The American economy is in chaos. COVID-19 has closed businesses, caused mass layoffs, quarantined consumers, and left us all wondering what’s next. Well, what’s next isn’t so great either. Experts predict we’re going to crawl out of the coronavirus pandemic right into a recession. Great…
Businesses will likely respond in 2 different ways:
- Businesses will see the decline in sales demand and slash marketing expenses to save money. Their strategy for survival is to cover the leaks and outlast the storm.
- Businesses will increase (yes, you read that right) their ad spend to capitalize on a marketing landscape left vacant by their competitors.
Now is the time to spend on marketing. Don’t wait until COVID-19 has come and gone (that could be many more months), and don’t wait until the next recession is over (that could be years).
The time to market your business is now. Here’s why and how.
Seize Your Share of the Market
The best time to step up your marketing is when your rivals step down. This is the perfect opportunity for your business to grab a piece of the market share.
The Excess Share of Voice Rule (ESOV) says that the more a business spends on advertising compared to its competitors, the more it will grow. With that rule in mind, just maintaining your marketing spend during a pandemic or recession is going to increase your share of the market. And if you increase your spend, you’ll gain proportionately that much growth.
When advertising competition falls, so do the prices—supply and demand. If you’re the only one demanding a piece of real estate on the highway billboard or your customer’s Facebook feed, the bid to win is much lower. You can market your business more for less.
Consumers Still Need to Buy
When a recession or crisis rolls around, your customers don’t crawl under a rock and wait it out. Yes, consumer habits change, but they don’t die.
Take, for example, this study on the effects of terrorism on Israeli consumers. Terrorism significantly disrupted Israeli consumer patterns, leading people away from malls and shopping centers. But the consumers didn’t just stop buying—they instead started doing more online shopping. We can see close parallels to consumer responses to COVID-19.
Depending on your industry, your consumers’ habits will change, but they won’t disappear. People still need to buy groceries, new clothes, dentist checkups, haircuts, and to take a vacation here and there. The way they go about buying these products and services will change, but the need is still present.
If you stop marketing your solution, someone else will—and they’ll be the ones who claim the market share (and potentially steal some of your customers, too).
History Teaches Us to Increase Marketing
This famous marketing adage holds a lot of truth: “When times are good you should advertise, but when times are bad you must advertise.” Time and time again, we see that businesses that increase their advertising spend during a recession reap the rewards. Here are a few examples:
- During the Great Depression, Post cereal cut its ad budget to ride out the storm. Rival Kellogg’s seized the moment and doubled its marketing spend (and even introduced a new cereal called Rice Krispies), growing Kellogg’s profits by 30% and helping the company steal the category leader position for decades to come.
- Looking at the 1981–1982 recession, companies that maintained or increased their ad spend grew their sales by 256% over 3 years compared to those who eliminated or decreased advertising.
- In the 1990–1991 recession, Taco Bell and Pizza Hut boosted their advertising while McDonald’s cut their spending. McDonald’s sales dipped by 28%, while Pizza Hut grew sales by 61% and Taco Bell by 40%.
The natural inclination for marketers is to cut their ad budgets during a crisis or recession. However, history shows us that maintaining your advertising can boost your sales and market share now and in the future.
Don’t Stop Marketing, But Market Wisely
Not all marketing campaigns are created equal, especially during a pandemic or recession.
Right now, you probably don’t want to waste money on downtown outside advertising when American metropolitan areas are deserted. Nor would you want to invest in a marketing campaign at the airport or local mall.
Consumers under shelter-in-place orders are scrolling their social feeds, swiping through their inboxes, and browsing the internet to save their sanity. These are the places you should spend your marketing budget!
Times are hard and will probably get harder, but whatever you do, don’t stop spending on marketing. Avoid your instincts to wait out the storm—get your business out there in front of your customers. History has taught us that cutting advertising budgets during a recession is a recipe for disaster, and we’ve all had enough disaster for a good long while.