Counter-intuitively, Manuel Yoacham of MediaCom says that beating a recession means spending more on marketing
The start of 2022 brought a lot of hope. It seemed like a pre-ordained fact that we were going to “beat” Covid this year, come hell or high water. Though scientifically speaking that is not true, it is fair to say most of society has, fortunately, been able to go back to a sense of normality.
Or even better than normal: a certain sense of forward-looking optimism permeates Irish culture. But life sometimes has a twisted sense of humour. It was not long before we started feeling the pinch of post-Covid inflation. It seems like the most basic of items costs an eye-watering amount right now. This, of course, has spiralled into global market analysts predicting a recession, the second one in less than 20 years. Alarmingly, this has already created some panic in marketing circles, with budgets already being cut to weather the coming storm.
But the question is: why?
Data has shown time and again, shaving marketing budgets during economic downturns is penny-wise, but pound-foolish. Management firm Malik PIMS collated data from 1,000 firms during the early noughties. The figures demonstrate a clear causal relationship. Brands that cut or maintained budgets suffered market share loss after recessionary periods.
Brands that increased marketing spend saw an increase in market share. Marketing consultant Peter Field compiled a similar database of brands and spend after the 2008 recession. Once again, brands that invested in extra Share of Voice (in other words, a greater SOV than their SOM) showed huge gains when compared to their more ‘silent’ competitors.
Keep on advertising for growth
The realities of a recession are just that: unavoidable and massively difficult. It is understandable that businesses, particularly smaller firms, have to make difficult decisions and cuts in order to keep on staff and operations. What approach to marketing should these brands take? The evidence is clear, there is only one viable route: keep advertising for long term stability and growth.
While budgets are always tightly confined during a recession, there is plenty of science out there to indicate how to maximise the value of this investment into marketing. We are living through a golden age of marketing, as far as data-driven insights are concerned.
More than ever before, we have a glut of different empirically demonstrable levers to pull on that CMOs and CFOs alike can agree on. Econometric modelling tells us the correlation between media channels and return on marketing investment.
Attention metrics from Amplified Intelligence now exist that irrefutably demonstrate which media channels and formats command most attention, which in turn confirms a link with mental availability and advertising effectiveness.
System1’s ‘Star Rating’ system taps into behavioural psychology and decades of ad research to predict how an ad will land with audiences and the impact it will have.
The science is there and many brands are reaping the benefits. Some might be justifiably concerned about the cost of these different studies and metrics. However we know at an aggregate that there are broad trends that can be applied to many advertisers across a multitude of categories.
In summary, they are: 1. Channel Effectiveness; 2. Balancing Brand and Direct Response messaging; 3. Understanding and applying Attention Planning metrics; 4. Creative advertising outperforms versus more ‘logical’ approaches.
Understanding that certain media channels are more effective than others is key. Ebiquity’s 2020 ‘Re-evaluting Media’ report outlines this clearly, and have ranked different channels.
To be clear, this does not mean that channels lower on this ranking do not drive ROI, or that they do not have a vital role to play in any media mix. Some channels are more cost-efficient to produce than others (Online Display came out highest) while others are more likely to trigger an emotional response (top honours going to Cinema). But, at an aggregate level, these channels are proven to deliver a real financial return.
The second point is striking a balance between brand advertising and more direct response campaigns. During times of financial hardship, the natural temptation is to shift energies and spends towards short term campaigns to get a more immediate sales uplift. While this is all well and good on a short enough timeline, it has been shown to erode brand health and decrease market share in the long term. That means that striking the balance between these two is critical. How established your brand is, market factors, and the category you play in have a large impact on this.
When it comes to attention planning, the recent research carried out by Amplified Intelligence has been stirring much needed conversation on the global marketing level. The increased shift towards campaign metrics such as reach, and clicks has brought with it a concurrent trend of chasing cost efficiencies. The problem with this is that not all channels deliver the same amount of active attention.
Active attention, where the consumers are actually viewing, registering, and encoding your brand messaging, has a direct relationship with mental availability and advertising effectiveness.
Securing those eyeballs
Their most recent studies around active attention showed cinema and TV advertising capture a high number of seconds of active attention, and that securing more ‘screen real estate’ on digital formats will be more likely to secure eyeballs.
System1’s chief innovation officer, Orlando Wood, published the massively insightful ‘Lemon’ in 2019. He demonstrated that brands and campaigns should use consistent brand assets that lean towards more human characters, dialogue, and a sense of place. When compared to those that are flatter, with narrow creative focus, the former tend to outperform significantly on effectiveness metrics.
Not for a second should it be assumed that these pieces of research can act as silver bullets. After all, we are focusing here on promotion, but we should not forget product, price and place as critical considerations in any marketing strategy.
But, by listening to the science, we can go into advertising campaigns with a modicum of reassurance that we are doing the right thing. We urge brands to continue to invest in marketing and trust that it will have a long-term payback. Your future self may thank you for it.