Advertising During a Recession
Advertising during a recession is no easy task. There are many important and strategic moves that need to be made in order to remain profitable, especially with consumers spending less. Considering that inflation has increased by about 7.5% globally between 2021 and 2022, brands need to be mindful with their approach to advertising. While consumers are spending less, this is mainly on large ticket items like a car, expensive technology or exclusive vacation. They will still purchase essentials, experiences and smaller non-essentials. As a result, it is important or brands to continue to advertise otherwise they might risk losing market share to their competition.
If Possible, Don’t Go Dark
Usually, the marketing and advertising departments are the first to get the chop – however, the best advice is to not go completely dark – even if it’s simply maintaining organic growth. When competitors stop advertising, it leaves more space for you to insert yourself and remain top of mind. It can even help to drive an emotional connection with consumers.
In an article by the Harvard Business Review, companies that had the strongest recovery from previous recessions didn’t cut their marketing budgets. They also state that during the 2008 crash, increasing advertising by 25% helped a company increase revenue by 8% and profits by 14%.
During a recession, advertising costs are the most efficient. This is due to simple supply-demand economics. When large advertisers like Ford or GM lower their advertising budget it opens up more inventory for small and medium-sized advertisers. Less demand and the same supply lead to lower prices. This is positive for small and medium-size brands that can take advantage of lower CPMs to drive a profitable return on media.
How to Advertise
During a recession, it’s important to remember that there are nuances to advertising during a difficult time. An important strategy is to review your copy. Your tone of voice needs to be reflective of the times. You need to be mindful that people can’t afford luxury items and non-essentials. Some brands will go as far as to not focus on their products, like Nike during the Covid-19 Pandemic. Others will gather user-generated content from their previous customers or influencers and promote the content as digital word-of-mouth.
Overall, your creative should work harder for you. Often times it’s the first point of contact for many people. It’s a great opportunity to highlight the benefits of the company outside the product itself (such as any charity work or sustainability initiatives). It also helps to run promotions when possible, to generate traction. Remember, people are spending less, and with that, they’re selective about what they purchase. The key is to be genuinely empathetic. Consumers know when a brand is being insincere.
At the end of the day, the most important thing to do as a brand is to keep moving forward. If possible, don’t go dark. Keep working on brand awareness and trust, and maintain some kind of social presence.
Kingstar Media has been advertising since 2003 and has experience advertising through economic ups and downs. If you would like assistance on rebuilding advertising assets or reviewing existing advertising strategies, feel free to contact us at [email protected]