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by Stephen Graveman
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The global economic shutdown has many people fearing a recession—here’s how marketers should handle it
4 Min Read
Recession is a scary word. Memories of 2008 are still fresh in many people’s minds, and with the COVID-19 crisis many believe we’re in for a repeat. That’s caused advertisers to establish recession marketing plans going forward. Some have reduced spend, others have paused completely—and some are going against the grain and spending more.
So what’s the right way to navigate a potential recession? While current times may feel uncertain, thankfully we can look to history for answers. And what history shows is that fortune favors the bold. Advertisers who stay active, engaged, and spending during economic downturns not only weather the storm, but increase their market share and come out better on the other side.
This bears repeating: do not cut your ad spend. When advertisers pull back on their budgets, they’re not just reducing their ad spend, they’re limiting their share of market (SOM).
Advertising luminary Stephen King studied the effects of reducing ad spend during recessions. He found that for advertisers who cut their ad budgets, they still managed to grow their SOM 0.2 points. Those who maintained or grew their budgets, however, increased their SOM by 0.5 points. And those who grew their budgets by more than 20% saw 0.9 point growth. In fact, the advertisers who increased their ad spend during a recession grew sales quicker both during and immediately after the economic downturn. And those that reduced their ad spend? It wasn’t pretty—they saw their sales decline during the recession and for years afterward.
This tells you one thing—recessions can be an opportunity to either claim or lose market share. And if you reduce your spend, you’re handing over more of the market to your competition.
Reducing your ad spend only stands to benefit your rivals, so it’s definitely a good idea to do the opposite of that, right? Right. So what do you do with your (hopefully increased) budget to maximize the opportunity?
There’s a good chance your competition will reduce their recession marketing budgets, so it’s up to you to fill that void. You have an excellent opportunity to not only reach in-market consumers who your competitors gave up on, but also introduce new prospects to your brand. This will help you seize more market share.
There’s a great ad channel for doing exactly that—Connected TV. Or as we call it here at MNTN, Performance TV. Traditional TV advertising has always been the ultimate branding tool, and Performance TV combines that ad experience with a direct-response ad format. Here’s how Performance TV can help you achieve both branding and performance goals.
See how MNTN helped a major home supplier drive 48% ROAS vs. display retargeting.
Research shows that streaming TV has more than doubled during the pandemic—a key difference between now and the last recession in 2008 when streaming television was more a dream than reality. That means marketers of today have an extremely useful ad channel at their disposal that marketers of the past could only dream about—and we recommend you use it.
Recessions are tough, scary, and uncertain. We can look to the past and see how others have navigated recession marketing, and it’s clear that reducing ad spend now—or even if things take a turn for the worse—will do more harm than good. So keep your campaigns well funded and it will pay dividends now and into the future.