Kellogg’s famously decimated rival cereal maker, Post, by doubling its advertising during the Great Depression while Post did the opposite.
McDonald’s experienced a 28 per cent reduction in sales when it cut its advertising and promotion spend in the face of the 1990-91 global recession. Pizza Hut and Taco Bell took full advantage by ramping up their marketing spend, resulting in increases in sales of 61 percent and 40 percent, respectively.
During the 2009 downturn, Amazon increased their sales by 28 percent by continuing to innovate and push new products.
Why increasing marketing spend works during a recession
Noise levels in brand product categories can drop significantly when some brands cut back on their ad spend. Therefore, brands that are bold often reap the rewards while more circumspect competitors suffer.
When marketing spend is reduced, brands lose ‘share of voice’ with consumers, often leading to a potential loss of short-term and even long-term sales. On the flipside, an increase in share of voice usually results in increased market share results and, in turn, increased profits.
Recessions also force advertising platforms to lower their rates, creating a ‘buyer’s market’ for brands.
For instance, Google and Facebook are reportedly set to experience a combined $44 billion reduction in worldwide ad revenue during 2020, meaning that there will be opportunities for brands to negotiate with them and increase market share through greater visibility.
In conclusion – spend smartly during a recession
TV, radio, out-of-home and other traditional forms of advertising may be hit during the downturn due to the prohibitive expense associated with them.
But the modern fragmented landscape created by advancing technologies and changing consumer behaviours has opened up great opportunities for Modern Marketers to take advantage of newer, smart forms of advertising such as Retail Digital Media (RDM) on eRetailer websites, Retail Search and, of course, broader search and social media.
Please contact us if you would like to learn about our Modern Marketer series of interactive webinars that will give your marketing teams the capabilities they need to help you make the very best use of your marketing spend during the downturn.
This article was written and created by the eBusiness Institute team.
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