Marketing In A Recession: How To Weather The Storm
By all accounts we’re standing by a cliff-edge, about to head into a global economic recession. It’s no surprise that businesses are looking for ways to mitigate the impending damage.
For most, that manifests as a choice between either reducing costs, or increasing efficiencies. And this is where most small business owners get it wrong.
In times of trouble, for many businesses marketing is the first thing to get cut — as well as the last thing to return.
But why would an erstwhile savvy business person do such a thing? To sever a mechanism so essential to the value creation process, driving awareness and creating sales opportunities?
I think there are two main reasons:
- Many business owners still see marketing as a cost to their company. They see it as optional, inefficient, unattributable, and ‘unscientific’ compared to the cause-and-effect, rational operating nature of other business units. Perhaps they’ve grown their business without any formal marketing efforts, confirming their belief that marketing isn’t really needed.
- The people hired as marketers aren’t able to perform the duties expected of the position. This is usually because they’re inexperienced or uneducated in what marketing actually is. Whatever the reason, their inability in moving the revenue needle means they’re considered dispensable. So they get moved sideways — or get canned.
Why businesses employ marketing inexperience
Of course, reason #2 is closely connected with reason #1. Its epidemic-implemented presence has a number of reasons.
From an HR perspective, taking on someone with little or no marketing experience is seen as an inexpensive hire with minimal risk. So if (when?) they fail at the job you’ve asked them to do, you convince yourself that you haven’t lost much.
Secondly, since they’re looking for your guidance and direction, you get to control the strategy and narrative. You get to direct their focus, tactical implementation and output.
But since you don’t have any marketing training or experience either, in reality it’s the blind leading the blind. The chance of success, however you want to measure it, is more likely to be based on luck than skill.
You’re wasting time and money trying things based on waving a wet finger in the air. You haven’t done the basics that should underpin any marketing effort. All the while competitors are growing market share, stealing customers from under your nose.
The problem with hiring an amateur to do the job of a pro is inexperience doesn’t know what it doesn’t know. People ignorant of the subject think marketing is about posting on social media, or making TikTok videos. Moreover, (most likely) your only experience with a marketer has been someone who designs a flyer or organizes events. Which means you’ve no clue what a marketer actually does either.
It’s almost as though marketing has a marketing problem.
Beating the recession with ESOV
It’s important to differentiate business costs between what’s essential and what’s optional. It’s tempting to reduce marketing expenditure when cashflow is unpredictable. However, making smart decisions now can catapult revenue when things get less crazy.
Marketing geeks and academics talk about something called “ Excess Share Of Voice “, or ESOV. The principle of ESOV is that, during an economic downturn, the effective reach of your marketing is increased.
To understand ESOV we first need to understand SOV — Share Of Voice.
SOV is how well your brand is noticed, compared to everyone else in your market category. It’s a measure of how well your marketing messaging (ads, website/e-commerce traffic, mentions, whatever) compares to the competition.
Want a crude, simplistic example? OK, since you asked so nicely…
Supposing you make widgets. Imagine that people on social media talk about wanting to buy widgets 100 times in any particular week.
As well as you, they talk about a number of your competitors. If your brand is mentioned 25 times out of those 100, you have a SOV of 25%. Not exactly rocket science, right?
There’s plenty of empirical evidence to support the notion that an organization’s Share Of Voice is linked to their Share Of Market. In the above example, a brand with 25% SOV usually has a similar share of that market category.
With me so far? Great.
ESOV comes into play when a brand’s Share Of Voice is higher than their Share Of Market. In other words, they’re doing better than they should be doing.
While closely related, ESOV and SOV are different. SOV compares all brands to all competitors, while ESOV compares all brands to one competitor.
Using our example again, suppose (because the other guys aren’t as active) you were name-checked 30 times in those 100 mentions. You’re fighting out of your weight class, right? People are noticing you more than the competition, because your rivals aren’t marketing as much as they were.
So why’s this important?
What’s interesting about ESOV is what happens when the selling environment reverts to its previous state.
As the competition puts their marketing activities back in place, you retain the boost you had during the dark times. Your SOV stays higher, which means people are thinking about you more than the competition when looking to buy widgets. All of this translates to increased market share. Boom. Ka-ching.
How much growth? Well, Nielson reckons a 10-point gap advantage between Share of Voice and Share Of Market translates into 0.5% of market growth. An IPA study (from 2008, admittedly) puts it at 1%.
Marketing in a recession
All of this gets exponentially more serious when in a recession. Cutting campaign spending during economically lean times not only sends the wrong signal to your market. It reduces brand awareness, visibility, reach, and engagement.
