How can brands thrive under economic uncertainty?
It is no surprise that the current state of permacrisis or the looming economic downturn pose a number of risks and challenges to marketers. What might be a surprise, however, is that those risks don’t relate to questions like “what if sales keep falling this quarter regardless of my investments” or “what if I overestimate compared to current (low) consumer demand”.
As valid as those concerns are, the matter is quite the opposite. In fact, there’s a genuine risk of marketers doing too little rather than too much. As money gets tighter, it becomes easy to administer the wrong kind of medicine for the situation. So how to maintain the brand’s health in difficult times?
Aki Toivonen; Creative Strategist, Head of Planning
The vicious cycle of shrinking budgets
It all comes down to a vicious cycle, which – if allowed to do its damage – will paralyze the brand’s ability to grow the business in the long term. This vicious cycle feeds its energy from two forces, two great enemies of wise marketers: short-termism & cautiousness. Marketing decision-makers tend not to be the main proponents of short-term thinking within the organization, but as economic outlook worsens, they may be lacking the tools or the arguments to fight the pressure.
It is only understandable then that with less money to spend and with increased pressure to succeed, many marketers fall into the trap of excessive cautiousness. Here cautiousness refers to an overly rational hard-sell attitude that downplays the effectiveness of creativity and stresses persuasion by reason.
While there’s a time and place for such argumentation, it is not the sort of marketing communication that enjoys the multiplier effects of creativity. This is an important point, because if the creative execution is not doing the heavy lifting of the campaign, the budget should be – if it hadn’t just been slashed.
And here’s the gist of the problem: short-termist decisions leading to budget cuts, leading to cautious marketing decisions, leading to lackluster results, leading to budget cuts, and the list goes on.
Two steps of maintaining great results
There are ways to combat this spiral, however. The first is obviously to protect the budgets. While that may be a tall order and easier said than done, there are actually various arguments for it – especially in a downturn. Firstly, going dark for a longer period is detrimental to the brand, decreasing future sales.
Secondly, even cutting back from previous levels will hurt the business. Thirdly, and most importantly, cutting budgets in a downturn is a lost opportunity to take share from the competition who are equally impacted by the forces of short-termism and cautiousness. See the deck for more detailed evidence on these matters.
Even if marketers lose the budget battle, the war is not entirely lost yet.
Their second chance is to focus on the brand. While it is tempting to try to reap as much of the shrinking current demand as possible by stressing sales activation, a long term view speaks in favor of brand-building, which leads to greater total business impact. Brand investment is also the best protection against rising prices, as it minimizes price sensitivity. A noteworthy benefit in the present economic climate.
Finally, as much of the buyer potential is not any case in the market right now, especially in categories mostly hurt by the downturn, brand-building and high-reaching campaigns are more equipped to build the clientele of the future.
Cultivating creativity is more vital than ever
Marketers have yet one trick in their sleeve, and that is to champion the work. Creativity is among the top contributors to advertising effectiveness, and the one thing that can actually make even the smallest of budgets work overtime. And it should be noted that when that happens, it usually is the bold, emotionally-driven, fame-seeking campaigns. Not the ones with the most reasonable arguments.
So if we consider the risks marketers face these times, there’s three to list at least. The risk of playing it too safe creatively, and not getting any attention and traction to the money you’re spending. The risk of focusing too much on the short term, losing money and long-term profits. And the risk of not doing anything, and letting the competition win. Dare to risk it?
