We’ve all faced a great deal of uncertainty over the past few years and it’s clear the upheaval won’t ease up any time soon. Businesses across the globe have had to manage unprecedented (couldn’t help it, sorry) pressures on their day-to-day operations, from extreme supply issues, unpredictable demand, inflation, huge increases in hard costs… the list goes on. As a marketer, there’s been a burden to accomplish more with less — ‘we need to cut your budget, but you need to keep making us money. Lots more money.’
As you kickoff 2023 in the heart of the cost-of-living crisis, it’s highly likely you’ll need to advocate even harder for your marketing budget. Klaviyo research suggests 6 in 10 small to medium sized businesses will freeze or cut their marketing spend this year.
But, what effect will that have on those businesses? And how can you convince your budget deniers there are better alternatives?
As Dr Simon Broadbent put it,
“The sales of a brand are like the height at which an airplane flies. Advertising spend is like its engines: while the engines are running, everything is fine, but, when the engines stop, the descent eventually starts.”
The simple fact is the longer you go without exposing your target audience to your brand, the more likely it is they’ll forget about you. All of the familiarity and trust you’ve built up over time (and all the advertising dollars that have gone into doing so), could go to waste.
There’s been proof of that in the past three years alone.
A release by Nielsen in 2020 (right around when the spicy cough was really ramping up) stated, “brands that go totally dark for the rest of 2020 could be facing revenue declines of up to 11% in 2021.” And you know what? They were right.
In early 2020 (pre-WHO declaring a pandemic), I worked with a client who was three months into a six month contract with several influencers. When the news broke, they wanted to cancel those contracts and stop advertising. Their umbrella company’s annual revenue fell 11% in 2020 compared to 2019. And they sold booze. A household staple after toilet paper and hand sanitiser.
You’d be right in thinking this isn’t true for every business. Of course, every business is different. If you’re a large business in a growth period, you’ll likely appear fine for a couple of years. But if you’re smaller or more stagnant in your growth already, please don’t abandon marketing.
It seems like everyone has collectively forgotten that marketing isn’t just running ads. Including marketers themselves.
Mark Ritson calls it the ‘tactification’ of marketing. The selective memory loss regarding the rest of the marketing mix. The belief that marketing and advertising are ‘the same thing.’
At a time like this, it’s so very important to remember that marketing has (or at least, should have!) access to the other levers of product, price, and place… not just promotion.
Les Binet wrote an excellent (and very detailed) article specifically on the importance of price, and how we can respond to market pressure with price. But, of course, without sacrificing brand equity.
That’s enough of the tough stuff… there’s hope for us yet!
Other brands pulling back on advertising can mean it’s cheaper and easier for you to reach your audience. Say you have 35% share of voice and your two competitors have 35% and 30%. They decrease their advertising by 10% and 15% respectively. Now there’s 25% of the market share that’s yours for the taking. That’s a very simplistic way of putting it and, unfortunately, it’s not quite as easy as that, but you get the gist.
If you skipped over it earlier (it’s ok, we all do it), 6 in 10 small to medium sized businesses will freeze or cut their marketing spend in 2023. Think about how much that will open up advertising channels for your brand to cut through. Particularly digitally, where a large chunk of your costs are directly related to how much competition you’re up against in that moment.
By continuing to advertise, you’re able to leverage the newly available share of voice and build yourself up compared to your competitors.
“Building brands is not an expense, it’s an investment and it needs to be prioritized. It’s not a choice, you have to build strong brands if you want to have a strong business.” — Brent Smart
This isn’t about boldly (and blindly) spending more than your competitors for the sake of it. It’s about carefully selecting and balancing where and what you spend. To do that effectively, you need to have a good read of the market, macro and micro factors, and competition.
It’s an oft-ignored fact that advertising is about more than just short-term returns; when done well, it also builds long-term mental availability. Consider the customer awareness funnel — unaware, problem aware, solution aware, product aware, and most aware. Building your brand image gives you a better chance at being well-positioned during the solution, product, and most aware stages. Without filling up those earlier points of the funnel, you’re less likely to experience the conversions at the bottom of it.
Even if your ads don’t get paused completely, you may be asked to only spend on conversion campaigns (it’s not an uncommon request). If you do, it’s very likely that this reduction of coverage will be at the detriment of your brand’s reputation and goodwill. Consumers don’t want to be sold to constantly, so if your only messages are sales messages, well… good luck. Yes, you might see an uptick in response rate, but at what long-term cost?
Consider how you and your company would like people to see your brand in 3, 5, 10 years’ time. What does that look like? Are you the go-to choice for your audience? The most trusted option? Do they want others to know they use your product? This should inform your next steps.