The Role of Paid Media in an Economic Downturn

B2B companies often find themselves faced with difficult decisions during economic downturns. The instinct to cut costs becomes almost second nature as sales may not be as robust as before, and the future seems uncertain. During these challenging times, the marketing budget is often one of the first areas to suffer. It’s understandable why companies might consider scaling back on marketing initiatives, including paid and organic digital strategies. After all, why invest in advertising when resources are limited?

But here’s where a different perspective comes into play. What if I told you that maintaining your marketing budget, even during tough times, could be the key to securing long-term success for your business? It may seem counterintuitive at first, but trust me, there is a method to this madness.

In this blog post, we will delve into the importance of maintaining and investing in paid media advertising during an economic downturn. We’ll explore why doubling down on marketing efforts can pave the way for significant gains in the face of adversity.

The Long-Term Value of Paid Media Advertising

During challenging economic times, it’s common for B2B companies to consider cutting costs as a means of weathering the storm. As a marketing leader, you understand the pressures and difficult choices that arise when missing sales goals. However, challenging the knee-jerk reaction of reducing your marketing budget, including paid media advertising, is essential. In fact, continuing to invest in paid marketing during tough times can be a strategic move that fosters long-term success for your business.

The Misconception of Cutting Marketing Efforts

In the face of economic downturns, it’s understandable that companies would tighten their belts and look for areas to reduce expenses. Unfortunately, one of the expected casualties is often the marketing budget, which encompasses paid and organic digital marketing initiatives. But let’s take a moment to consider the bigger picture. Marketing initiatives, especially digital ones, are pivotal in maintaining brand visibility, generating leads, and driving revenue. While it may seem counterintuitive at first glance, maintaining or even increasing your investment in paid media during tough times can be a wise decision with long-lasting benefits.

A critical point that is often overlooked is the potential consequences of scaling back marketing efforts during an economic downturn. By significantly reducing or eliminating marketing activities, companies inadvertently put their long-term market share at risk. As a renowned British marketing consultant and researcher, Peter Field astutely said, “You may not think a recession is a time of sunshine, but if you’ve got the resources and you hold your nerve, it’s a great time.” In the following examples, supported by research and real-life cases, we’ll explore why doubling down on marketing during a recession is a winning tactic for bottom-line impact and sustained growth across economic downturns.

Lessons from the Past: How Smart Marketing Decisions Transformed Businesses in Economic Turmoil

Throughout history, countless brands have faced economic hardships and made critical decisions that shaped their futures. We’ll examine their experiences, learning from their successes and failures alike. By exploring real-life examples, we’ll unveil the untapped potential within marketing investments during challenging times.

Kellogg’s Success Story: How Marketing During the Great Depression Led to Lasting Results

In the late 1920s, two prominent companies, Kellogg and Post, dominated the packaged cereal market. Cereal was still relatively new to consumers then, and families began embracing it as an alternative to oatmeal or cream of wheat. When the Great Depression struck, consumer demand became uncertain. Post followed the predictable route, cutting its budget to reduce expenses. On the other hand, Kellogg doubled down on advertising, mainly through aggressive radio campaigns promoting its new cereal, Rice Krispies. By 1933, Kellogg’s profits had soared by nearly 30%, even amidst an economy at its lowest point. Today, Kellogg’s remains the leader in the dry cereal category, a testament to the enduring benefits of investing in marketing during challenging times.

Toyota’s Triumph: How Marketing Allowed Them To Rise Above the Energy Crisis

Fast-forward to the energy crisis of the 1970s, when the United States experienced a 17-month recession. Toyota faced stiff competition from the likes of the Honda Civic in terms of fuel efficiency, as indicated by the government’s first-mile-per-gallon report. Despite the temptation to cut its advertising budget, Toyota stayed committed to its brand-building strategy and long-term vision. This steadfastness paid off as they surpassed Volkswagen to become the top imported carmaker by 1976. Toyota’s decision to invest in marketing during the energy crisis propelled its growth and solidified its position in the automotive industry.

Outshining the Golden Arches: How Pizza Hut and Taco Bell Beat McDonald’s During Tough Times

In the recession of 1990, McDonald’s chose to reduce their marketing spend and promotions budget. Seizing the opportunity, Pizza Hut and Taco Bell capitalized on McDonald’s reduced presence.

The Hidden Costs of Underinvestment in Marketing

To truly grasp the implications of underinvestment during a recession, we turn to the insights provided by Peter Field, a British researcher who analyzed the Institute of Practitioners’ advertising case study database. His findings shed light on the consequences brands face when they fail to maintain adequate marketing efforts during challenging economic times.

