Bracing Brands for the Economic Shift

Article by Rob Steeles, Creative Director, Eleven Miles

Here we go… If this is your first recession rodeo, buckle up, things are about to get interesting.

If you’ve worked in marketing and advertising for as long as I have, you’ll have seen a few of these economic wobbles. We’ve been there when the dot-com bubble burst, when 9/11 halted a decade of prosperity, the great recession (there wasn’t anything great about it), covid…and now we face a new yet somehow familiar foe of a downturn triggered by a senseless war, and an energy crisis that’s about to put a shiver down everyone’s spine.

On top of that great big dollop of joy, for those of us working in marketing and advertising, we now have the added spectre of client budgets being slashed. Cutting back on your marketing spend is a quick win for brands looking to shore-up defences and ride out the storm.

The first reaction of most brands is to batten down the hatches, and pray that when all this blows over, there’s still some customers left with money to spend.

Yet, there are some who look more openly, seize opportunity, and look to ride out the recession in a completely different way.

How do they do that? Is it blind faith? Recklessness? Naivety? Or a well-planned strategic manoeuvre to gain market share while others conservatively cower?

To find out, let’s have a look back at the last few economic blips and see who came out the recessions ‘up’ and more importantly is there a common thread they all share?

Rewind to 2008 and the total collapse of the US Stock Market. While bankers were being given brown boxes and being told to clear their desks on Wall Street, the fast food market was in a weird stand-off. McDonald’s were looking at Burger King and Yum Brands to see what the next move would be. And what ensued would determine a seismic shift in market share by doing the unthinkable.

First to blink were looking at their customers, and knowing they were feeling the pinch decided to drop prices and go to a value proposition to ‘help’ people through these hard times. The Dollar Menu became an instant success. Everyone followed suit. Problem solved…but profit on an already meagre margin took a real hit. Except for McDonald’s. Since no advertisers were buying media, rates were almost as cheap as the burgers they were flipping. McDonald’s upped ad spend significantly and used that airtime to push new products and reinforce their price proposition.

They did this on the cheap of course. Repurposing content and creative they already had, but with a bit more emphasis on the all-important price.

What McDonald’s knew was that although the world was feeling the pinch, and a trip to the Golden Arches suddenly became a luxury, everyone still wanted to go there. To the world, they looked open, inviting, understanding, while the rest were quiet… almost too scared to ask for people to spend their dwindling money.

Okay, but that’s an established brand. What if you’re a start up? Surely a recession is the first nail in the coffin of your business dreams. Or it could be the launch pad.

Recessions, as painful as they are at the time, do tend to bring Darwin’s theory of evolution to the fore. The weak will most likely perish. It’s an unfortunate but necessary part of brand life, right?

In turbulent times, some people double down and take the opportunity to reimagine whole sectors, often driven by an advancement in technology. In 2009’s 3G world where we could all just about manage a pixelated video call, along came 4G which meant the world could do everything almost as fast as a desktop computer. 

While the world suspended play until normality resumed, a bunch of brands were born that took the new 4G technology and spawned the likes of Uber, Groupon, WhatsApp, Airbnb…

These new brands erupted onto the scene and caught everyone napping. They found faster ways to do things, easier hassle-free ways to pay, book and order and consumers shifted to them faster than the big brands could transform.

Not only could these new brands out-pace and out-smart everyone, they also had instant data, geo-location, trend analysis – you name it. And they used this data to tap into new markets with communications straight into inboxes and a growing platform named Facebook.

Media was cheap, and with 4G your customers had more of a reason to keep looking at their devices because they were now officially ‘smart’.

If you haven’t got your 5G game sorted yet…you’d better hurry.

My final example of recession-proofing comes from the pandemic. Before a woman sneezed in Wuhan, China, Samsung was ranked No.21 in brand value according to Interbrand’s global list. Still a hugely profitable global business, but nowhere near the brand it is today. As the pandemic took hold, Samsung seemed to follow the spread of Covid-19 with well-orchestrated and concerted investment in their marketing and advertising. Since the world wasn’t allowed to go shopping anymore, it upped production and created the demand for in an incarcerated world. 

By May 2019, Samsung had climbed to No.6 on the index and a 29.6% increase in operating profit - $32.1 billion.

Mark Ritson, brand consultant, journalist and former marketing professor summed up the Covid recession conundrum nicely;

“Confronted with a 50% cut in marketing budgets, the smarter play is to actually focus more of it on the longer-term brand-building mission. Performance marketing is going to under-perform in the current market conditions. But this virus, too, shall pass. At some point consumers will return to the streets, the cafes and the various other activities that they have been denied during the dark days ahead. Keep the brand light burning, because the cost of snuffing it out for the rest of 2020 and then trying to reignite it next year is gigantic.”

In conclusion, it’s very easy for me to come out and tell brands to keep spending. I do, after all, have a vested interest in keeping my kids fed and a roof over my head. But this piece runs deeper than that. You see, I love brands. I know how much effort it takes to build one, and to get your customers to believe in what you’ve become. And in uncertain times, your brand can be a pleasant and familiar presence. If you’re there for them in these hard times, and stay communicating, then they’ll be there for you just as soon as they can afford to.

Take this time to figure out something to say that shows you are genuinely with your customers. Help them out. Give back. Offer a little margin. Keep them entertained. Find new and innovative ways to engage and talk with them, and be prepared to listen and action their feedback.

But whatever you do, don’t stop spending. Because your competitors might be the ones your most loyal customers turn to.