Navigating Marketing Strategies During Economic Uncertainty
With the current economic climate, Australia teeters on the edge of a recession, and businesses worldwide are taking massive hits. This is prompting everyone to rethink their marketing strategies, aka, advertising is the first to go.
Now, we understand that a couple of knee-jerk reactions may be to drastically decrease marketing spend, pivot your core marketing strategies, or even cut out your marketing initiatives entirely. But this is a mistake.
While uncertainty looms, savvy marketers should use this period to not only survive but thrive. A study from Harvard has shown that brands who not only stick to their marketing efforts but increase them in recessionary periods, come out on top, both during the economic downturn and the boom that follows. Moreover, companies that lowered ad spend during a recession saw sales and income fall by 20-30% over the next three years as a result. So, the question you may be asking yourself right now is can your business afford to spend three years playing catch up with your competitors who maintained their marketing during the recessionary period?
Now, at Content Smith we understand better than anyone else that it’s not easy to remain consistent and adapt your marketing strategy during these testing times. That’s why over the last few months we have been deep diving into research from industry experts on how to use effective marketing tactics during a recession. What we’ve found is pretty damning, and we can’t wait to share it with you. Here’s a breakdown.
Adapt, Don't Cut!
One cardinal rule during a recession is to adapt your spending ratio. The 60-20-20 budget rule can serve as a guide, allocating 60% to essential activities, 20% to growth opportunities, and 20% to innovation. Think back to your primary school days when we learnt about the importance of recycling. Finding new life in old campaigns as well as focusing on the "best bang for buck" initiatives can maximise your marketing impact. Advertising spend should constitute at least 5-10% of your revenue, ensuring a consistent brand presence.
Back To Basics.
Returning to the fundamentals of your brand is crucial during economic downturns. Revisit your brand values, create content that aligns with your core identity, and empathise with your audience's feelings. What you are feeling, they are too. A recommended strategy is to leverage platforms like the face-to-camera video series to communicate your brand/business values effectively. Try to understand why your audience initially engaged with your brand. Do this on social media by asking questions and community management. This can help build a more authentic connection.
Invest Where Others Neglect.
While others may be pulling back, this could be a good time to consider investing in untapped markets or channels. Identify areas where your competition reduces efforts and increase your ad budgets accordingly. Getting creative and reaching out to other businesses in your industry may provide opportunities for collaboration. Exploring this beyond traditional platforms like LinkedIn (B2B) can open new avenues for growth, or at the very least provide a new support system. The key here is to capitalise on areas where your competitors could be better, ensuring a more substantial return on investment.
Be Human!
We already touched on this earlier, but during challenging times, consumers appreciate authenticity. Pull back the curtain, humanise your brand, and build personal connections. Creating content that showcases vulnerability can resonate deeply with your audience, fostering stronger connections. With Coles and Woolworths price gouging during this recession, they are losing trust and loyalty among revered customers. Using this as an example, remember that empathy is key – understanding and addressing your customers' concerns will bring your brand closer to their hearts.
Stick To What You Know.
Leverage your past successes and expertise. Focus on channels that have proven effective for your business, such as email campaigns, or social media. While exploring different methods of marketing should always be encouraged, it is inherently a gamble and therefore comes with a risk. Use your knowledge to develop compelling campaigns in the areas your brand is already known.
Who Is Your Customer?
In times of uncertainty, understanding your customers is crucial for your business. There are many crossovers in psychology and marketing, and knowing how to identify consumer behavioural patterns can help marketers. This article in the Harvard Business Review is a comprehensive breakdown of the consumer groups during recessions. It explains the ways companies can navigate recessions successfully by emphasising the importance of understanding evolving consumption patterns and adapting strategies accordingly.
The key insight is categorising customers into four groups based on their reactions to economic challenges: "slam-on-the-brakes," "pained-but-patient," "comfortably well-off," and "live-for-today." Each group prioritises consumption differently, sorting products into essentials, treats, “postponables”, and expendables. Read the article to grasp a full understanding of how to target each category.
To Summarise…
So there you have it. Marketing during a recession requires a strategic and empathetic approach. There've been many recessions before and sadly there’ll be more in the future. But it’s not a time to become complacent or disheartened. At the end of the day, economic downturns often free up the field of marketing. So by adapting spending ratios and investments, returning to brand basics and empathising with your audience, not only will you survive the recession, but you’ll be positioning yourself for success.