This is also why many experts were literally horrified after the UK government issued its recommendations to marketers and businesses. The face of these recommendations has been David Buttress, the new crisis manager to Prime Minister Rishi Sunak, who has urged companies that the best move right now is to keep marketing budgets to a minimum and instead plunder a reserve fund to help reduce retail prices in the short term. It's a concept that the marketing world can never identify with - in the language of ancient legends, Buttress in the new campaign offers a downright danai gift leading to a pyrrhic victory at most. To start operating out of the blue with just discounts and pricing is not a good use of the opportunities that crisis situations offer. This is instead an attempt to strengthen customer loyalty and experiment with new kinds of consumer experience. Disciplines that simply cannot be done without strong marketing.
IN THE GRIP OF ECONOMIC CYCLES?
The economic cycle is relentless and has a life of its own. Periods of economic boom are an ironclad certainty in it, and the same is true for periods of recession. Anyone who wants to survive in the market simply has to reckon with these laws and learn from them. According to a renowned marketing expert Mark Ritson, the 2008 recession was not something to celebrate, but we can now draw valuable insights and empirical data from it. This recession was by no means the first, and as Ritson points out - there is plenty of literature and advice gleaned from the last hundred years. But he argues that marketing executives are still making the same fatal mistake of looking primarily within their internal structures for innovative cures to the recession. While such confidence is admirable on one hand, on the other it's quite naive to think that your position in the market during a recession is that unique.
For a marketer, failure at such an exposed time looks particularly bad. Simply because, perhaps paradoxically, it is during a recession that companies focus on marketing as much as possible. Many managers find themselves in the unenviable position of being under pressure from their peers and superiors, but also under constant scrutiny from customers and consumers. According to Ritson, this is the logical outcome of a situation where marketing experts represent the voice of the consumer public in the company. They are the ones who are supposed to understand customers and predict their behaviour on that basis. „During a recession, your main objective is to understand the mood of the market and then explain it to the rest of your organisation accordingly. An equally important task is then to rethink your marketing strategy,“ Mark Ritson points out sharply.
Video: webinar called Ritson on Recession
He then reminds us of two thought processes that can help marketers weather tough times. The first one is actually based on positive thinking - not focusing all of our energy on how to solve the recession, but thinking straight about how the post-crisis recovery that will inevitably come will work. Therefore, mindless cuts cannot be recommended without further ado, but well thought-out investments, of which marketing is often an integral part, also play a role. Ritson even goes so far as to say that brands that shut down completely during a recession will be in huge trouble when they try to make themselves known again afterwards. In doing so, they unwittingly give a huge competitive advantage to those more proactive.
The second thought process is to realise that as a marketer you are one of the main players in market pricing, not just a passive recipient of it. Not, perhaps, in terms of setting them yourself through your decisions, but in terms of customer analysis that suggests how much consumers value brand equity.
„The ways in which we communicate and frame prices are far more important than the prices themselves. That's why the active involvement of marketers is an existential necessity,“
notes Ritson, who recommends maximum honesty. In short, price increases are a concomitant of an inflationary recession, and companies should be open about it, trying to explain to customers what is driving them to increase prices and by how much, how they will try to compensate, and how the company is overcoming the crisis. If you simply suddenly inflate the price and keep quiet about it, you can immediately forget about the sense of belonging.
Another marketing guru, Orlando Wood, also believes it's best to draw inspiration from history. He sees the advertising campaign by Hovis, the American bakery that responded to the 1973 recession, as a very inspiring example. “The Boy On A Bike” advert can be seen as a kind of allegory for the economic cycle - a courier from the bakery makes the arduous climb up the hill where customers live, only to enjoy the journey down the dive and regain his strength. This is how the economy worked in the 1970s and nothing has changed today. This ad draws its power mainly from nostalgia, but also from the anticipation of a brighter tomorrow, and its timelessness is clear - it received a digital remake in 2019 and was put back on the air with all the pomp and circumstance. Crises are simply a part of our reality.
Video: Hovis - The Boy on a Bike (1973)
PERFORMANCE MARKETING: GOOD SERVANT BUT BAD MASTER
The debate between brand marketing and performance marketing has been going on for years. The dispute between experts was dissected by analysts from Analytic Partners, who focused on the experiences of companies in practice in a comprehensive survey. Their conclusion is the overwhelming dominance of brand marketing, which is significantly more effective than performance marketing in up to 80% of cases. Moreover, as Analytic Partners points out, performance marketing could never be as effective if it were not supported by a long tradition of corporate brand marketing. So it seems the answer is more than clear. Yet there are many companies that, in times of crisis, still cannot resist the ephemeral allure of immediate profits and generated savings.
Video: Vellko - Marketing vs. Branding
Performance marketing is especially appealing to companies because it can deliver immediate and easily quantifiable results. Many managers therefore reach in this direction as soon as a crisis comes knocking. At first glance, this is a logical course of action that is relativized by many "buts". The ability to estimate fairly accurately how much will what cost, what it means in terms of returns or sales, is undoubtedly a very valuable tool, and it is therefore no wonder that it is still being used. It's just that in a recession, the economy hardly operates according to the usual rules - which is also the biggest weakness of performance-oriented marketing. It does not sufficiently take into account the dynamics and variability of existing market conditions. Simply put, what is set in stone in the morning may be ancient history in the evening. Performance marketing is often unable to cope with such brutal fluctuations, leading to dreams of an immediate boost in sales to dissipate like steam over a pot. Perhaps the most negative concomitant, however, is that companies are willing to sacrifice years of carefully built branding for this short-term calcification.
