Oxygen360’s Managing Director Cameron Jurd poses some interesting questions to Mediaweek on marketing during a downturn
This article was originally published by Mediaweek Australia on July 31, 2023.
At the time of writing, economic pundits are predicting Australia will officially enter a recession sometime this year. For many of us business owners, this presents us with a greater level of uncertainty. But should it?
Unless we are very new to this marketing and business game, we should have experienced tough economic and trading conditions in the past.
So, what can we be doing to safeguard our cashflow, demand and ensure that we get through this period without a huge hole to crawl out of?
Naturally we are looking to cut costs, stabilise as much as possible and hold back on any major capital expenditure. The easy line in the P&L to put a mark through is marketing. It’s a quick win, keeps the CFO happy, so it seems like an easy decision.
However, is cutting back dramatically on marketing the right move? What about a short term pause on marketing? Which channels should we cut? What about Brand health? Can we just do digital? These are questions pondered in boardrooms across the country every day.
Here is what we do know.
Yes, cutting marketing dollars will immediately improve your bottom line. The existing marketing halo will carry you for some time depending on your sector so, why not?
What many fail to consider is the cost to regain your market position once things come good; and let’s face it, they will – it’s just a matter of when.
According to Harvard Business Review “companies that have bounced back from recessions most strongly did not cut their spend during a downturn. In fact, in many cases, they increased it”.
Media outlets are feeling pain during a recession so it’s a great time to drive a better deal. You could be getting a much lower CPM or greater impressions at a lesser cost and importantly, there is a good chance your competitors have paused their marketing creating a perfect opportunity to increase market share at a significant cost reduction.
So, what do we do with that information?
We can break it down further; as they say timing is everything.
Be targeted, ensure your advertising supply partners are delivering by challenging them, cutting your spend entirely will isolate you from your Agency partners who are of course invested in your success. So, have open and honest discussions with them about your challenges including budgets, and don’t leave it to the last minute.
You may be tempted to increase the sale price of your goods, but this is not a great idea as consumers become much more cost conscious during a recession and increased prices fly in the face of this. Plus, you will most likely be tempted to run a cut price promotion to rectify the problem you have created, and this can be another cause of consumer frustration.
Remember as money becomes scarce consumers will turn to brands that they know and trust so you must stay top of mind.
The content of your marketing should reflect the tonality of the times, acknowledge the challenges households are facing, ask consumers how you can help? Or let them know you are here to help.
Creative is more important than ever. Getting the creative right can stretch the returns on media investment by up to 10 times, so making sure that advertising is as engaging as possible is key.
The brands that invest their budgets in common sense marketing science ensuring they have solid attribution measurement in place and apply it to stand-out creative will emerge from the downturn in a far stronger position.
Value-based messages build a genuine connection with your audience. Plus, not only recognizing but overtly addressing challenges in the economy builds trust, inevitably moving your customer relationship beyond just your product or service.