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Marketer’s Guide to Recession-Proofing Ad Spend

By incivus

As we were researching and writing this article, it was becoming increasingly certain that the entire world is about to face a recession. A chaotic housing market, inflation at the peak, and skyrocketing oil prices; all the signs of the recession are here.

It is not a question of if anymore, but rather when.

According to America’s GDP data of the third quarter of 2022 by the Bureau of Economic Analysis, the recession has not hit yet but it will either be in late 2023 or early 2024. And Dr. Doom, who predicted the market crash of 2008, suggests this recession is going to be a long and ugly one.

While this recession will not be like any ‘normal’ recession, we are still expecting marketing, and advertising budget cuts, and hoping that a few of the lessons from the earlier recessions are still effective as the marketing world defines the new way forward.

One of the main lessons learned from the past recessions is that cutting down on marketing and ad budgets can adversely affect brands’ market share and overall profitability. According to a study, brands that increased their marketing and advertising budgets during the recession saw 256% growth over the brands that decreased their marketing budgets.

For instance, during the great depression of the 1930s, Kellogg’s doubled their marketing spend while their competitor, Post, cut down their budgets drastically and lost their market share. Today, Post is nowhere to be seen while Kellogg’s enjoys a lion’s share of the breakfast cereal market.

In the COVID-19 pandemic when the global economy came to a standstill, brands, in a similar fashion, instead of cutting down on budgets, increased and/or reallocated them. Advertising channels like out of home, TV, and experiential events saw a steep decline in budgets as the brands redirected their budgets by investing 67% more in webinars, 56% more in organic social, and 44% more in online video.

Emily Snacks, a vegan-friendly snack brand, was all set to run their first ever OOH (Out of Home) campaign in the summer of 2020 exactly when the pandemic hit. But instead of pausing the campaign and saving cost, they ran parody ads that earned them a lot of media attention and resulted in hundreds of PR articles by the top global magazines.

(Source: Ads of the World)

How to Navigate Through the Dark Times of Recession

1. Make data the strategic cost cutter

Using data to gather insights into different marketing activities and their direct impact on the bottom line can help businesses make precise, data-driven decisions at speed.

For instance, creative intelligence platform like Incivus provides various data points like recall score, attention graphs, the effectiveness of music, emotions, and ad copy that help identify the impact of various creative variables on ad success. With the help of such insights backed by data, businesses can reduce countless cycles of iteration in ad creation and thereby saving cost and time of production.

2. Keep building the brand

Consistent presentation of a brand can increase revenue by 23%. Marketing activities like creating different formats of content directly impact sales. 64% of consumers purchase a product after watching a branded product video and over 60% of consumers are motivated to buy from companies that publish content.

3. Consider automation for repetitive tasks

Marketing automation has been woven into the fabric of marketing operations for a few years now. It has been proven to increase sales productivity, reduce marketing overhead, and even provide better quality, higher CLV leads.

While good marketing automation does not come cheap, it is an investment toward saving time while making more money. For example, replacing the tedious, expensive, and long-running process of conducting survey-based concept and creative testing before launching an ad campaign with an AI-based ad evaluation platform like Incivus. Instead of waiting for days and months to finalize an ad campaign, with Incivus, you can predict the success of your ads in a matter of minutes. The creative intelligence platform built using artificial intelligence technologies like NLP, computer audition, facial coding, and the like evaluates video and display ads for creative variables like attention, recall, and impact of copy, characters, music, and brand cues.

Shifting from survey-based testing to AI-based testing can result in reduced operational costs and time taken to launch the campaign.

4. Save on ad spend

While A/B testing is the norm for advertisers to analyze what works with their target audience, it can be a waste of money among other things in the longer scheme of things. Money spent on A/B testing can be better utilized to reach a wider audience or a new segment of potential customers as it will either generate brand awareness or leads for the brand.

Our creative intelligence platform, Incivus, enables brands to predict the success of their ads without having to spend on A/B testing. Built on the solid foundation of millions of data points from human trials indicating visual memorability preferences, image attributes of high-attention focal points, and in-depth music analytics that identifies mood, emotions, genres, and energies, Incivus can predict what will work with the target audience before launching the campaign. By evaluating ads pre-flight, brands can eliminate the need to A/B test their ads to validate the creative or the concept among their target audience. They can confidently launch their campaigns ensuring higher ad recall, attention at the right places, and effectiveness of copy, brand cues, emotions, and music based on Incivus’ AI-based evaluations.

Additionally, brands can eliminate costs associated with high-value of production of ads and replace them with more relatable influencer-centric content to build an emotional connect with the target audience which is what people are anticipating during these times.

5. Offer loyalty rewards

It is always a good strategy regardless of the economic situation to reward customers that have been loyal or have the potential of turning into a loyal customer and brand ambassador. Offering loyalty rewards, payment plans, or reduced product sizes — all tailored to different changes in consumer behavior can go a long way in maintaining loyalty among such customers even during a recession.

And when the times get better, such customers will end up staying with the business instead of switching to competitors’ products and services.

6. Do not forget the competitors

Mark Ritson in his recent recession playbook for marketers suggests keeping an eye on the competitors and how they adapt to the impacts and changes of the market. According to him, this will help businesses understand competitors’ long game and will give them a chance to fill the void as and when the competitors pull back their investment and get to the customers without the noise which will positively impact their market share.

He also mentions the direct impact of increased share of voice in the market share of the brand. He says, ‘It is the closest we have to a scientific law of advertising, and it says an equilibrium exists between a brand’s share of voice and its share of market. If a company increases its relative share of voice above its share of market, the equilibrium will eventually restore itself and market share will also grow.’

Prepare for a long recession, but do not stop marketing

Above everything, marketing during a recession sends out a positive message that your company is strong and stable, and that your customers can rely on you.

While recessions are not uncommon or new, this recession and its impact might come in different shapes and sizes as compared to what we are used to. And the good thing about this recession would be that by the time it hit us at its 100% potential, we would have already experienced about 6-8 months of economic downturn and survived it.

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