Bubbles & Froth: Marketing in a Recession

“What this country needs is a bloody good recession!” declared a frustrated client to me last March, as he sought a black cab in London’s West End.

At the time, nobody was predicting financial meltdown and economic turmoil. The client – tongue firmly in cheek – was exasperated by the fact that every passing taxi was already occupied. His comment now seems insensitive in the doom and gloom of 2009. At the time, it was a perceptive observation on disposable income and the feelgood factor, delivered in his own, inimitable style.

Over the past decade, the tide of rising affluence has been driven by credit and exploited by marketing. Advertising and promotional activities played a central role in our burgeoning economy. As cash vanishes and global economies recede, marketers are left pondering the implications for their profession. While most of us have enjoyed the excesses, the fallout will be painful. The bursting bubble will not only blow away the froth, it will require all of us – advertisers, agencies, consumers – to re-evaluate many of our comfortable assumptions about marketing.

For clients, first and foremost, the instinctive response is to cut back on non-essential expenditure. Don’t. Marketing spend should remain a constant. It’s no more discretionary than paying the rent; companies that stop promoting themselves and neglect their brand are destined for failure. For the brave, it’s a time of opportunity when market share can be captured with reduced investment.

The emphasis may switch to direct marketing or substituting radio for television advertising but a brand’s share of voice must remain high and, ideally, increase. So, marketing strategies should be adapted, not abandoned. The general commitment to marketing should be unwavering, but we can expect to see changes in terms of tone, message and brand personality from our advertisers.

In the B2C sector in particular, warmer, more inclusive and thoughtful brands will become increasingly commonplace, as the likes of Google and Innocent Smoothies set the tone. Traditional, nostalgic and family scenes will become more popular subject matter, as consumers seek comfort and reassurance from big business.

Similarly, in B2B advertising, the emphasis will be on integrity and decency as brands look to convey a reliable persona. Trusted brands are highly valued in times of economic turmoil. Advertising should major on price, value and performance, not corporate image. As such, pricing transparency and ‘unbundling’ of products and services are to be encouraged. On a tactical level, now is the perfect opportunity to rework your sales collateral, ensuring that weaker product offerings are pruned, new products and services are clearly communicated and the key messages are promoted effectively.

The value of your offering needs to stand out in a commoditised marketplace, especially a price-sensitive one. If in doubt, listen to your customers. They will tell you how to beat the recession; you just have to ask them, or at least understand them, through research. More than ever before, you need to know how customers are defining ‘value’. If they are looking to postpone purchases or trade down then you need to respond accordingly.

The ‘that’s how it’s always been done’ rulebook no longer applies.

In tough times, price cuts attract more consumer support than promotions. Customers will be shopping around for the best deals. Every industry, therefore, must intensify its new business efforts. Marketing agencies are no exception. Moray MacLennan, CEO of Saatchi & Saatchi and IPA President, recently predicted that “advertising is going to be no place for the faint hearted in 2009”. He’s right. Marketing budgets will be cut and agencies will disappear. Those that deliver value to their own and their clients’ bottomline, however, will thrive: positive, ambitious agencies committed to delivering success.

The rules of the game remain unchanged; businesses with a sustainable competitive advantage will win through. The fundamentals are constant. Keep watching your competition. Excess got us into this mess and in one sense, my client’s declaration was right: we do need a recession to encourage us to focus on essentials and re-examine our value proposition. None of us can predict with any certainty how long and how severe this recession will be. We’re powerless over the billions being wiped out in global markets.

Predictions for 2009 all hinge on the restoration of confidence, a fickle and unreliable commodity. What we do know is that – eventually – attempts to reflate the global economy will work. In the meantime, we all need to adapt our immediate tactics and our long-term strategies to the changing economic environment.

Andrew McCarthy is Fantastic Media’s Strategic Planning Director
a (dot) mccarthy (at) fantasticmedia (dot) co (dot) uk – www.fantasticmedia.co.uk

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