But the findings of Analytic Partners' research also debunk another commonly held myth, which is the belief that any increase in click-throughs or searched keywords is the result of just enhanced performance marketing. The opposite is true - as much as 30% of these are pushed by brand marketing and its varieties, according to the survey, while another nearly 60% are a matter of parameters such as customer loyalty, brand tradition, seasonality and so on. As a result, performance marketing primarily influences the timing of purchase, but has almost no effect on shaping consumer will. This is the domain of brand marketing.
BRAND MARKETING: MORE WORK, EVEN MORE RESULTS
Brand marketing is without an exaggeration the soul of any brand. It gives space to marketing experts who want to communicate the philosophy on which the brand has been built, who want to build a loyal customer base for whom the brand is a guarantee of reliability and often a source of emotional attachment. A brand campaign, unlike a performance campaign, has the ability to further expand this base, while also being able to effectively deepen the relationship with the brand. It is likely that if a company launches a unique product that does not correlate with its traditional offerings, it will engage its loyal customers despite the fact that it is a purchase they would not have thought to consider. These campaigns then survive much longer in the company than the company's own involvement - customers talk about their favourite brands and remember the successful campaigns fondly.
Video: Analytic Partners - Invest In Brand
Managers who are skilled in performance strategies, however, find themselves in a situation with brand campaigns that they may not be comfortable with. What has been said above applies de facto in mirror opposition at this point. Because brand marketing operates largely subliminally, its results are also much harder to measure and quantify. Especially in terms of short-term benefits expressed in monetary equivalents. Brand marketing takes into account parameters such as geography, gender, age, as well as the current market situation. It only works in a coherent ecosystem full of correlations and interdependencies. Nevertheless, Analytic Partners concludes that these strategies are more effective in the long run in 60% of cases. They are not more effective in the short term, but the drop is not abysmal - they are only 26% less effective.
Therefore, abandoning brand marketing in times of economic recession is not a very good advice and marketers should not listen uncritically to these misguided whisperers either. It is clear that brand marketing means more work and balancing, but this in turn is beneficial in terms of enhanced loyalty and attracting new loyal customers. Similarly, performance marketing is not a priori bad, it is more suited as an operational complement. In general, it is best to complement both strategies appropriately, with the understanding that brand marketing should always come first.
Analytic Partners' recommendation for 2023 is then clear - no less than 50% on brand marketing and no more than 50% on performance marketing.
EMPATHETIC AND INNOVATIVE
Some ways not to lose momentum during the crisis are also mentioned by the UK advertising agency Contagious in its New Year report. For example, it cites as an example of good practice campaigns that respect a brand's existing identity while offering its customers help in a difficult financial situation. It specifically mentions the Feed Your Family for a Fiver initiative by retail chain Sainsbury's. The company involved superstar chef Jamie Oliver and with his help showed customers many recipes and ideas on how to streamline their shopping and culinary habits without having to make any radical changes. So the main message was one of empathy - Sainsbury's are very aware of who shops with them and every single customer matters. That's why the well of inspiration is open to all without exception, because the financial crisis doesn't just have to divide, it can unite.
Sainsbury's - Feed Your Family for a Fiver recipe book
A young British company, Octopus, has also come up with an interesting concept and started supplying free electric warming blankets to its customers for the winter. The intention here is also clear - to offer an alternative way to reduce energy costs, while perhaps demonstrating that it is possible to function differently, even when there is no crisis. It should be noted that Octopus went significantly further than many other energy distributors in this case, which was met with great enthusiasm from their customers. But again, it was a confirmation that the company had the welfare of its customers in mind and would not let them down in difficult times.
Video: Today world news live - Octopus free electric blankets
Some companies have begun partnering with non-profit organisations to do just that. For example, frozen food manufacturer Iceland has partnered with an ethical credit union called Fair For You. Together they have come up with a new low-interest bridging loan programme to help struggling households overcome the effects of the economic crisis. And other companies have been slow to launch brand new products that also have the potential to make the most of consumers' wallets. In this vein, Italian pasta maker Barilla has introduced its new Passive Cooker, which always alerts its owners via a mobile app when pasta has been simmering in boiling water for too long. The ideal way to indulge in a great al dente meal while saving some money on an unnecessarily running cooker.
Video: Barilla - Passive Cooker (2022)
These are just a few ways how to make the most of the crisis marketing-wise. All of them suggest that the key element is fidelity to the existing corporate philosophy combined with revolutionary and novel ideas to prove to customers that you are not completely out of touch with their living reality. It is more than clear that emotionless performance marketing is simply not up to the task. But every good brand marketer knows that when fate serves up lemons, the best way to use them is to make a great lemonade. For those who realize this in 2023, the current economic crisis will be a distant memory in a few years.
