re we in recession? Is stagflation setting in? How much worse is it going to get? Should you still be advertising in a recession?
Good news. Economic dips don't mean brands need to experience a corresponding contraction. You could even strengthen your business to reach new heights, if equipped with the right knowledge and growth mindset.
Cycles in the economy are nothing new. There are brands that come out on top every single time. Almost any situation offers opportunities if you can identify and respond to them. Ultimately, marketing is not a cost, it’s an essential operating investment.
So unless your business is nearing the point of collapse, firmly push your CFO’s hand away from the marketing budget nuclear button. Give them reassurance that your business is going to get through any challenges just fine, if you collectively keep your heads and play it smart. No short-sighted and damaging knee-jerk reactions.
Here’s what you need to know about marketing in a recession. I’ve included plenty of great examples from brands that proved the case in point during the financial crisis (aka The Great Recession, December 2007 - June 2009).
Skip To What You Need:
- What Happens When Brands Reduce Marketing Budget?
- The Primary Challenge Is Changing Customer Behavior
- 1. Leverage MarTech + Analytics
- 2. Clarify Your Brand Positioning + Customer Targeting
- 3. Adapt Messaging + Tone
- 4. Review Your Pricing Strategy
- 5. Evaluate Your Stock Holding, Products Or Offering
- 6. Adjust Media + Channel Investments
What Happens When Brands Reduce Marketing Budget?
Drastically cutting off the marketing budget should only ever be an option if it’s literally a matter of company survival. Why?
- Customer Bleed - Less brand visibility and engagement with existing customers and potential sales leads puts you out of mind. Apart from any particularly loyal customers or financially unaffected target segments you may have, customers are quick to switch to competitors that are marketing to their current needs. For example, it was found that up to 75% of consumers tried new brands during the pandemic. Any savings you make cutting marketing budget is likely to be outstripped by a loss of customers switching to other brands. B2B projects or contracts last longer, but new projects, scope extensions or contract renewals could decrease as a result.
- Market Share Costs More to Recoup Later - Your brand's share of voice and mind, brand equity and market share all depend on sustained marketing activity. A 2022 study found that most brands are already under-spending on marketing, depressing their ROIs by a median of 50%. Additional media cuts on budgets that are already proportionally low will be disproportionately counter productive as a result. Given that more advertising competition during growth periods drives up CPC and CPM prices, it would require increased spending to build back to previous ROI levels after activity is paused. (ROAS and brand awareness always have a lag period.)
- Long-term Growth Contraction - Research found that brands going ‘off-air’ can expect to lose 2% of their long-term revenue each quarter. And a 2018 research study found that stopping advertising for a year resulted in sales revenue declining by 16% on average, compounded to a 25% decline after 2 years. The effect hit smaller firms hardest. When media efforts resume, it takes around 3-5 years to recover the resulting equity losses. So to summarize, any short-term underinvestment in marketing can put your brand at a longer-term disadvantage that won’t financially balance out.
On the other hand, your brand stands to benefit if you maintain brand awareness.
- Increased Market Share + Revenue: Brands that keep advertising during recession can see up to 5% increases in market share. Translated to sales, businesses that advertise aggressively during recession have seen sales 256% higher than those that ceased advertising. Growing a successful brand in a declining market is actually easier than growing it in a very competitive one, which is why so many of today’s big brands successfully launched during recessions.
- Greater Brand Visibility For Less - A number of companies (who haven’t read this article) will pull back on marketing investment during a recession. This reduction in competition drives down ad placement costs. It means brands still advertising can quickly gain share of voice for the same investment. This is where share of voice exceeds the corresponding share of market. In the 2008 recession, advertising expenditure dropped by 13% yet statistics showed 3.5x more brand visibility for companies and organizations that maintained their marketing output. Excess Share of Voice (ESOV) is the name for this key metric where you stand to gain ground.
However, that’s not to say you should just continue as is and expect to maintain or improve your results. On the contrary.
A 2010 study of how businesses performed during the financial crisis found that 9% had come out in even better shape than before. The businesses that did best had deployed a mix of tactics to reduce costs while still investing in growth strategies best suited to the recession and post-recession periods. Firms that dramatically cut back on everything performed the worst.
Looking specifically at marketing spend, you should be looking at ways to trim unnecessary fat and make your budget work more effectively, for greater ROAS and overall marketing ROI. This may require some mix of budget reallocation, shifts in audience targeting and redefined messaging.
