New figures – published this month by the Office for National Statistics – revealed that the UK has fallen into recession.
For businesses, the economic downturn naturally triggers a reflex to tighten belts, slash budgets, and hunker down. But here’s the twist…
In the scramble to weather the storm, the biggest misstep we’re set to witness from businesses in 2024 is the slashing of marketing budgets.
It’s an age-old reaction — as predictable as it raining when you plan a barbecue in Cumbria — but just because it’s predictable doesn’t make it wise!
In case studies going back a century, the picture is clear. Businesses that maintained or increased their advertising spend saw greater success compared to their more-conservative counterparts.
Although during the recession itself the advantages were small, as soon as the economy started to return to normal and green shoots appeared, their business’ growth sky-rocketed compared to those competitors that cut back during the recession.
Now I’m not suggesting you can just spend your way out of a recession, but I will always urge businesses to take a nuanced approach, and continue building their brand even in the face of economic challenges like we’re up against in 2024.
What I’m explaining might feel a bit counter-intuitive, but there is a good reason why spending on long-term branding in a recession works.
There’s an iconic marketing book that should be on the shelf of any self-respecting marketer, called The Long and Short of It by Les Binet and Peter Field.
In their ground-breaking book, they describe a rule of thumb – backed by years of data across industries – that by investing 60% of a marketing budget into long term brand advertising, you will grow sales, market share and profitability.
With this in mind, the recession presents a unique opportunity: as competitors reduce their marketing spend, the stage is set for your business to capture an increased share of voice in the market.
But why is an increased share of voice so important? There’s a direct correlation between your share of voice in a market, and your market share. If your share of voice is 20%, you will be near enough right on 20% market share.
It’s simple, yet profound, and borne out by data and evidence time and time again.
As others retreat, your continued investment in brand building allows you to occupy more of the mental and digital space of your target audience, setting the stage for long-term growth.
Reflecting on a century’s worth of data, the reason businesses should continue their brand-building spend isn’t directly due to the downturn itself, or customer behaviour changes.
It’s because this is when your competitors are most likely to lose their nerve, leaving them exposed. By maintaining your focus and investment in your brand whilst others cut back, you position yourself to reap significant advantages once the economy rebounds.
So, there you have it. The biggest mistake we’re set to see this year. The knee-jerk reaction to cut marketing budgets in a recession is not just a mistake; it’s a missed opportunity. The key isn’t to spend less, but to hold your nerve and spend smart — particularly by investing in long-term brand building.
By maintaining your marketing spend, especially in brand building, you’re not just surviving the recession; you’re setting up your brand for a stronger rebound.
