Obviously, as a marketer, I’m biased. But hear me out.
Not sure about anyone else, but when I saw the Marketing Week research earlier this week showing that 86% marketers are delaying their campaigns in response to the Corona crisis, I wasn’t shocked. When times are uncertain, or tough, cutting spend makes sense. But is marketing really the right place to cut budget from?
Marketing Week reported that:
Sobering stats to say the least. However, while it’s terrifying for some marketers, for others, it presents a unique opportunity.
Kelloggs
Prior to The Great Depression, Post was the category leader in cereals. However, during the depression they significantly cut their marketing & advertising budget, whilst Kelloggs doubled its spend, investing heavily in advertising and even introducing a new product (Rice Krispies!). Long story short - Kelloggs’ profits grew by 30% and became the category leader, where it still remains almost a century later.
Target
In the 2000 US recession, Target upped its marketing and sales budget by 20%, whilst cutting back in other areas, and as a result grew sales by 40% and profits by 50% during the recession.
While their rivals were cutting budget, both Kelloggs and Target understood it gave them a finite window of opportunity to grow their share of voice. With less competition & less noise, the budget that may have given them 10% share of voice before could now afford them exponentially more.
Increase in share of voice > increase in share of market > increase in revenue
A study by Kantar and BrandZ found that strong brands recovered 9x faster than weaker brands after the 2008 financial crash. Put simply, determined brands that continue to invest in marketing are more likely to prosper.
It’s clear you shouldn’t jump the gun and cut your marketing budget. In the same vein, don’t just carry on as usual, or quickly switch tactics and plug more money into digital channels. Yes, adapting and being nimble is vital, but the first step is understanding the new customer segments that are emerging. As marketers, we’re used to segmenting according to demographics or lifestyle (mid-twenties, male gym goers for example). John Quelch and Katherine E. Jocz recommend that in times of economic crisis, such as a recession, to segment by psychological markers instead, “taking into consideration consumers’ emotional reactions to the economic environment”.
They identified four main groups of customers: