THE MYTH OF “UNNECESSARY” MARKETING. WHY DOES IT PAY FOR COMPANIES TO INVEST IN PROMOTION IN TIMES OF ECONOMIC RECESSION?

27. 10. 2022
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When the harsh reality of an economic recession hits companies, most of them tend to respond somewhat schematically according to the established rules of business logic. However, the more statistical data we have, the more clearly we see that these rules may not be as logical as they may appear at first sight. While in a worsening economic climate CEOs are cutting what they consider “unnecessary” costs - with advertising and marketing traditionally being the first to be cut - marketing experts advise exactly the opposite approach. Experts agree that you can advertise your services and products happily during a boom, but you absolutely must advertise during a recession. Why don’t companies realise this?

INFLATION DOES NOT HAVE TO BURY MARKETING COMPLETELY


We can draw useful data from an examination of the market response to the economic recession of the early 1980s. Just like today, it was triggered by the global energy crisis - at that time it was caused by the Iranian Revolution. As a result of that geopolitical upheaval, the price of oil began to soar. Later, this period became known in history as the ‘oil shocks’ that drove already high inflation in the Western world into double digits. Historians agree that this was the biggest economic crisis since the Second World War.

A study by the American educational company McGraw Hill, which mapped the actions of 600 companies in 16 industries between 1980 and 1985, focuses precisely on the strategic decision-making of companies in these difficult times. Individual companies took different approaches to marketing - some invested the same amount of money, while others either radically reduced or completely eliminated related expenditures.



Video: Iran’s Revolution – 40 years on

However, there were also some that advertised more intensively than before despite the recession. The findings of the survey may seem shocking - McGraw Hill reports that companies that invested in advertising and marketing during the recession were rewarded with up to a 256% increase in sales after the recession ended. Conversely, those that did not advertise had to endure literally zero market share growth and only a marginal improvement in sales oscillating around 18%. Nevertheless, it is clear that abandoning advertising and marketing may bring some benefit in the short term, but it is all the more difficult to successfully follow up once the economy gets back on track.

DOMINATING THE MEDIA SPACE RATHER THAN ABANDONING POSITIONS


Why is this happening? Obviously, if your brand disappears from the public space, even for a few years, you have to go through the whole process of reintroducing yourself to consumers and potential customers after the crisis is over. If you are active even during an economic crisis, you can develop a pretty solid momentum. You naturally cannot expect customers who are streamlining their personal budgets to take you by storm right away, but you can easily make them feel that your products are worth investing in as soon as things get a little better. According to available scientific research, the average consumers’ brand awareness drops by 24% for every six months they are not in passive contact with a brand. Economic recessions can last for years, which can ultimately lead to even the most famous goal-oriented brands being forgotten if they switch into this ‘communication hibernation’ mode for a long time.

In addition, companies have the conveniences of the digital world at their disposal today. Back in 2008, during the global economic crisis, the situation was complicated by the fact that all advertising activities took place in a media environment that relied on linearity with the corresponding marketing formats. But the media landscape has changed beyond recognition in a decade. Even traditional media such as TV no longer rely solely on linearity, but use a variety of methods to target advertising, provide on-demand services and generally leave the control of decision-making to the viewer. Simply put, in 2008 you launched an ad that somehow reached everyone without exception. Today, you can target your communications specifically at the audiences you want to reach, which is an invaluable advantage in times of economic recession when you think about maximum effectiveness. Consumers are not a uniform mass, so it is logical that the crisis affects them in different ways.

Do you focus on the distribution and sale of luxury goods? You can assume that your customer base is coping with the crisis without the need for significant belt-tightening. Is a pro-social brand image crucial to your company’s profile? Communicate advice and recommendations on how consumers can save money in difficult times and how you want to help them. In short, stay active - advertising and marketing are creative disciplines. Right now you have the most diverse portfolio of tools ever. Do not neglect traditional media such as TV and radio. Find out instead what new features you can utilise. After all, TV advertising is still the crown jewel of marketing. When it is managed correctly and reaches the desired target audience, its value is incalculable. And what is TV these days? Not just a screen in the living room but also an app on your phone or laptop. These days, the vast majority of consumers simply carry their TV with them everywhere.

MANUAL 2008


We have experienced this recently during the Covid-19 pandemic. Now there is a new crisis linked to geopolitical uncertainty, which is driving up inflation rates globally. The format of the crisis is slightly different but the recipe for socially responsive marketing in these times remains virtually the same. Peter Field, the world’s marketing icon, has formulated a few principles that marketers should follow when preparing their campaigns. In line with the above, he urges companies to continue to invest in advertising - but the funding should be directed mainly towards strengthening the brand itself as the vision of immediate sales is very naive in this situation. He also has recommendations at hand - these are based on his analyses of the global economic crisis in 2008.
“The short-term activation of consumers during a crisis makes no sense because their demand cannot be met or does not exist at all. In any case, most companies spend less than half of their budgets on brand building today, well below the recommended 60%. Further cuts in marketing spend is not a good strategy unless it is strictly a matter of survival,”

explains Field. “Companies should resist the lure of short-term media offerings that promise to activate their customer base - unless they operate in the few sectors that are traditionally resistant to the fluctuations of the economic cycle,” he adds.



