Marketing

Should brands keep advertising through a recession?

With a recession potentially around the corner, brand consultancies and media agencies seem to be largely advising their clients to keep advertising.
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Illustration: Dianna “Mick” McDougall, Photo: Getty Images/Klaus Vedfelt

· 5 min read

Don’t believe everything you hear. Contrary to popular belief, a pen is not actually mightier than a sword, and a watched pot will, in fact, boil.

But sometimes, there’s truth to old adages. You might have heard that brands should keep advertising through a recession. That saying is actually sound, according to marketing researchers and analysts.

“We’re going to make our recommendation on a case-by-case basis, but going dark is not a good thing,” Steve Grant, SVP of human intelligence at Horizon Media, told Marketing Brew. “You miss 100% of the shots you don’t take.” There’s another saying that definitely holds up.

With a recession potentially around the corner, marketers might be wondering how to navigate their ad budgets. As Grant pointed out, the answer often depends, but generally speaking, brand consultancies and media agencies seem to be largely advising their clients to keep advertising, even if they adjust their targeting or messaging strategies.

Competitive edge

GroupM’s latest forecast predicts 8% growth in US ad revenue this year (with the exclusion of US political advertising) despite fears of a recession. That growth will likely be driven by industries like travel and restaurants experiencing resurgences in the wake of the pandemic, according to Kate Scott-Dawkins, global director of business intelligence at GroupM.

“The rate of new business formation remains incredibly robust,” added Brian Wieser, GroupM’s global president of business intelligence. “As a new business forms, it’s highly likely at this point in time they’re spending an awful lot of money on advertising and digital advertising relative to incumbents.”

Still, some brands might pull back their ad spending. Brands that are concerned about their cash flow, for instance, could see advertising as “the easiest thing to cut,” said Graeme Hutton, SVP and group partner of research at UM.

“This isn’t my first rodeo…The first thing that happens when you go into a recession is a lot of publicly traded firms cut their marketing budget,” Grant said. “It’s a bellwether.”

There are some signs that this process could already be underway: Microsoft recently paused TV ad campaigns.

While it’s true that axing advertising can be easier than shutting down a factory or getting out of a futures contract, Grant noted, that decision is not without a cost of its own. In particular, brands that “go dark” can risk ceding consumers’ “mental availability” to competitors, he said.

Hutton pointed to a study conducted by marketing consultancy Engagement Labs after the 2008 recession that illustrated a similar point: Both financial and auto brands that made large and moderate cutbacks to ad spending saw a drop in net sentiment about their brands, while brands that maintained their spending did not.

Amar Singh, senior director at Consulting by Kantar, said his company’s research also backs this theory up. Brands that go dark can experience a “drop in awareness,” Singh told us.

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Even smaller brands could challenge the titans in their industries if the big guys stopped spending, according to Grant.

“Challenger brands, if they’re aggressive with their spend and targeted with the messaging and activation strategies that they take, this is the time that [they] can make some headway against overcautious, dominant incumbents,” Grant explained.

He pointed to Netflix as a prime example. Though certainly not a challenger brand now, it was considered a disruptor during the Great Recession in 2008. Americans became incredibly price sensitive at that time but still wanted entertainment, so Netflix “had to advertise heavily,” Grant said, in order to change consumers’ movie-rental habits.

“Look at how that turned out for Netflix and Blockbuster,” he said.

Platform preferences and messaging must-haves

Grant said he’d advise clients considering reeling in their ad budgets to instead focus on targeting their ads more carefully. If a brand knows its target consumer lines up with the core audience of a true-crime podcast, for instance, they might shift their spending accordingly, Grant said.

Other highly targeted media that enables brands to reach their most loyal customers will also be crucial, according to Grant, since brand loyalists tend to generate a significant share of a company’s profits. Email marketing and loyalty programs are both good channels to reach that audience, he said.

Ad-supported streaming services can also be used to “target more price-sensitive consumers,” Grant said. Those who are looking to cut costs might turn to ad-supported streaming services as opposed to more expensive subscriptions, and as a result, they’re likely to “put up with a few ads,” he said.

Brands that do continue advertising should be careful and clear with their creative to drive maximum awareness, according to Singh.

“It’s important to stay on, but it’s even more important to have tactful ads working for you,” Singh said. “If your creative is not optimized and it’s misconstrued, it’s not helping your brand, it’s helping your competitor.”

That’s a common problem for ads that are not clearly branded or ones that don’t convey a strong brand persona, according to Singh. In other words, a viewer might see a Pepsi ad at home, but remember it as a Coke ad when they’re shopping at the grocery store and buy the competing product instead.

Oftentimes during a recession, brands lean into “persuasion-driven” ads, Singh said, meaning ads promoting bundles, discounts, or other deals. This type of messaging can be effective in driving people to take action, but can be less about building brand affinity, he said, adding that, for these types of ads, “driving persuasion, driving sales is the objective.”

“Your ads may change, your ads may be more persuasive, or you’re highlighting the discount aspect of your brand or just promotion that you’re running, but completely going off air is never recommended,” Singh said.

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