Field’s research offers valuable lessons from studying numerous advertising case studies. By examining how brands coped with the global recession of 2008 and 2009, he uncovered a strong correlation between excess share of voice and campaign performance. Specifically, campaigns that maintained a solid positive excess share of voice during the recession outperformed those that did not. Outlined below are three key findings from his analysis: 

Key Finding #1: The Power of Excess Share of Voice During a Recession

Maintaining a solid presence in the advertising landscape is crucial during a recession. Field’s research emphasizes the significance of preserving an excess share of voice, which represents the brand’s share of advertising compared to its market share. Brands that prioritize and invest in advertising during economic downturns can gain a competitive edge and position themselves for long-term success.

Key Finding #2: Strategically Reallocating Budget, Not Cutting It 

Successful brands during the recession were not the ones that panicked and indiscriminately slashed their marketing budgets. Instead, they demonstrated adaptability and strategic thinking by reallocating their spending to align with evolving market dynamics. While budget cuts may have been necessary, they ensured that marketing budgets remained intact, recognizing the importance of maintaining brand visibility and driving customer engagement.

Key Finding #3: Cutting Marketing Budget Results in Long-Term Repercussions 

Brands that succumbed to panic and drastically reduced their marketing budgets faced severe long-term repercussions. By neglecting their marketing efforts during the recession, these brands missed opportunities for growth, customer acquisition, and market share expansion. Even after the recession ended, they struggled to regain their position in the market, highlighting the lasting effects of underinvestment.

Driving Growth: 3 Brand Opportunities to Fuel Success in Downturns

In challenging economic downturns, driving growth becomes a paramount goal for brands. Capitalizing on three key brand opportunities can fuel your success even in the face of adversity. These opportunities include increasing your share of voice, leveraging less expensive CPMs, and capitalizing on the appeal of your brand’s offering. Let’s explore how these strategies can propel your brand forward during downturns.

  1. Higher Share of Voice as Competitors Cut Back

One remarkable advantage of increasing your marketing spend during an economic downturn is gaining a higher share of voice. As competitors trim their budgets and reduce their advertising efforts, you can fill the void and increase your brand’s visibility. This heightened share of voice enables you to capture the attention of your target audience and establish a more substantial presence, ultimately leading to increased brand awareness and customer engagement.

  1. More Impressions as Cost per Impression Drops

During challenging economic times, advertising costs often decline due to decreased demand. These declining CPMs present a unique opportunity for brands willing to increase their marketing spend. As the cost per impression decreases, your investment can generate more impressions and reach a larger audience. By capitalizing on this cost-efficient environment, you can amplify the impact of your marketing campaigns and reach potential customers who may have been harder to engage during prosperous periods.

  1. Brand’s Offering Becoming Especially Appealing

An economic downturn often triggers changes in consumer behavior and priorities. Your brand’s offering can become particularly appealing as individuals reassess their spending habits and seek value in their purchases. By increasing your marketing efforts, you can effectively communicate your products or services’ value and benefits to a receptive audience. This allows you to position your brand as a solution that addresses consumers’ evolving needs and desires, enhancing your competitive advantage and driving increased customer loyalty.

Embracing these opportunities requires a strategic approach and a belief in the power of marketing. By seizing the moment and increasing your marketing spend during an economic downturn, you can outshine your competitors, maximize your reach, and resonate with your target audience. Remember, challenges often present hidden opportunities for growth and innovation. By staying agile and investing in your brand’s future, you position yourself for long-term success and emerge stronger from the downturn.

Unlocking Your Marketing Potential: Embrace Opportunities for Growth

Investing in marketing during difficult periods is not just a short-term tactic but a crucial long-term strategy for sustained growth and success. By allocating resources wisely and strategically, you can position your brand for future prosperity. 

Remember, tough times may test your resolve, but they also offer unprecedented opportunities for those who dare to seize them. Let’s embark on this journey together, uncovering strategies to transform adversity into triumph.

It’s time to challenge conventional thinking, break down the barriers of uncertainty, and pave the way for a brighter future. To gain a deeper understanding of marketing strategies and how to navigate through economic challenges, we invite you to join our Brilliant Metrics Marketing Strategy workshop. This workshop will empower you to develop a strategic plan that leverages consumer insights, marketing trends, and technology. You will learn how to limit wasteful spending and focus on impactful areas while aligning your business goals, key results, and KPIs for stronger cross-team connections by attending. 

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