Aurora Magazine

Promoting excellence in advertising

Published in Jul-Aug 2019

It’s stormy out there.

For any marketer, these are paralysing times; the economy is nose-diving, inflation is rocketing and the currency is on a free fall to hell. It’s no secret that recessions damage consumers, harm businesses and kill brands. Small businesses struggle to make payroll, distributors become irrational about cash, employees worry about losing their jobs and consumers become more price-conscious and value-oriented. Yet, as dismal as this may sound, a recession might be the perfect opportunity to grow your brand.

Here are five ways to turn up for a downturn.

1 Don’t scream

A recession affects minds before wallets. So panicking won’t help. Contrary to popular belief, consumer spending rarely falls in nominal terms. It just doesn’t grow as fast to keep up with inflation. Moreover, a recession affects different industries in different ways. Luxury retailers typically are immune to recessions (much like packaged goods, fast food chains and discount brands). So, while brands might expect to lose revenue, a recession is a great time to reassess, re-evaluate and restructure your offerings to minimise losses – always seeking out your most profitable segments to offer them an updated, tuned-up value proposition.

2 Invest in the best

Recessions have a way of alienating your best customers and employees. And because they are both expensive to replace, now might be the time to invest in them. Instead of price-cutting (which can trigger a competitive price war and a race to the bottom), spoil your loyal customers with

value-adds such as improved loyalty programmes, education, training, new experiences or more access to what they love most about your brand. If rightsizing is on the horizon, your best employees will likely have offers to jump ship first. Now is the time to produce retention bonuses, cross-functional training, educational support or generous raises (as they might be the ones taking the brunt of the extra workload if headcounts are reduced).

3 Use the break

If things are slowing down, it doesn’t mean that you must. Use the hiatus to acquire, expand, experiment or grow. Seemingly perfect brands that might be burdened with financial weaknesses could be looking to sell. Alternatively, you can acquire new technology, rights or patents, market segments or even complimentary brands that are better suited to the current economic environment. Brands that grow in a recession (like Lego, Netflix and Hyundai) tend to consolidate their gains when the storm is over. You can try to negotiate better media rates; it’s no secret that ROI from advertising increases in a recession. Or simply experiment. Try new ways to package, deliver or offer new service options. Finally, pursue projects that you would not have otherwise found time for so that you can use the break to get a break into an idealised future.

4 Keep advertising

Most importantly, do not cut your ad spend. It’s well-documented that companies that slash their marketing budgets typically see sales and income drop by 25% over the next two years. So what may look like savings on the surface are, in the long-term, damaging. Moreover, because advertising can continue to impact sales years after the ads are shown, cutting ad spend amputates the chances to recover swiftly once the economy is back in full swing. And while cutting ad spend depresses sales and market share, distribution also becomes harder to maintain because the pressure to cut prices becomes imminent. And with lower sales and margins, a non-advertised brand often finds its profits crashing, sometimes with terminal consequences.

5 Think like a creative

If good times don’t make you think like a creative, bad times may force you to. For starters, use emotions, not promotions. Brands that rely heavily on deals and promotions erode their brand value and profit margins. On the other hand, engaging emotionally with consumers yields better results than focusing on rational messages like low prices, special offers or discounts. And if budgets are restrictive, then think in ways that can get you free publicity – often achieved through remarkable work that is met with word-of-mouth and digital virality. Betting on safe, functional, price-centric messages is money burnt. And if all this can be strategically orchestrated with the right combination of traditional, digital and ambient media, a recession will feel exactly what it’s meant to feel like. A brief storm on an otherwise clear day.

Faraz Maqsood Hamidi is CE & CD, The D’Hamidi Partnership.