We’ll spend the rest of this article looking at exactly what that means, giving you inspiration for how your brand can approach recession marketing for growth.
The Primary Challenge Is Changing Customer Behavior
When it comes to marketing in a recession, your fundamental challenge is changing customer behavior. Recessions trigger a scarcity mindset which alters buying behaviors. Demand could contract but often shifts to different places; it’s not that spending always stops but rather the way money is spent that changes.
That typically includes:
- Limiting discretionary purchases or postponing projects.
- Shifting to cheaper or more cost-effective alternatives.
- Seeking more utility.
- Seeking out promotions and spending more in value channels.
If customer behavior is changing, your marketing approach also needs to change accordingly. Your marketing strategies need to meet customers where they are and where they want to be.
Analyze how your particular customer segments respond to recession.
- How is customer purchasing behavior changing?
- Are your customers purchasing other alternatives instead?
- What are the main trends of reasoning and decision-making behind any purchasing changes?
- Are any new customer segments opening up to you based on your brand’s offering and competitive positioning?
Sufficiently understanding this is the key to everything else we’re about to cover in terms of adjusting tactics.
1. Leverage Martech + Analytics
Use your available MarTech tools and resources to develop insights from two perspectives:
- Looking externally to your customers + market
- Looking internally to your own team + organization
Customer + Market Insights
Explore how to cost-effectively gather customer data to answer the questions above. That includes:
- First-party customer data collected in your CRM system.
- Campaign reporting data.
- Social listening tools.
- Customer survey tools.
- Third-party research and data sources.
- Media, government or industry-body reporting.
- Your competitors' activity.
Internal Marketing Insights
You can’t fully anticipate what will come next so your strategies need to be fluid. Agility is key. As is selling the value of marketing to C-suite and the board.
To help you improve efficiency, responsiveness and make savings where justified:
- Optimize Your Processes - Identify where you can improve processes and the use of MarTech. That includes creating, executing and analyzing all deliverables to improve results with less time invested. Each team member’s focus should be dedicated where it makes the most impact. Ensure time isn’t wasted such as on unnecessary team calls or unsuited tasks outwith primary skill sets.
- Improve Visibility On Full-funnel ROI - To optimize spending, you need to know where to invest more and what to cut out. Tie marketing investments to real business outcomes that are measurable so you can reallocate money to the biggest sources of return. Don’t forget that early journey targeting feeds bottom of the funnel supply - a balance needs to be maintained for sustainability. Optimize channel usage and touchpoints for a full customer journey.
- Improve Analytics Automation - Following on from the two points above, the right MarTech and automation set up will afford more team capacity and campaign optimization with real-time insights. Immediately pull money from campaigns or speculative activity that aren’t yielding adequate results for short-term requirements.
- Leverage Your First-party Data - Crucial for 2023 is the imperative to remove any reliance on third-party cookies to gather audience insights. User privacy updates mean they will become redundant in 2023. If you haven’t already, get a customer data collection strategy in place as a priority. Your first-party customer data should help you generate useful insights on authenticated users while keeping legislation and user privacy top-of-mind.
- Reevaluate Agency Support - External marketing partners can offer the right specialized skills and manpower as your needs fluctuate. A great agency will help your brand stay ahead of the curve. Work with your agencies to improve ROI visibility and prune unnecessary costs. Depending on the agency, you may need your own mechanisms to confirm that adequate value is being delivered. However, if you’re left wondering where the ROI is, that’s telling. It’s up to you if you want to take responsibility for driving improved value from the relationship, or consider other options. Just ensure you’re giving an agency the inputs and clarity they’re requesting first, not frequently changing goal posts or being too vague. (Feel free to give Half Past Nine a holler if you’re in this situation - demonstrable ROI is our method and track record!)
- Encourage Innovation - Challenge and necessity is often the driver for smarter solutions. Reducing waste can free up budget or time to allow your team more capacity to innovate. Innovation leads to competitive advantages that will long outlast a recession period and permanently increase market share. Focus on value for your customers based on their challenges, especially while times are tougher.
B2B Example: SAP
Used customer insights to deeper penetrate SME as a growth segment and feed 13% revenue growth in 2008
SAP responded to the economic situation in 2008 by adopting a range of cost cutting and investment strategies to come out with 13% revenue growth. They “intensified” their marketing activity and boosted their sales and marketing headcount by 29% over the year.
