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In recent days there has been a lot of serious discussion around a recession or technical recession due to COVID-19. Specifically our circles, around what that means for marketing and advertising.
Often times when a recession happens businesses begin cutting back spending and investment in general. However, there have been a number of studies going back a century that indicate it’s better to maintain if not increase marketing spend during a recession. Watch the full video for more:
In recent days there’s been a lot of serious discussion around a recession due to COVID-19. Specifically, in our circles around what that means for marketing, sales, and advertising.
From the data set available to us, we are seeing conversion rates down for most industries apart from food, healthcare, and media. Organic traffic, or SEO traffic rather, is also down across the board and the cost per acquiring leads and customers has increased.
Now, often times when a recession happens, businesses begin cutting back spending and investment in general, and although this is a good idea in some areas, there have been a number of studies going back a century that indicate it’s better to maintain, if not increase marketing spend during a recession.
In the 1920s, Post was the category leader in cereal, but during the Depression, Kellogg’s doubled its ad spend and grew profits by 30% as the world emerged out of the recession. What about Post now? Well, how many of you eat Post cereal in 2020?
Pizza Hut and Taco Bell did the exact same thing to McDonald’s in the 90s and Amazon did the same thing to the market in 2009.
Those brands that maintained or grew spend, increased sales and market share during the recession and were significantly better placed when the economy recovered. And that’s because competition goes down.
The noise levels in the category drop as your competitors back off, the cost of marketing decreases as media channels and software vendors drop their prices, and your share of voice increases.
In 2008, the IPA Bellwether Report stated, “If other brands are cutting budgets, “the longer term benefit of maintaining share of voice “at or above share of market will be even greater.” They go on to mention that three key areas where it’s actually advisable to increase spend and those three areas are communication, research, development, and new product development.
These were all areas where increased expenditure was associated with business success during downturns.