By Patrick Headley, CEO at Go Inspire.
When we’re all feeling the pinch, is continuing to invest in marketing the right things for brands to do?
The question has been a hot topic of debate among marketers after the Government’s “cost of living tsar”, David Buttress, unveiled a new campaign urging brands to divert budget from communications to price cuts, and other initiatives designed to directly help hard-pressed consumers.
Needless to say, some business groups pounced on the announcement. Outspoken Wetherspoons boss, Tim Martin, accused ministers of “tinkering…when they don’t understand money”. A Federation of Small Business called the initiative “a slap in the face”, in particular for smaller brands “trying to survive”.
Taking a step back when tempers flare is important. The last thing brands need now is a rush to knee-jerk judgements that could leave them up the creek in future. The Institute of Practitioners in Advertising (IPA), for example, offers a balanced view.
Revealing its most recent quarterly marketing budget Bellwether Report, IPA director general Paul Bainsfair notes, “…amid mounting economic headwinds, a number of businesses signalled their intent to market aggressively…This is usually a wise and canny move.” However, he also acknowledges: “Others were planning to support customers through difficult times. Brands need to be seen to work for the benefit of consumers.”
Both of those positions can be simultaneously true. But it’s my view that rather than taking a blanket approach to immediately cutting marketing budgets, every individual brand should take some time to examine their strategy. That means thinking again – and thinking smarter and harder – about your short- and long-term goals.
Businesses that slash spend in a downturn are more likely to see revenues slide backwards in the long run. There are good reasons why this might be the case.
The first is consumer choice. It’s a cut-throat, competitive world for brands. If you’re not continuously showcasing the reasons why people should choose your product or service, rather than your rivals’, you immediately remove the chance for them to compare, and to convince them that yours is the right option.
Regardless of the message – “you can trust us”, or “we promise the best value” – being on the same stage as your competition is crucial.
In strong economic climates brands have plenty of opportunities to attract consumers. But in a downturn, there’s suddenly a scramble for any sales you can get, and consumers react accordingly.
Far better, I think, to continue to offer an attractive option that provides colour in darker days. Otherwise, brand anonymity beckons and your brand equity shrivels and dies.
Another by-product of “urgent” cutbacks during the early days of a downturn – whether that’s taking an axe to marketing budgets or indeed personnel – is the inability to kick-start previous strategies when the economy eventually improves.
Think about the cost of setting up a “team within a team”, for example – that could be in-store promotion, data and insight, or digital marketers – then making them redundant; only for there to be a sudden and expensive need to find talent again soon afterwards. Your brand could be left counting the dual cost of a brain drain and also a loss of momentum in the market.
In other words, it’s better to consider ways to “save” expenditure or employees by redirecting it to another part of your marketing strategy – rather than getting rid of it altogether. We’ve all worked in businesses where the person in charge of marketing budgets is keen to spend their annual “allowance” from the board in full, for fear of permanent cuts. That view is usually right.
In uncertain times, data-driven insight from both qualitative and quantitative sources is also critical. It can underpin marketing strategies that work better both for brands and their customers – even if they’re just short-term plans to put in place.
That means reassessing all of the data at your disposal. I can point to any number of retailers, for example, that are currently running marketing campaigns to what appears to be the wrong demographic.
This might work to an extent in better economic circumstances but when we require budgets to work harder it’s vital to change tack. It’s a case of pinpointing the right audience to target, through the right channels and at the right time.
Data is also the bridge between what customers say they’re going to do, and how they actually behave. It reveals their true story, and that’s gold dust when every marketing penny must be spent wisely.
Continuing consumer communications; predicting their actions with data; and being smart about marketing resources are just three ways brands should behave in a downturn to pave the way for future success. Thinking strategically about what your business and your customers need in a crisis, rather than reflexively reducing spend, is the brave way forward. And, as we know, fortune favours the brave.
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