Their investment strategies were built on robust insight data. They built deep customer and market insights for a volume business model targeting SME audiences’ needs as a growth segment to expand into.
“We intend to widen the market we address with more attractive offerings for our customers including, for example, new data analysis and decision support solutions for business users, and software solutions scaled to small businesses and midsize companies.”
- The SAP Business ByDesign solution was used to open up a new segment of smaller businesses with between 100 and 500 employees with distinctly different software needs: “Getting their new IT solution running quickly, at minimum risk and predictable cost, is often more important for these customers than specific functional depth. Many such companies do not believe that their needs can be met by traditional software offerings or by the available on-demand solutions.”
- Over 4,200 customers signed contracts for SAP Enterprise Support services when the service was launched in February 2008: “The growing complexity of business processes, the growing SAP solution portfolio and the success of SOAs are leaving traditional support models behind, because today’s customers require more than a fault-fixing and maintenance service.”
- SAP partnered with HP and IBM to market preconfigured, preinstalled, and tested SAP Business All-in-One solutions on HP and IBM technology, bundled in a fast-start program. It was designed for midsize companies in the manufacturing, service, and retail industries, “which need a highly interoperable solution with plenty of functional reach”. The number of midsize companies using SAP Business All-in-One solutions grew 21% to 13,450.
SAP also heavily targeted industries they identified to have greater growth potential: “In 2008, we focused on strategic industries with exceptional growth potential, including, for example, banking, retail, communications, and the public sector.”
B2C Example: Walmart
Leveraged customer insights to achieve the highest sales growth of any competing retailer in 2008
During the 2008 recession, Walmart’s analytics highlighted that consumers were:
- Browsing less to reduce impulse purchasing.
- Less brand loyal, substituting for budget brands.
- Purchasing from cheaper categories (more pasta, less meat).
- Purchasing more from home entertainment and health categories rather than going out.
In response, Walmart upped their marketing spend to $2B (up from $1.9B in 2007), focusing on ‘take and bake’ advertising campaigns and promoted offers on home entertainment products. This allowed Walmart to grow 2008 net sales by 8.6% YOY - a record for any retailer that year.
2. Clarify Your Brand Positioning + Customer Targeting
Your task is to reevaluate your brand positioning in the eyes of:
- Your existing customers.
- Potential new customer segments based on changed purchasing criteria (aka, the switchers).
It costs less to keep a customer than to win a new one, so start by considering your brand positioning in the eyes of existing customers. Relationship building must be sustained, centered around the evolving needs and priorities of your customers.
This needs to fit with your brand’s unique value proposition within your competitive niche, considering the other options that customers have in front of them and why they should keep choosing you.
Segment your high-value customers out and make their needs your first priority. Each high-value customer segment might be affected in different ways. Don’t assume that all are negatively impacted by recession.
Focus on product or service strategies that increase the perceived value of your offering with a focus on long-term satisfaction. The greater the perceived value, the less likely your products or offering is to be cut.
List out the key needs and challenges for each segment and your corresponding value propositions. Include the value you already offer, and any additional value you will now incorporate in response to customers' recession challenges. Identify where you add value above your competitors.
Recessions are an opportune moment to assess which new customer segments may be opening up to you.
These segments will help mitigate any losses from existing customers who might be trading down or postponing purchasing. Diversifying also helps buffer you against shocks in individual segments, whether from the supply or demand side.
Identify who the switcher segments are and what value propositions will attract them to buy from you. For example, better customer service, your product/offering lasts longer, or replaces multiple other solutions in one lower cost.
Switchers can either be:
- Moving down a price bracket.
- Pressed to find more utility/ROI than a previous product/provider was supplying.
- For B2B, may have new requirements if they too are targeting new segments and verticals.
You may need to shake up your use of distribution channels to access these new segments.
But if you can attract these switchers, you have the opportunity to prove your value and retain their loyalty after recession passes, fueling greater long-term growth.
B2B Example: Salesforce
Majored on cost-saving brand positioning to acquire 14,400 new customers in 2009
Salesforce is a SaaS pioneer that took the business model mainstream. Their market position was perfectly pitched for the recession: “When credit is tight, big invoices for hardware, software and data centers defy logic and consume precious capital and increase risk.”
