Lessons for advertising in a recession

Jun - 2020


Renowned marketing guru and the ‘Godfather of effectiveness’ Peter Field discusses the key learnings from his recent report Advertising in Recession – Long, Short or Dark?

“Invest in your brand during a recession not because you want to spend your way out of a recession, but because you will earn yourself an incredibly strong place during recovery."

The economic impact of COVID-19 has been felt by a huge number of people and businesses in New Zealand. The advertising industry is no exception, with recent SMI data showing that ad spend has decreased significantly in April 2020 vs April 2019. However, the world’s leading marketing consultant Peter Field says that this is not the time to be pulling back on advertising spend. In an interview with global marketing research and effectiveness agency, System 1, Field states that reducing advertising spend during a downturn can have detrimental effects, and going dark carries a high risk of market share loss and greater price sensitivity leading to a major loss of profit in recovery.

In his recent report, Advertising in a Recession – Long, Short or Dark? Peter Field examines IPA data from 50 case studies covering the 2008-9 recession period with a COVID lens applied, to give marketers guidance on how to navigate advertising spend in the current market.

Focus on the long term: The sensible approach is to have a greater focus on brand advertising investment versus short-term sales activation. Typically, most businesses allocate less than the recommended 60% to brand building, so there is no sense in cutting it further unless survival depends on it.

Defend your share of voice: Share of voice (SOV) is strongly correlated to market share, if SOV falls below the brand’s share of market, then market share is likely to fall over the year following. While it might provide short term relief to profitability, the subsequent loss of market share that follows will be extremely difficult and expensive to regain during the recovery.

Seize your market opportunity: Recessions can be a low-cost growth opportunity for brands, as they can boost their SOV relatively cost effectively. Taking the short-term hit to profitability by investing in advertising during the depths of a recession is ultimately worth the long-term profit.

Demonstrate humanity and warmth: This recession is unusual in that having a common enemy – COVID-19 – has generated a level of community spirit that far exceeds previous recessions. If people are demonstrating solidarity in adversity, then brands doing the same thing will earn their respect. Having said that, early research findings show that people are not reacting negatively towards brands that continue to advertise as normal, meaning they can continue to run existing (pre-COVID) creative.

Read Peter Field's full article here