It’s not an ideal world
The only guarantees in life are death, taxes and recessions. It won’t come as news to anyone that we’re heading into an increasingly hostile economic climate. The jitters across marketing teams have become increasingly apparent, with budgets being slashed left and right.
The research is unambiguous. In an ideal world, marketing budgets should not be the first to take a hit. Based on data from the most recent major economic recessions, studies from both the IPA and McKinsey say that brands should keep advertising on. Almost 60% of brands that went “dark” during a downturn saw a decline in at least one key brand metric.
But we don’t live in an ideal world. Not all brands are spending £100m on advertising and have the cash reserves to ride the storm. For many startup and scaleup brands, it’s often marketing or redundancies and that’s where marketing, rightly so, takes a haircut.
Often for marketers, by the time the marketing budget cut makes its way to you, the decision has already been made.
At the end of the day, marketers still influence how much business impact their marketing activities can have, regardless of budget. The question merely shifts from a top-level – ‘should I cut my budget?’ to a precise resource allocation one, ‘what can I do with what I have?’
The temptation to put all your eggs in one ‘digital basket’
When put in this situation, the knee-jerk reaction is often to double down on a digital-only marketing strategy and let offline investment bear the brunt of the retrenchment. It’s an intuitive reaction, and an understandable one.
The digital-only mindset becomes attractive when you’re called to do more with less. There’s the assumption that cause and effect are more demonstrable in terms of spending vs revenue and conversion rate. The perceived measurability of online vs. offline makes this a common marketing decision at times of uncertainty.
However, as offline media specialists for 20+ years, we’d warn brands against this
The longer-term reasons for investing in longer-term brand building.
Nick Waters, Group Chief Executive of Ebiquity, the world leader in media investment analysis says: “It is a natural instinct to want to see immediate results from media investment, but the longer-term trade-off needs to be weighed carefully. It becomes more expensive to re-build brand credentials once they have slipped.”
According to Les Binet and Peter Field’s must-read, The Long and the Short of it, the most effective advertising campaigns split their marketing budget so that only 40% is spent on short-term activations, and 60% is spent on brand-building advertising. Growth comes from playing the long game, getting out of survival mode, and focusing on brand-building.
Offline is crucial for short-term success
Performance marketing has for some reason become synonymous with digital. However, our experience shows that more traditional media channels such as TV, radio and outdoor still deliver the greatest step-change in performance for a brand in the short term.
Offline media is crucial for your marketing strategy. It works by priming your audience over the long run so that they’re searching you up instead of you trying to reach them in oversaturated digital spaces (check out our previous blog post for more on this).
What’s the best action plan for you?
Suppose you’re a challenger/start-up brand with no current investment offline. In that case, an all-digital strategy will help you grow to an extent, but according to Harvard Business Review, continuing on an upward trajectory requires a second growth engine. Doubling down on your existing digital marketing strategy won’t drive this, as offline investment is essential to unlocking Stage 2 growth. The best step forward is to scale back on digital, and invest some of your budget offline.
If you already have some investment offline, resist the urge to cut it out entirely. Rather, maintain your current split between online and offline marketing investment, just on a smaller scale. With the correct ratio of online to offline, you’ll get back more than your investment, regardless of what the budget is. During a downturn is a relatively good time to gain a share of voice at a lower price point. Remember: if you go quiet, your competition will just get louder!
We strongly believe in what the IPA said in their report about advertising in a recession, “By itself, spending is a less important driver of effective advertising than creativity”. It’s in times like these that you want to keep advertising on, try new things, and be different and daring. We think of great examples like Specsavers’ humourous ‘Should’ve gone to Specsavers’ OOH campaign earlier this year, which they revived after 20 years, for it to still be instantly recognisable and iconic. Goes to show that innovative offline can drive long term brand endurance.
Thinking ‘this is all great, but how do I convince my CFO?, then come along to our next event to know all about the why, and how of investing in offline. Don’t let 2023 be the year your brand goes backwards.