Key growth objectives during the recession period were to invest in a quality product promoted via effective account management and GTM strategies, including:
- Deeper relationships with existing customers for greater LTV:
- “As the customer realizes the benefits of our service, we try to sell more subscriptions by targeting additional functional areas and business units within the customer organization and pursuing enterprise-wide deployments.”
- “...by continuously enhancing the functionality of our service, we believe that customers will find more uses for our service and therefore purchase additional subscriptions, continue to renew their existing subscriptions, and upgrade to more fully-featured versions, such as our Unlimited Edition.”
- “Aggressively” pursuing new customers and territories with expanded targeting and the use of local partners:
- “We have created several editions of our service to address the distinct requirements of businesses of different sizes.”
- “We seek to extend our leadership position in this industry by continuing to innovate and bringing new application and platform services and value-added technologies to market, as well as by providing the tools needed by third parties to develop their own SaaS applications on our platform.”
- “We plan to continue to aggressively market to customers outside of North America by recruiting local sales and support professionals, building partnerships that help us add customers in these regions and by increasing the number of languages that our service supports.
The combination of a quality product with lower cost of ownership was a no-brainer for many businesses. Salesforce went from $749M sales revenue in 2008 to $1,077M in 2009. They acquired around 14,400 new customers during that year.
B2C Example: TJ Maxx
Educated a wider audience about off-price retail through advertising to drive 7% revenue growth in 2009
During the financial crash, T.J.Maxx increased its advertising spending by 15% as part of a strategy to target new customers affected by the downturn.
They believed that customers had fundamentally shifted their priorities towards better value, using value-based messaging that attracted customers from all income brackets. “Our marketing campaigns are stepping out and educating consumers about off-price.”
“In the tough economic environment of 2009, we were one of the few retailers to invest significantly in marketing and enhancing our customers’ shopping experience, and we will continue to prioritize investments to drive customer traffic in 2010.”
The proof is in the pudding. In 2009, 75% of TJ Maxx shoppers were new customers and retail sales grew 7% YOY.
3. Adapt Messaging + Tone
The messaging and accompanying tone of voice you use should be formed around the strategies built after going through the processes above.
Messaging is the combination of your customers needs with your corresponding value propositions. That means focusing on benefits over features or capabilities.
Recession messaging should speak to the psychological and decision-making elements that are driving your selected customer segments. The value your brand offers in response needs to be made clear.
For each distinct customer segment, you are aiming for no more than a few strapline messages, ideally one line each.
These will act as taglines and guide subsequent content development. You can plan key moments on a customer journey where these messages should be used and elaborated upon further, shaping out your content strategy.
Here are a few more elements to consider when crafting your segmented messages:
- Is Changed Messaging or Tone Actually Required? - Any high-value segments who are able to continue with business as normal may not require updated messaging. Messaging should be tightly focussed to a customer's current needs - not pointing at the unnecessary.
- Value + Benefits Over Features - A key part of successful recession messaging is conveying the value of your offerings, focusing on the benefits and outcomes delivered rather than just the specifications or capabilities. You are first speaking to the needs that you resolve. This is always best practice, but check in if you can better match your value propositions to any recession challenges your customers are currently experiencing.
- Helpfulness + Empathy - Account for the realities your audience is facing and share anything your company is (actually) doing to make things better, such as sponsorships. Develop solutions or longer-form content that offers genuine and practical value in helping steer customers through their specific challenges (being careful not to patronize customers). Empathy may be beneficial or even necessary depending on your target audience and the challenges they face. Nine in ten US consumers want brands to show empathy through their behavior, and 86% said showing empathy is critical to fostering loyalty.
- Values + Vision - If applicable for your offering, incorporate inspirational messaging around values and vision to stand out. This offers greater value for customers equally aligned, generating loyalty. Research found Americans prioritize companies that are responsible (86%), caring (85%), advocate for issues (81%), protect the environment (79%), and give to important causes (73%). Storytelling is a powerful way to back up values messaging, translating it to your actions and impact. But be authentic - not every brand needs to try and convey deeper values to meet their audiences’ needs.
- Warmth + Humor - Where appropriate, feel-good warmth or humor can be more human, relatable and memorable. The aim is to lift spirits, offering comfort and reassurance. Humor in advertising has been found to be more expressive (+27 point increase), more involving (+14) and more distinct (+11), significantly enhancing attention and positive effect. However, do be highly considered in how, where and when you use humor. The danger is humor backfiring if interpreted as insensitive. Depending on your brand, it may only be appropriate for a limited number of content pieces and platforms.