Not only does that impact sales in the short term. It increases the costs of new customer acquisition, increases pricing sensitivity, and reduces customer loyalty.
So what’s the right play when your marketing efforts (and budget) are being scrutinized even more than normal?
1. Brand Building vs. Sales Activation
We can break down the types of marketing messaging into two distinct camps: Brand Building, and Sales Activation.
Brand Building, as the name suggests, is about increasing your visibility and top-of-mind recollection in the minds of the customer. In many categories — especially in B2B — the people who see your marketing are not ready to buy at the time they see it. They’re what we call out of market.
Sales Activation marketing, on the other hand, is about converting prospects into customers. Sometimes called Direct Response or Performance Marketing, it’s designed to get people to buy what you’re selling right now. It’s the attention driven “buy this product today”, “limited offer’, “buy one, get one free” type of stuff.
While many small businesses ignore it, brand building is an essential component to any successful marketing plan. Why? Because — as I’ve mentioned above — most people who see your messaging aren’t ready to buy right now.
Brand Building work is a future investment to keep you top-of-mind when prospects are in a position to buy what you’re selling. It’s like a mental bookmark they refer to, when they’re shortlisting which suppliers are worth considering.
Brand Building is essential, because if you’re not on that shortlist you may as well not exist. There’s little point blasting prospects with offers on your product when they don’t know you, or trust you.
Combining Brand Building and Sales Activation during a recession turbocharges the effectiveness of your marketing. Not only do you mop-up more ready-to-buy sales due to your increased Share Of Voice. Your also in the buyer’s consideration space when the green shoots of economic growth start to show themselves.
You’re better placed than competitors to take advantage of the mini-boom that follows a recession, as buyers open their wallets again.
In short, if possible maintain (or even increase) your marketing budget during a recession. Doing so positions your organization to accelerate past competitors intent on tightening their belts.
2. Media and Channel
Forced to make every marketing dollar work harder in a tough economy, a recession is a great time to review planning and execution methodology.
Too many businesses ride the ‘cruise control’ wave of doing the same old stuff, year after year. Sure, they may get a modest return on their marketing spend. But they don’t take time to peer above the parapet to see whether buyer expectations have evolved.
Conduct research to help validate — or dispute — your current marketing strategy. Speak to your customers to find out their content consumption habits. Listen to their concerns, to get insight and ideas on new messaging or advertising campaigns.
Maybe it’s an opportune moment to try something new, and different. Could you run a webinar, start a podcast, or launch a YouTube channel? Could your LinkedIn content benefit from using updated messaging, graphics, or video?
Perhaps it’s the perfect time to invest in training for your team to learn new techniques, software, or applications.
Most businesses haven’t reviewed their content strategy, publishing plan, or choice of media in the last, say, three years. There’s a very good chance the effectiveness of your marketing output can be increased.
Customer buying expectations continue to change, therefore so should you plan on delivering information, advice, opinion, entertainment, whatever.
Arguably the biggest media format growth in recent years has been the implementation of video into your marketing communications. Mainstream consumer-centric networks such as Facebook, Instagram, TikTok, and YouTube have influenced more business-centric platforms such as LinkedIn. The result is an increased acceptance of video content in buyers’ social media timelines.
Marketing opportunities during a recession
Perhaps the biggest marketing opportunity any business has in financial times of uncertainty is the one staring you in the face: your current customers.
It’s exponentially easier to sell to existing customers than to new ones. Yet many companies take their eye off the ball and focus too heavily on prospecting for new business. Depending on your business, industry, and customer base, that may not be the best plan of action during a recession. Longer sales cycles and pricing pressures can erode profit margins — hitting cashflow hard.
Increasing communications efforts to your current customer base can drive repeat purchases, upgrades, or incremental product additions. If you’re worried about coming out of a depressed economy unscathed, you can bet your customers are feeling the same way.
Offering special promotions or services to existing clients doesn’t just show them you have their back. It helps build affinity and loyalty.
History doesn’t just show us that recessions are getting shorter in duration. It also provides evidence that, when the sun comes out again, buyers come back stronger than ever. Data from the two most recent economic catastrophes — the 2008 recession and the COVID-19 pandemic — confirm this.
Yes, we’re heading into murky waters. There are sure to be casualties. But it’s also true that this, like everything else, will eventually pass. As marketers, our job is to come up with innovative and creative solutions to solving business problems.
If a recession doesn’t qualify as a business problem, I don’t know what does.
Originally published at https://kexino.com.