Video: The Brand Recovery Series: Peter Field‘s take on marketing in times of recession

Field’s other recommendation also calls, to some extent, for CEOs to be smarter than their competitors. Media presence correlates with the market share. If it starts to decline, it is very likely that your post-crisis position will also deteriorate. While generating one-off savings and profits looks promising on paper, it is not the best way to protect your own brand. Yet many companies will undoubtedly behave in this way, which is an opportunity for the more astute. “This is good news for those who want to actively protect their own brand. If some companies withdraw from the media space, it will result in lower prices in the advertising market. Of course, the media world is evolving very dynamically, so those with a very good ability to adapt will benefit most from this competitive advantage,” points out Field.

Last but not least, Field recommends taking a humane and understanding approach towards consumers facing existential problems. This applies universally to any type of crisis. He recalls the conclusions of the IPA study on which he participated during the 2008 recession. Betting on emotions combined with rational thinking has paid off for most brands. What does such advertising look like? It is able to evoke positive emotions in the viewer - the consumer simply feels good after watching it. On the other hand, such advertising is not detached from reality. In fact, the crisis-stricken viewer responds best to a presentation that talks about what his favourite brand is doing to help him in his predicament. A simple feel-good ad that completely ignores the hot issue will not have the desired effect.
“In times of crisis, a person’s sense of his or her inner human values is more evident than ever. In 2008, people valued warmth and good humour in their interactions with loved ones and friends, even though they were more likely to be filled with anxiety and helplessness,”

quotes Field the findings of the 2008 analysis for T-Mobile.

Nearly 15 years have passed and the crisis is again beginning to affect all social groups. Brands are already starting to react proactively to rising inflation. What are some specific examples of TV ads that can be expected to be successful with viewers?

MINT MOBILE – DEFLATEGREAT (2022)


If you want to deliver a good message to your customers and entertain them in the process, call on Ryan Reynolds for help. The versatile actor has a great handle on comedy roles, which he repeatedly proves not only in the title role in the extremely popular Marvel movie Deadpool. Reynolds is both a proud customer and a stakeholder of Mint Mobile, a telecommunications company that specialises in providing mobile virtual network services. The company has dealt with skyrocketing inflation in its own way - at a time when everyone is raising prices, Mint Mobile is slashing the price of its services. Ryan Reynolds himself offers the answer in the spot - “because we don’t hate you”. At Mint Mobile, they have a long track record of funny and catchy ads, and this particular one definitely confirms that. It also resonated with the mood in society with its deflating potential. It is a fact that most players in the U.S. telecom market are dramatically increasing their prices - and Mint is offering a monthly plan for $15. Moreover, the presentation works with a sense of transparency, with Reynolds specifically explaining to the audience why the company can afford such a move in the first place.



Video: Mint Mobile – Deflategreat (2022)

If we take into account the generally positive user experience, we have a recipe for successful anti-inflationary advertising. The actor in the ad speaks directly to the audience, making sure to mention all the efforts the company is making to be budget-friendly. This is not the first time Reynolds has joined forces with Mint Mobile. “I love ads. Except when they cost 5 million dollars for 30 seconds of airtime,” Reynolds said several years ago. And how did he comment on his investment in the telecommunications company? “I buy into companies that are already perfect. Mint Mobile was already perfect when I heard about it for the first time... Similarly, I do not make gin but Aviation Gin was already a finished product. I loved the product, I used the product, and it was part of my life... For me, the story has been pretty authentic,” he explains. And so is Mint Mobile.

BOJANGLES – FREE $10 GAS CARD (2022)


The American fast food chain Bojangles may not have the capacity to solve your inflation woes, but it understands that you have to eat. And since most Americans have to arrive in person to get their favourite dishes, this often requires them to invest in gas so that they could go by car. Unfortunately, escalating fuel prices are another aspect of the current crisis. But Bojangles has found at least a partial solution. The chain, which specialises in Cajun-style fried chicken, launched a campaign back in April of this year where every customer who bought their Big Bo Box containing 12 or 20 pieces of chicken received a $10 gas voucher as a bonus. No doubt a good move for a company that has long profiled itself as family-friendly.



Video: Bojangles – Free $10 Gas Card (2022)

The spot itself is not particularly original, it is exactly the kind of ad you would expect. But the message is the key that aims to help customers in a difficult life situation. That this move has more than paid off is confirmed by Bojangles’ management. According to the company’s top executives, their family menu sold better than ever during the limited-time campaign. As for the vouchers, the company claims to have given away a million dollars worth of gasoline in 25 days. As you can see, customers will be happy to come and buy their beloved Cajun chicken... even more so if they are motivated enough to do so.

OUTDOORSY – INFLATION (2022)


Outdoorsy, an RV rental company, decided not to play games and to pull all the skeletons out of the closet. The cursed word ‘inflation’ appears six times in the company’s 30-second ad, but the emphasis is on the fact that inflation is not something that should dictate what we do with our lives. In this way, Outdoorsy is trying to combat another common bad habit that plagues many of us in the current crisis - limited travel options due to high airfares and accommodation prices. Given that it is not just in the US that people are now discovering the comfort of a motor home holiday, this is a rather logical and ingenious move. Staying in the countryside has much to offer, and it is a relatively economical option compared to other alternatives.