- Pricing - Do you want price to be part of your value proposition messaging? This should only really apply for discount brands unless you’re running a targeted promotion. Read the following section on pricing strategy to better understand if you want to incorporate it at tagline level.
A quick note here on authenticity and sensitivity when it comes to your messaging. Use adequate customer insights, and impact-led activity or features to match any claims you make. Don’t run the risk of being perceived as insensitive, misleading (lying), or manipulatively virtue-signaling for PR purposes. Brands that get this wrong do more harm than good. No brand wants to find itself on the wrong side of cancel-culture.
B2B Example: IBM
Used campaign messaging around a better vision for the future to galvanize record-breaking sales across multiple verticals
“Many companies are reacting to the current global downturn by drastically curtailing spending and investment, even in areas that are important to their future. We are taking a different approach.”
“In other words, we will not simply ride out the storm. Rather, we will take a long-term view, and go on offense. Throughout our history, during periods of disruption and global change, this is what IBM has done. Again and again, we have played a leadership role. We have imagined what the world might be, and actually built it.”
The key elements of IBM’s “transformation” during the recession period included:
- A continuing shift to higher value businesses.
- Investing for growth in the emerging markets.
- Global integration.
- Investing in innovation.
- Ongoing productivity resulting in higher profit margins.
IBM aligned their external messaging by launching their visionary ‘Smarter Planet’ global marketing campaign in 2008. The messaging spoke to a wider need for change as businesses and governments around the world looked to drive greater efficiencies and responsiveness. In IBM’s view, the global economy “created a mandate for business change” that required an intelligent and connected digital network built for the future. There was a pressing opportunity to upgrade global infrastructure through embedded information technology. Their messaging covered multiple key sectors, including smarter cities, smarter power grids, smarter food systems, smarter water, smarter healthcare, smarter traffic systems, smarter airports, and smarter supply chains.
In 2008, IBM’s revenue went up 5% to a record $103.6 billion.
B2C Example: Starbucks
Reestablished their brand as the best quality coffee on the market, driving them back into growth
During the 2008 recession, more than 900 Starbucks stores closed as American consumers turned to cost-effective alternatives like McDonald’s.
In response, Starbucks launched the largest marketing campaign they’d done called “coffee value and values,” designed to reassert the quality of their product and reassure consumers it was worth the cost.
They removed marketing gimmicks that had diluted their brand identity and stripped right back to the core value proposition of their brand - better quality coffee. Ad strapline messaging included:
- Beware a cheaper cup of coffee. It comes with a price.
- Starbucks or nothing. Because compromise leaves a really bad aftertaste.
- If your coffee isn’t perfect, we’ll make it over. If it’s still not perfect, you must not be in a Starbucks.
4. Review Your Pricing Strategy
More customers will be predisposed to seek out reduced prices and promotions during recession.
Does that mean you should or need to lower prices? Not necessarily. A reduction in prices is a long-term strategy, not a short-term fix.
Dropping prices can generate more sales in the short-term, albeit at lower margins. However, any new customers who chose you based on lowered prices may quickly switch away again if the price increases. Also consider any impact this would have on the perceived value of your product against the needs and resources of customers. For example, those in more affluent areas or verticals may not be driven to purchase because of reduced prices.
Unless your business needs the sales boost for survival, reducing prices is only a strong strategy if you plan to sustainably maintain them there based on your current and projected costs. For example, under a planned price skimming or penetration pricing strategy.
The same goes for promotions, which done continually could reposition your brand as a discount brand and condition consumers to only buy on promotion. Consider your margins against the additional sales volume generated and whether this is a suitable longer-term positioning tactic to attract target customer segments.
If you are shifting your pricing in either direction then explain to your customers why, bringing it back to their needs.
An alternative to price shifting is a loyalty program, or discretionary discounts for B2B brands. Selectively target loyal customers who deliver high lifetime value (LTV) and profitably reward them, not devaluing your brand in the process. For example, 62% of firms with loyalty programs said it helped retain customers during the pandemic. B2B brands could also introduce referral bonuses to incentivize new client introductions through personal networks.
B2C brands can incorporate more timing sensitivity around seasonality, such as earlier seasonal promotions to spread out associated costs over longer periods.
Additionally, brands could offer non-exploitative financing or longer payment plan options where possible.
B2B Example: Mailchimp
Launched a free subscription targeting small businesses to feed a pipeline of future customers
Mailchimp is an email platform that was initially focused on large corporate clients on yearly retainers. They didn’t even offer a free trial. However when the Great Recession hit, Mailchimp found their growth stagnating and also wanted to help smaller, struggling businesses.
Mailchimp decided to introduce a free tier to their price plans in 2009. With a limit of 2,000 contacts and a daily send limit of 2,000 emails, it massively took off. The move introduced a wave of small and medium-sized businesses to the Mailchimp platform that wouldn’t otherwise have been part of their customer base. They went from tens of thousands of users to a million in the first year, fueling their growth for years to come.
Mailchimp was able to demonstrate its value and retain these new users, moving them onto premium subscriptions as they grew. Among the customer community, requiring a move up to paid subscription became like a badge of honor as a growth milestone.
B2C Example: Hyundai
Offered a car take-back scheme to grow sales despite consumer fears of unemployment
In 2008, Hyundai managed to grow global revenue by 5% and market share by 4.7% despite an incredibly tough year for the auto industry.
They did this by not just delivering new and better quality car models at lower price points. They also reduced the risk for buyers by offering to take back cars that were financed or leased if the owner lost their job. In 2009, a finance rebate was also offered to buyers of some Hyundai models, for up to $333 a month for six months.
These groundbreaking measures empathized with struggling customers within their core target demographic, helping to build trust, confidence and maintain sales despite fears of unemployment. It was a huge publicity win generating goodwill towards Hyundai, and other companies were inspired to follow suit due to the success of the program.
Hyundai reported that its U.S. sales were up 14% in January 2009 compared to the same month a year earlier, all while the U.S. auto market fell 37%.
5. Evaluate Your Stock Holding, Products Or Offering
Certain product categories or offerings may take a hit to their bottom line. Your lead-gen budget (separate from your brand campaigns budget) should be focused on promoting categories that will offer most value and return during the recession period.
Take this timely opportunity to permanently prune out poor performers, unless they can be profitably adapted to deliver new benefits or target new segments’ long-term needs.
Keep your eye on the long-term. Invest in areas where you can outdo your rivals under the current conditions, or where you have an edge to get ahead for the recovery period. This includes R+D or product development if applicable to your brand, and your distribution channels. If you can anticipate where demand will be next quarter, prepare accordingly, especially where you have an international supply chain. Naturally, make sure any risks are carefully considered and don’t have the potential to be life-threatening to your business.
A key note here though. Building competencies or product features is a long-term strategy, so make sure the customers needs you are evolving to meet are equally long-term.
For B2C CPG, review your product catalog against sales performance during previous recessions to understand what products did well. You could add to these categories for more recession mileage. Essential or value categories are likely to do best, although people will still buy from non-essential categories too but perhaps favoring budget-friendly options. If applicable for your target segment (where pricing is valued over in-store or brand experiences) stick to the basics and minimize nice-to-haves to preserve cash flow.
B2B Example: Shopify
Shifted their product offering and invested in innovation to tap into an unmet market need
Shopify made a fundamental pivot between 2006 and 2009 that not everyone might be aware of. Shopify started life in 2004 as a Canadian snowboard ecommerce site. However, the founders decided to build their own ecommerce platform when they couldn’t buy a satisfactory CMS product. They launched the platform in 2006.
Growth was slow in 2007, until they made a significant change in their pricing strategy. Instead of charging transaction fees as a percentage of sales, they switched to a subscription-based plan and tacked on a small transaction fee that decreased as plan size increased. They also dived deeper into product development, building new value-added features that helped customers sell more, such as built-in analytics tools. They now had an affordable and easy-to-use solution that aligned with customers' needs. They became profitable in 2008 and continued to invest in their product throughout the recession period, launching the Shopify API in 2009.
Bravely deciding to go after a market gap resulted in a highly compelling and valuable product. Shopify successfully built an ecommerce platform for the needs of an emerging ecommerce retailer segment - many of whom were sole traders starting up after redundancy. They were fundamental in fueling an ecommerce sector as we know it today by providing recession-friendly value for small businesses and startups.
(IBM is another great example of successful pivoting in a changing market, shifting from a PC manufacturer to an IT consultancy.)
