It is fair to say that 2022 will be remembered as a challenging year. The invasion of Ukraine, skyrocketing energy prices, a fluctuating pound, turmoil at the helm of the UK government and record inflation have led to a melting pot of problems facing businesses and consumers alike.
In the face of a recession, companies around the world are starting to tighten their belts and we can expect that spending in general will be down across the board.
During these times, marketeers can bear the brunt and often have their budget trimmed first. Organisations looking to save money and drive growth at the same time turn to direct sales activities in the hopes that this will create the strong pipeline that they are targeted on.
That’s something of a short term strategy and our advice to clients is always hold strong if you can.
Why? Well, the research shows us that investing in comms during a recession is a genuinely good business move. According to new research by Analytic Partners* brands that boosted their investment in comms throughout the last recession performed better post-recession than those who didn’t.
Not convinced? How about some more hard data. The same research showed that over 50% of brands that maintained or increased their comms investment during the last recession saw a 17% increase in incremental sales.
A classic example is Reckitt Benckiser (makers of Dettol and Strepsils) which actually increased its budget during the 2008 recession. In the face of reduced marketing activity by competitors, Reckitt Benckiser saw revenues growth of 8% and profit growth of. 14%, when most of its rivals saw profit declines.
It’s a no-brainer really, when you think about it. If you cut your brand awareness activity your brand will stop being front and centre in the minds of your target audiences. Other brands who continue their activity will take your place. When the difficult times are over, who wins? It is a well-known fact that word-of-mouth recommendations is a key sales driver; people are 90% more likely to buy a product or service that has been recommended by a peer*. Maintaining your awareness and earned media activity is absolutely key to driving growth, on a long-term basis.
This is especially important for scaling businesses. Budget scrutiny will be paramount, as investors need to know you’re spending well. But venture capitalists are pragmatic people and understand the concept of ‘speculate to accumulate’ better than anyone! There is a clear business case for communications activity.
That isn’t to say that communications budgets and activities shouldn’t be considered carefully, and a good agency partner will never recommend you do something that won’t have a genuine impact on your business. Instead, multi-channel, data-led campaigns, aligned to a strong strategy that everyone agrees on, will maintain your brand awareness, capture your audiences’ imagination and help sales teams who have exciting material to work with. Market share is there for the taking even in an economic downturn and those with the foresight to continue to invest in the right places potentially stand to win big.
*
Analytic Partners, ROI Genome, June 2022
* Invesp, Word of Mouth Marketing, April 2022