How can you protect your brand during this pandemic-induced recession? There’s no one simple answer, particularly when some sectors are all but shut down. But a key question to ask when thinking about how to ensure your brand comes out the other side is: Am I maintaining share of voice?
According to advertising researchers Peter Field and Rob Brittain and their new report, Winning or Losing in a Recession -- a key consideration for marketers right now should be how to conserve enough marketing and advertising dollars to defend your brand’s share of voice.
The way this recession is affecting different sectors varies enormously. But within each sector, competitive brands are operating in the same or similar markets. The goal is simply maintaining or increasing share of voice compared with your category rivals.
And with lots of brands cutting or reducing advertising activity, greater share of voice is relatively cost-effective to achieve right now.
The risk if this can’t be done is significant: it’s much harder for brands to recover after a recession if they haven’t maintained their share of voice during the downturn. You’re not only turning off the tap, you’re shrinking the pipe.
Conversely, to ‘win’ during the recession, aim for ‘excess share of voice’ -- a share of advertising or marketing volume that’s higher than your actual market share. In this scenario, you’re keeping the tap turned on, but you’re also enlarging the pipe.
Field and Brittain are not alone in making this argument. History is littered with examples of brands that increased their share of voice during a downturn and came out of it in a much stronger position than their competitors: Kellogg in the Great Depression; Toyota in the energy crisis of the early 70s, Pizza Hut in the recession of the early 90s, and Amazon in the 2009 aftermath of the financial crisis.
“This is not the time to cut advertising,” wrote Harvard Business School professor John Quelch during the global financial crisis and recession of 2008. “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”
ANZ marketers are disproportionately cutting budgets
Of course, where revenues are under pressure, conserving marketing and advertising spend is easier said than done.
Australia and NZ are leading the world when it comes to containing the spread of COVID-19. Yet they’re also leading when it comes to advertising and marketing cuts. For example:
- Australian and NZ marketers have slashed spending by as much as 35% since March according to SMI ad spend data -- similar to the US -- despite to date containing the COVID-19 pandemic much more effectively
- UK ad spend cuts are forecast to be just 13%-16% despite a relatively severe COVID-19 impact
- While in the UK and US, adspend typically recovers faster than GDP out of a recession, that is not the case in Australia and NZ, where pre-recession spending levels, once cut, are generally not regained.
A balance of offence and defence
“This is not some naive call for you to find extra dollars,” Field told an audience of hundreds of marketers at the report’s recent launch event. “It’s all about defending enough marketing dollars to stay in the game to ensure you’re healthy enough for the recovery -- that is the strong case for advertising spending.”
Brands should strive to achieve a balance of “defence and offence”, he argues. ‘Defence’ means looking for operational efficiencies rather than cutting head count and brand advertising; ‘offence’ means investing for growth.
Those that invest in their brand, and who execute well, will come out of the recession better than those who don’t, the authors say. In fact, the benefit is likely to be more immediate than at other times.
“The impact of SOV on return on capital employed proves advertising is a highly effective use of capital during a recession,” Brittain adds.
Field is well-known for his earlier research, “The Long and the Short of It,” conducted with Les Binet, which proves the value of brand advertising relative to short-term performance and tactical spending, and supports a 60% brand, 40% performance spending split in many cases.
He says marketers should resist the temptation to redirect budget to performance advertising seeking a short-term return, or to pour money into tactical advertising related to COVID-19 that departs from a brand’s long-term brand position.
“There’s a tendency to put what’s left of the budget into performance marketing,” Field says. “The data says you won’t win.
Tips for defending your brand in a recession
So how can advertisers achieve a balance of offence and defence and ultimately pursue that excess share of voice? We think there are some clear initial steps to investigate.
- Look for ways to boost marketing activity without boosting headcount by utilising current or reduced staff levels more efficiently
- Investigate your marketing processes and look for operational or administrative improvements. This can be as simple as streamlining approvals.
- Examine how automation can be employed to amplify your brand’s share of voice with minimal time and cost
- Seek longer-term media deals at advantageous rates in brand-building media. Consider avoiding high-demand channels such as online video and look for bargains
- Use the language of the CFO when making the business case for investment in marketing. Advertising reduces price sensitivity, safeguards future cash flows and offers a good return on capital employed during a downturn
- Invest in technology that offers a clear cost benefit or return on investment
- Protect the brand experience. To get full benefit for your spending, ensure your brand presence is consistent, impactful and maintains your established brand values.
At Outfit, we see opportunity in the current climate, both for our customers and for our brand automation platform.
Outfit enables marketing teams to automate the advertising production, slashing the time, cost and effort it takes to produce all the content you need to maintain your brand presence across all your channels to market.
Customers see a return on investment within weeks of implementing the platform: work that once took several designers several hours to complete now takes one designer just minutes to execute.
Outfit empowers distributed and remote teams to move quickly to execute new campaigns while protecting the brand experience by ensuring all work adheres to guidelines and remains on brand.
And it frees marketers to spend more time on the crucial customer and brand strategy work that will safeguard brands both within this recession and on the other side.