7 Ways to Create Marketing Advantage in a Downturn
There, I said it, that word on everybody’s minds that few dare speak: “recession.” Fear of economic downturn has dominated the business dialogue since we entered 2023. This despite real signs that most companies are still doing kind of ok. Sure, taken together, the economic indicators look quite bleak, but you have to wonder in the chicken and egg world of macroeconomics, how much does preparing for a recession ensure its inevitability?
Regardless of how we got here, here we are. Most marketing leaders have been asked to prepare for the worst, and many are already being proactive about reducing their cost base. Now is the right moment in time to consider that jiu-jitsu thing of how to turn a negative force into a source of advantage, and come out of the back end of whatever this uncertainty is, better than how you entered it. It is possible, but it will require marketing leaders to swim against the tide of fear and boldly lead.
There is no company/brand/organization/division that does not need some form of fundamental reinvention, so why not use this moment of change as the burning platform that drives yours.
Recession Marketing Lessons
As a famous resident of my town in New Jersey once said, “it’s like deja vu all over again.” The economic cycle is just that, a repeated cycle. We’ve been relatively blessed over the last 30 years to have had to deal with this very infrequently – although the downturn of the late aughts is seared in the minds of many marketers who are now in positions where they have to make some extremely tough choices.
So what happens? We cut too hard, often the wrong things, we get to it too late, and we are slow to read the signs about when it’s time to get back in the fight. The recovery often gains steam quickly, so there is little organizational appetite to look backward at our recessionary efforts and assess what we gained and what we lost. So inevitably, we end up repeating the cycle again and again.
Let’s unpack the typical recessionary marketing actions and their sadly typical consequences:
• Those who cut in-market programs too aggressively, do harm greater than their savings, as those who maintain their spending realize a windfall in share growth.
• More than lost share, is the risk of losing a brand’s most valuable customers, as more come into play during uncertain times.
• We let brands erode in favor of down-funnel spend and create an opening for disruptors to reframe our categories away from now voiceless incumbents.
• We delay hiring, often inflicting the most pain on high-potential new spaces which have less current revenue to protect.
• We lay off staff without “rethinking” the work they do (did), so those left to pick up the pieces, and in particular, the strong ones with options, leave. Then we scramble to rehire top talent during the recovery in a seller’s market.
One of the most ironic consequences of recessionary marketing cuts pertains to the timing of cause and effect. For most categories, marketing spending, particularly top of funnel spending, has little immediate impact on your brand. There is lag effect, which, depending on the category and metric, can be as much as 12-18 months. This is about as responsive as steering a supertanker through a slalom course. So, the spending you cut during a downturn has less impact on the market when demand is suppressed and there’s less to gain than it does during the rebound when pent up demand is released. Said another way, the actions your current self takes will weigh most heavily on your future self. Pretty deep, huh?
Rise to The Challenge
That’s enough negativity. Let’s look at this from a glass half full perspective and discuss how to make the most of this “crisi-tunity.” Let’s introduce 7 ways your brand and business can rise to this challenge. As General George S. Patton once said, “pressure makes diamonds.”
1. Reset your marketing priorities to do more with less
2. Rethink and reduce marketing work – not just headcount
3. Find the small pots of wasted spend that add up to big savings
4. Take this opportunity to clean house with your brand portfolio…
5. …Then high-grade your brand portfolio spending
6. Get aggressive – target others’ high-value customers while defending yours
7. Be proactive – get ready now for the coming post-downturn boom
In our next edition of Reinvention Notes, we will dive into each of these opportunities. Until then, stay strong and think about how your organization can seize this moment as a mandate for reinvention.