It was my birthday this week and the usual “you’re past it” gags came out (despite only being 25 I might add!), so it somehow seemed fitting to write a bit about “The Recession”.
Yup, the economic downturn is now officially being mooted as the start of a recession and the conversations on what will happen to advertising/marketing spend have already begun.
Marketers were predicted to decrease spend by 3% at the start of the year whilst the latest Bellwether Report (Q1 2008) reveals that, for the second successive quarter, Q2 marketing budgets have been downgraded. Original estimates of a 3.2% increase in 2008 ad spend are looking ropey if reductions continue and this positive prediction is largely due to continued online investment counteracting reductions in more traditional media, especially below-the-line. (In fact, online spend has already overtaken press and it’s predicted to overtake TV by 2009.)
Now, I’m no economic analyst but I understand the logic that positions our friend the ‘marketing budget’ as one of the first victims of money-saving cutbacks. But, I’m going to stand by him – leave him be. In fact, feed him some more if you can!
The latest Brandz report from Millward Brown suggests that investing in a brand is actually one of the best courses of action during a period of economic turbulence:
“Strong brands generate superior returns and protect businesses from risk. Our data shows that strong brands continue to outperform weak ones in terms of market share and share price during recessions” says Joanna Seddon, CEO of Millward Brown Optimor.
Strong words, but there are also strong supports:
- Reports suggest that only 10% of consumers are motivated exclusively by price
- There are strong links between Share of Voice and Share of Market – invest and increase your share of voice whilst others are decreasing theirs and snatch their share of market as well
- Companies that have brands in the BrandZ Top 100 have performed significantly better in the stock market when compared to the S&P 500
- Loyal customers stay confident in a strong brand when the going gets tough. Confident customers are less likely to switch brand
- Potential customers, staff and shareholders are more risk averse during a recession. A strong brand alleviates risk in the shareholder’s mind
- There is a greater chance of a company’s value remaining buoyant in an economic downturn if supported by a strong brand
And there are cases to point to: P&G claim to have a “When times are tough, you build share” philosophy; Dutch retailer Albert Heijn tried to compete on price in 2003 only to trigger a price war that resulted in them losing share to competitors; and so on.
So could a recession become an opportunity? Perhaps, but it’s not just spend spend spend. As Millward Brown rightly points out, each industry requires its own recession strategy as each will be affected differently. Offensive or defensive, value focused or product focused, weather the storm, etc. Either way, a strong strategy utilising marketing spend is essential.
As for my own recession… well, 25 isn’t that bad at all. Really…
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