At the beginning of December, we wrote about preparing your business for a recession. While we had no great prophecy of the current crisis, we were reading increasing predictions about a coming recession. Possible recession causes ranged from new trade policies to market course correction. In all of our research, we never read one word about a world-wide pandemic that would force most of us to shelter-in-place and plunge us headlong into a recession, yet here we are.
We don’t need to repeat all the bad news about unemployment numbers and company closures for you. You’re living this nightmare along with the rest of us. What we can do is help you figure out how to weather this crisis so your company not only survives but thrives.
Avoid Slashing Advertising Budgets
Everyone is cutting budgets. Even those of us for whom work continues to be steady are looking at ways to preserve capital in the event this recession cuts deeper and lasts longer than we expect. One of the first and easiest ways companies cut expenditures is by slashing advertising budgets. We’re an ad agency so of course, we’re going to tell you not to drop your budget to zero. We’re also a digital ad agency so we’re going to back up our words of caution with data.
Forbes details some great research on companies throughout the last century who maintained (or increased) their advertising budgets during a recession compared to their competitors who pulled back. Guess who was stronger in the end? The advertisers who continued to advertise. This trend transcends industry as food, restaurants, automobiles, and technology all experienced the same effect across multiple recession periods.
Not only will discontinuing advertising during the recession result in an even higher loss of sales, but it also raises the cost of regaining market share. Businesses who slash advertising budgets in a recession spend four to five times more money regaining their market share when the recession ends. It’s not worth the risk.
Our world’s a different place than it was ten years ago when we started climbing out of the last recession. Advertising methods and media consumption have changed drastically over the last decade. As the Harvard Business Review put it, companies should “take a scalpel rather than a cleaver to the marketing budget.”
Expertly trimming off unproven advertising tactics takes a little dive into your data. Luckily, digital marketing offers a lot of it, and if you’ve been paying attention to your advertising spending over the last ten years you should have plenty of information to help you decide what’s working and what’s not. If you have ads showing in places you aren’t sure are worth the money, now’s the time to experiment with shifting your advertising budget to where it makes the most sense.
Know Your Target Market
Every advertising manual starts with goals and target market. Today your target market is shifting. While you once advertised to a demographic, now you’re looking for people in a psychological mindset. The Harvard Business Review article referenced above offers great details about the four new categories of customers: Slam-on-the-Brakes, Pained-but-Patient, Comfortably-Well-Off, and Live-for-Today. I encourage you to read that article for details on what each category is buying and not buying as well as their motivations behind their purchases.
If your product is an off-brand, good value, you can easily target both the Slam-on-the-Brakes and Pained-but-Patient people. If you’ve been targeting higher-end consumers, you’re probably looking at the Pained-but-Patient or Comfortably-Well-Off categories. Both of those are looking for good values but will continue to indulge themselves in a treat.
Many companies are enticed to switch gears during a recession and target demographics different than their typical core. Don’t give in to the desire to be all things to all people right now. You’ll dilute your brand and alienate your core, who may not stick around if they decide you’re not the company they expected you to be.
Adjust Your Messaging
Your target audience’s motivations plus sensitivity to the current situation should drive your company’s messaging. Images of large groups enjoying a sporting event or a patio party ring hollow to consumers right now. First, it reminds us of what we’ve lost and second, it promotes carelessness. At the same time, you don’t want your message to be depressing.
So, aim for a middle ground between “everything’s great” and “the apocalypse is coming.” Easy, right? One way to strike the right cord is reminding your customers how your product can meet a need they have during these difficult times, and how your company is serving them. Some companies are also using the time to implement “cause marketing” by donating to charities serving those in need. Always promote a sense of community. You aren’t just out to make a buck. You’re supporting your employees and their families, contributing to a delicate economy, and helping ease your customer’s ills during these days.
We’re praying for our essential and non-essential small and mid-sized businesses out there. You’re all essential to make our economy work and support the people around you. Our communities wouldn’t be the vibrant, rich places they are without your voice and personality. We’re hopeful we’ll all be back in our businesses very soon, which puts us all one step closer to climbing out of this recession. While we are hopeful, we’re all too aware of the uncertainty that looms ahead. However long and deep this recession goes, together we can weather the storm. We’re offering free hour-long brainstorming sessions to help you find creative ways to advertise and grow your business during these days. Email us to set up your time.