no videos and movies, affordable bundle with no install cost and short contract) rather than a luxury.

At a minimum you should endeavour to keep your share of voice, however, you may find that you can even grow it on the same (or lower) spend.

Sales Promotions

Sales promotion should similarly tap into the current mood. Now may not be the best time to give away a “frivolous” prize but rather to give your customers (and community) something that is more meaningful. eg

1. Value bundles – ie Meal deals, price caps, etc

2. Value adds – Bonus (useful / valuable) widget

3. Support for charity – This is a classic win-win-win. Your customer feels good about purchasing from you, your brand affinity is increased and charities get a leg up at a time when donations are down.

Leverage Every Touch Point

Your company communicates with its customers (and potential customers) in many different ways but are you maximising your returns on these. Bill inserts, customer service contacts, etc. For more on this see my 4 September, 2008 post http://edwardbaral.blogspot.com/2008_09_01_archive.html


2009 is not a time for the faint-hearted. Be brave, think differently and make sure your brand is ready for the inevitable upturn – their called “cycles” for a reason!