Marketing in a recession: Lessons learned from the 2008 Global Financial Crisis
Jacinda Adern likened our current economic downturn to that of the 2008 GFC, a period that has gone down in the memory books as one of financial ruin. Among those ruins, many brands rose and flourished. What lessons can we learn from those who invested in the right areas of marketing?
Brands who grew marketshare during the GFC had these things 4 in common:
1. They didn’t cut their marketing budget. (Gee like you weren’t expecting to read that from us!)
When a recession hits, marketing is typically one of the first places business owners are tempted to cut. It’s understandable that brands have this gut reaction, but it’s a mistake. Harvard Business School professor John Quelch has said “Brands that increase advertising during a downturn can improve market share and return on investment.” He goes on to demonstrate that slashing marketing budgets only defends business finance in the very short term and that ultimately, brands who stop marketing emerge from the downturn weaker and much less profitable.
Some brands have no choice but to cut their marketing but most of us can instead, objectively look at our marketing budget allocation. For some brands, it will be appropriate to reduce or cut spending in some areas such as sponsorship, billboards, and some content marketing or other areas that position them for the long-game. For most brands, direct response marketing is key.
Email marketing, social media updates and client experience are things that most of us can improve on a very small budget, even if other areas do need to be cut. Take stock of where you are. As our CEO, Shayne Moore always says ‘Your quietest time should be your busiest time’ so if you or your team find yourself with a lighter workload, get stuck in to these areas.
2. They focused on family values in their marketing
This was particularly prominent in the US where family homes were being lost by the thousand. Family, providing for the family, and future proofing for your family was at top of mind of many American families. With self-isolation measures, limits on large gatherings and the prospect of school closures, we can learn some lessons from this to help battle the Covid-19 induced recession. Images and themes of family values should replace those of rugged individualism, risk-taking, and adventure.
There’s also plenty of room for clean humour here: Memes about school closures entertaining kids at home and toilet paper shortages are getting strong engagement on social channels.
3. They adjusted pricing tactics to suit the marketplace
Discounts count when the market tightens. Right now, competitions on Facebook, 10% off when you refer a friend and other low-stake offers aren’t what your customers expect. Instead, limited-time offers and solid discounts are how to win business because you can bet that people are shopping around for the best deal.
At Mint, we’re a relatively high end service: Not quite the cheap one-man band, but not the large glitzy agency either. Our margins generally allow for a 20% profit. In 2020, we’re expecting to have to adjust this and bring that margin down significantly. We know that our clients are buckling their belts - smart spending is crucial and encouraged. That’s why we’ve massaged our services and while we’ll be mostly keeping our service offerings the same, we are now offering a leaner marketing package to help out those who have very limited marketing budgets but know they can’t get by without marketing.
How can your service offering or product range adapt to the new economic climate?
4. They comprised with their suppliers, distributors and service providers
Supply chain is a key component of many businesses risk management strategy. Ecommerce giants like Amazon and even luxury ‘alpha brands’ like Louis Vuitton and Hermes gained marketshare during the Global Financial crisis. Part of their strategy a solid understanding of customer psychology, but it was also about working closely wth their suppliers: Now’s a good time to lock in early-buy allowances, extended financing, and generous return policies.
Sending big love and strength to everyone. We’ve all got a challenge ahead of us in the coming months. As a business community, particularly here in Christchurch, we’ve seen how much we can band together and support one-another, let’s keep it up. If you’d like to talk to us about how you can optimise your marketing budget, contact us for a coffee, a call or a chat via video call.