B2C Example: Amazon
Continued to invest in innovative initiatives for bringing customers more product choice at lower costs
In the 2008 recession, Amazon grew its sales by a staggering 28%.
They did this through continued product innovation rather than pulling back on investments, launching new products such as Kindle 2 that made books more affordable for readers. This move was a risk at the time but as we know helped grow their market share significantly, resulting in customers buying more ebooks than printed books by 2009.
In 2007, Fulfillment by Amazon (FBA) was launched as a service to attract more third-party sellers. Amazon provides warehousing within their global fulfillment network, and a ‘pick, pack, and ship’ service on the sellers’ behalf. FBA items are eligible for Amazon Prime and Super Saver Shipping as if the items were Amazon inventory. In the fourth quarter of 2008, Amazon shipped more than 3 million units on behalf of FBA sellers.
These product and offering shifts reflect the dynamic, “customer obsessed” and long-term thinking that Jeff Bezos is legendary for. His opening statement for the 2008 Amazon.com Annual Report is worth a quick read. Here are a few gems:
- “Seek instant gratification – or the elusive promise of it – and chances are you’ll find a crowd there ahead of you. Long-term orientation interacts well with customer obsession. If we can identify a customer need and if we can further develop conviction that that need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution.”
- “Working backwards from customer needs often demands that we acquire new competencies and exercise new muscles, never mind how uncomfortable and awkward-feeling those first steps might be.”
- “In our retail business, we have strong conviction that customers value low prices, vast selection, and fast, convenient delivery and that these needs will remain stable over time. It is difficult for us to imagine that ten years from now, customers will want higher prices, less selection, or slower delivery. Our belief in the durability of these pillars is what gives us the confidence required to invest in strengthening them. We know that the energy we put in now will continue to pay dividends well into the future.”
Amazon was another company that increased their marketing investment during the period, with increased spending across marketing channels, including their Associates program and sponsored search.
Also a quick note here on the cash operating cycle, which Amazon also offers a master class in. “Because of our model we are able to turn our inventory quickly and have a cash-generating operating cycle. On average our high inventory velocity means we generally collect from our customers before our payments to suppliers come due.”
- Learn more about how the Cash Conversion Cycle can drive growth for your retail business.
6. Adjust Media + Channel Investments
Adjusting your paid campaigns will quickly show you the effectiveness of updated targeting, positioning and messaging. You can test adjustments and variables for instantaneous feedback using engagement and conversion KPIs.
Set up campaigns properly for full KPI visibility so you can pull campaigns that don’t deliver against their individual objectives. Whether that’s to build brand awareness and intent in a new segment, or generate more sales/leads rapidly.
If you are in a position to target unimpacted segments and verticals, you may wish to allocate more of your ad budget there for the short-term. Assuming this doesn’t put you at a significant disadvantage for the rebound by ignoring key verticals for your business. Your paid audience targeting should continue to match your offering and brand positioning for key segment variables such as geo-location.
As covered earlier, recession offers the opportunity to buy more ad placements for less as other companies cut spending, offering the potential to capture excess share of voice. But bear in mind the advertising lag phenomenon, meaning you’ll often have to maintain consistent campaign activity for a minimum period of time in order to reap the rewards.
Synced cross-channel campaign delivery will amplify frequency and brand awareness, increasing your budget efficiency and conversion rates.
Profile and test new ad platforms, especially if your strategy involves targeting new segments. The performance of individual platforms is not necessarily dictated by the number of users or the CPC/CPM. If a platform successfully brings you high quality leads in sufficient volume, you can achieve higher ROAS and customer LTV regardless of the higher costs. Testing is the only way to find out.
You may not want to pull investment from poorer converting channels and platforms entirely. Consider first if they form a crucial point on valuable customers’ journeys that helps prime them for the point of conversion on another platform later. Data shows that the most effective advertising campaigns spend around 60% of budget on brand-building (or brand awareness) advertising, and only 40% on short-term activations.
Developing a clearer view of successful customer journeys will help you make more profitable campaign investment decisions. Identify existing and new consumer journeys so you can target the moments that influence purchase decisions most. This includes any shift in keywords that drive conversions for your website. Referring back to first-party data, use it to test new tactics that deliver more personalized interaction with customers and prospects at any stage of the journey. Ensure you have adequate data capture and analytics capability to support you in achieving this.