Video: Outdoorsy – Inflation 30 sec (2022)

The spot itself is a quick sequence of scenes of people enjoying their stay in the RV and in the country. The authors of the ad explain in a light-hearted tone that there is a world where there is no need to talk about inflation, think about it or even worry about it. Mother Nature simply has ways of making you forget everything that is currently bothering you. Outdoorsy will open the gateway to this form of relaxation and recreation, which will also remind you that the beauty of the world does not have to be found thousands of miles from home, but within a pleasant driving distance. Marketing strategies need to dynamically transform their messaging - Outdoorsy has brought such an identity transformation to perfection.

TALLY TECHNOLOGIES – GROUP MEDITATION (2022)


Tally Technologies, the company behind the development of an app that allows you to streamline your personal finances by consolidating your monthly credit card transactions into one payment, realises that inflation is a bogeyman that haunts you even when you do not want to think about such things. Logically, the financial technology market stands and falls with the ability to earn the trust of customers. Therefore, it is no surprise that the company has come up with a solution to rising inflation. It promotes the app as the most reliable tool to combat credit transaction debts, which is why it has chosen a rather playful and smiley campaign styling. It works with the idea that most of us need at least a little help, especially in matters of financial literacy.



Video: Tally Technologies – Group Meditation (2022)

Meditation should provide time to be devoted only to ourselves - our physical shell and our revitalizing psyche. But the attention of the participants in the group meditation in this Tally Technologies TV spot runs in every direction but inward. “The inflation, it’s killing me,” one of them despairs. His words are met with approving nods. But no group therapy is worthwhile without a guru to guide the meditators through it and set the direction for the entire session. In this case, the guru is materialised in a voice-over, offering a solution - the Tally app, which will solve your debt problem fast. In real life, the situation may be a bit more complicated, but on the other hand... Rome was not built in a day, was it?

 EXPEDIA – STUFF: MADE TO TRAVEL (2022)


The darling of the British audience, Ewan McGregor, has his own opinion on how we should fight inflation. In a new TV advert, he challenges viewers to think about whether things or experiences are more important to them. Obviously, it is a presentation by the airline Expedia, which is trying to encourage its customers not to frantically buy everything they can think of, and at the same time not to give up on travel. Because it is the experiences we will remember for years to come, while even the latest smart phone will hit the limits of its own lifespan in a few years. This is a rather bold move, because for many, travel is difficult right now as mentioned above.



Video: Expedia – Stuff: Made to Travel (2022)

But market analyses prove Expedia’s marketers right. Indeed, in crisis situations, consumers tend to invest in experiences rather than material pleasures. McGregor cleverly avoids the forbidden “i” word in the spot, and the text at the end encourages viewers to “save more on the things that matter”. This message is further underlined by a visual shot of a happy family enjoying a beach holiday. This is again a fine example of how it pays not to ignore the reality of society as a whole, no matter how difficult it may be. Expedia’s collaboration with Ewan McGregor proves that it can be done in a way that is rather subliminal, that does not explicitly talk about the problem as such, and yet everyone knows which way the wind is blowing.

FRESH THYME MARKET – IMMERSE YOURSELF (2022)


We will conclude our illustrative list of good practice examples with a TV spot from the sector that suffers perhaps the most from inflation on a daily basis. There are even jokes about it already circulating on social media - where did you first realise that the economic situation is not entirely favourable? Well, in your local supermarket! It is true to a certain extent. Inflation-driven price growth affects us most when buying groceries, which none of us can avoid from time to time. This is not entirely good news for food brands, as they are getting into a situation where their products automatically have a stressful effect on potential customers. Fresh Thyme Market, a company that operates a grocery chain focused on natural and sustainable products, decided to provide some comfort in its new TV campaign.

At Fresh Thyme Market, they realise that we often perceive food by the price tag attached. Then it is easy to just grumble discontentedly that something is expensive because we do not keep in mind the entire process and work involved in getting the product to the store shelves. Every fish had to be caught first, all the fruit and vegetables come from the orchards of the growers who have to spend hours and hours every day tending to these crops, and so on. This is even more true for Fresh Thyme Market, because their stores work almost exclusively with small producers. It is something we should always keep in mind when we buy any product. Similar to the previous example, you are not buying an ordinary item, but an experience of sorts. Even if the price is higher, it can be sustainable and fair. If it were not set like this, the small producers might not be able to make a living either. In times of economic crisis, they also have to deal with existential problems on a daily basis, just like everyone else.



Video: Fresh Thyme Market – Immerse Yourself (2022)

All of the above ads have one thing in common - they offer a viable alternative. And customers will appreciate such consumer-facing steps, which will become apparent during the crisis or when the situation calms down. Continuing what worked six months ago in a very different economic situation is not a good strategy for corporate marketing. Customers will have to change their habits and not many of them will wait for slow companies to finally get going. After all, even patience is a very scarce commodity today.
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