Industry veterans know the adage: marketing is the first budget to be cut and the last to be reinstated. But the savings are false economy. As Henry Ford famously said, “A man who stops advertising to save money is like a man who stops a clock to save time.”
When companies cut something as directly tied to top-line revenue as marketing, it’s damaging to the bottom line. Even in a tight economy, slashing communications budgets can mean lost sales and lost opportunities.
Businesses must strike a careful balance between navigating the storm and capitalizing on opportunities that rise from it. Done with care, it’s actually an ideal time to be investing because brands and businesses have a valuable chance to capture market share and re-position their brands.
Evaluate, optimize and accelerate
In 2010, a study in Harvard Business Review looked at 4,700 public companies, comparing performance before, during and after several large recessions. Results showed the post-recession winners weren’t the usual suspects. In fact, firms that cut costs faster and deeper than their rivals had the lowest probability of pulling ahead of the competition when times got better.
The winners? Companies that selectively reduced costs by focusing on their operational efficiency, while also investing in the future by spending on marketing, R&D and new assets.
A downturn is the perfect time to review a company’s entire marketing funnel, evaluate the tools and processes used to move prospects through their sales cycle, and accelerate future marketing and communications initiatives — especially new disruptive approaches and technologies.
Disruptive approaches and innovative technologies capture market share
Brands that build and spend smartly, instead of cutting their marketing budgets, can reach new audiences and aggressively capture market share while their competitors are in retreat.
At our own communications firm, Strut Creative, we’ve been working with virtual reality (VR) for the last 14 months. It’s a powerful new tool that can be used to create an immersive 360 degree storytelling experience. We began using VR for stakeholder engagement for our clients in the energy sector because it lets us transport our audiences to places they couldn’t experience otherwise. This downturn was the perfect opportunity to take a technology platform we developed for multi-billion dollar energy projects, and apply it to consumer marketing efforts.
For our homebuilder clients, presenting home models directly to key audiences where they’re already shopping is much more effective than spending valuable resources convincing prospective homebuyers to give up a Saturday morning to physically visit a show home. VR will be a tremendously disruptive force in marketing property development projects.
VR will overturn decades of entrenched communications practice and that will create winners and losers. Marketers investing in innovation right now will be among the winners.
Unexpected Opportunities to Fortify Brand Positioning
Uncertain times are exactly the moments for more and better communications, not less. When others adjust to economic conditions by taking their foot off the communications pedal, you can assertively re-position your brand, with market conditions creating the space to tell your unique brand story and ask consumers to reconsider their established opinions.
The last large recession provided an enormous opportunity for at least one automotive manufacturer that was ready to start climbing the brand ladder. In 2009, Hyundai took advantage of a window presented by the shaken economy. When General Motors abruptly ended its decades-long sponsorship of the Academy Awards, the Korean-based automaker took over the partnership, becoming their new exclusive automotive partner. The recession was their opportunity to move consumer perception closer to their product reality.
Don’t panic, ride the turbulence
As professor Andrew J. Razeghi of Northwestern University outlines in his well-known article Innovating Through Recession, don’t panic, don’t freeze up and don’t stop communicating. Making a statement is easier to do when there’s a communications vacuum to operate within.
Economic turbulence creates space for disruptive special projects, innovative new approaches, re-positioning brands, and opportunities to more effectively move the needle of public opinion. Rise above the storm, plot a new course, stay flexible, and dream big.
Smart businesses with valuable brands and ideas to sell should push forward, not pull back during tough economic times. This is the best opportunity for resilient businesses to optimize their communications spend, innovate and come out ahead.
Aaron Salus founded Strut Creative, an award-winning special projects agency, and has grown it into one of Calgary’s preeminent communications firms. Strut serves a wide range of clients from Shell and Brookfield Residential, to MUCH and Canadian Geographic.