The targeting, timing and cadence of your content promotion should be in tune with customer purchasing cycles as much as possible. Work to understand and collect behavioral signals that can be used for content personalization based on the customer journey and lifecycle stages. Get in front of your customers just ahead of the times they are most likely to make a repeat purchase, or a contract is coming up for renewal.
For B2C brands, POS marketing from signage to packaging and placement are included in your promotional strategy. Ensure you update these to match any shifts in your customer behavior and updated strategy.
As part of your innovation and testing process, get creative with how you maintain overall channel visibility. Leverage organic methods more heavily where possible. Examples include:
- Trial new content formats and unique creatives within your organic channel strategies.
- PR stunts, especially driven by community altruism.
- New marketing partnerships or distribution channels that expand your reach.
- Better keyword targeting for recession-driven searches.
- More valuable or helpful content for customer's recession challenges.
B2B Example: Cisco
Cisco used new digital media channels and innovative campaign creatives to drive more audience engagement
Cisco’s R+D and sales + marketing budgets were both upped in 2008 as the company doubled down on its strategic investments. Cisco’s use of social platforms and creative media experimentation expanded in 2008.
The Human Network Effect campaign was launched in 2008, at the same time an ABI Research poll found that Cisco was seen as ‘boring but trustworthy’. Through the year, Cisco pioneered early digital marketing activity, harnessing the growing power of social media. They experimented with digital media formats using more human-oriented, optimistic and humorous content.
For example, the launch of a new series of routers incorporated the use of a campaign microsite featuring satirical videos where Santa Claus and the Easter Bunny solved their problems with the new router. It used a social share function, and posted the videos on popular platforms at the time including YouTube, Yahoo Video, Google Video and Veoh. Cisco also used a social media press release, a Facebook application and group, plus a widget featuring videos, collateral and images that could be embedded on social media pages.
The result? Cisco’s growth trend didn’t miss a beat in 2008, with revenue growth across all product categories and geographies. Revenue was up to a record $39.5 billion, an impressive 13% YOY increase.
B2C Example: Coca-Cola
Coca-Cola introduced innovative digital content formats to re-engage their core target audience and reverse a sales slump
Coca-Cola experimented with its paid media and creative strategy during 2008 and 2009. A number of innovative campaigns leveraged multichannel tactics at a time when digital marketing was still in its earlier stages.
A full-length TV commercial on the theme of video games was designed to target their core audience, supported by integrated digital seeding, gaming and social media campaigns. It was promoted on popular video sharing websites with banners and links to exclusive content including wallpapers, Instant Messenger icons and ringtones of the ‘You Give A Little Love’ soundtrack.
Their global ‘Open Happiness’ campaign launched in January 2009, encouraging recession-weary consumers to enjoy the simple pleasures in life. The campaign was heavily invested in and went beyond the traditional marketing tactics, with distribution across platforms including Twitter, Facebook, Bebo and YouTube. It made accompanying music videos by some of the top pop singers, ran competitions and gave away millions of ’Happy Prizes’ based on the most popular rewards on the brand’s loyalty website ‘Coke Zone’. They also used attention-grabbing tactics such as the ‘Happiness Truck’, ‘Happiness Vending Machines’ and the ‘Hug Machine’.
Coca-Cola reported a 5% increase in revenue in 2008, and a 17% increase in 2009.
To reiterate, don’t panic. Recession is unlikely to last that long once it’s officially been declared. There are a plethora of tactics to get your business through it in reasonable if not even better shape. There’s an available response to help remediate most situations. And you’ll find countless other articles and research enforcing these same messages about how to successfully navigate recession.
The basics of right audience, right message, right price, right product, right channel and right time are more crucial than ever. One or more of these elements are likely to require adjustment.
Key tools in your marketing toolbox are:
- First-party customer data and behavioral insights.
- Analytics tools used with greater cohesion and automation.
- Clear customer segmentation.
- Reframed messaging around enhanced value and benefits.
- Purchasing data from previous recessions (first or third-party).
- Personalized and localized content messaging tuned into purchasing cycles.
- Appropriate rewards or discounts for your valuable customer segments.
- Ad budget and campaign consistency to fully assess + realize results.
- Cross-channel experimentation and syncing.
Need advanced support to build your cross-channel strategy, marketing intelligence infrastructure or paid media campaign delivery during recession? Reach out to the team at Half Past Nine anytime.
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