By Nancy Smith, CEO of Analytic Partners
Hindsight is a wonderful thing. But marketers looking to ride out the looming recession should look to original author William Blake’s fuller quote for inspiration: “hindsight is a wonderful thing, but foresight is better.”
By drawing on valuable lessons from the past, marketers can survive and thrive in the future: hindsight plus foresight. Forewarned is fore-armed.
It’s time to heed the lessons of the past as global headwinds of recession start to swirl and cost of living crises start to hit. The temptation for brands might be to batten down the hatches and slash spending, but a bold CMO must fight that boardroom battle.
When it comes to weathering the uncertainties of a recession, data shows that brands that maintain consistent marketing spend are better positioned both to respond to the challenges of the present and to thrive in the long term. Organizations that cut marketing spend are likely to lose ground to rivals during and after a recession, while those who maintain or even increase spend stand to boost their ROI, becoming even more efficient at a time when efficiency is all the more important.
According to the latest Analytic Partners ROI Genome Report, which draws on more than two decades worth of data drawn from 750 brands, 45 countries, and hundreds of billions in spend across industries, 60% of brands that increased their media investment during the 2008 and Covid recessions saw ROI improvements over that time period.
Brands that increased paid advertising also saw a 17% rise in incremental sales, while those who slashed spend risked losing 15% of their business to competitors who boosted theirs.
This might seem counter intuitive when the CFO is calling for ad spend cuts to preserve margins, but the historic data speaks for itself – short-term marketing cost savings might give a short-term feel-good factor, but they undermine growth and true value over time.
That’s not to say that marketers should bury their heads in the sand and carry on regardless, but lessons from the past can help them recalibrate their media investments, test recession-adjusted messaging tactics, and use analytics to strategically allocate resources to build their brands.
Analytic Partners has identified five main factors in advertising success, which are, in order of impact: amount of investment, creative quality, halo (the power of advertising for one product to boost another product), mix of media and channel optimisation. Each of these factors are levers that CMOs can pull to help recession-proof their marketing strategies.
Investment has primacy and the past tells us that brands that increased media investment saw stronger ROI, business growth and brand-building than those that did not. However, for all of the five factors, data speaks louder than words, and we have seen key proof points across each:
- Using multiple marketing channels can increase advertising impact by 35%
- Half of brands that increased marketing investment during the last recession saw ROI growth in back-to-back years
- Brand messaging outperforms performance messaging 80% of the time, so refocusing exclusively on performance messaging will lead to losses
- Two thirds of the opportunities to improve video advertising performance lie in improving the quality of creative
So storm clouds may be gathering, but marketers have a plethora of options. They should use this period to test and learn consumer-centric messaging delivered through an omnichannel approach to balance long-term brand building with short-term promotions and activations that position their businesses as supporting customers through hard times. This will see them gain and retain loyalty in the long term.
Hindsight is indeed a wonderful thing, so marketers must use it to look to the past to survive the future.