(By Bob McCurdy) There have been four articles published recently that focused on the importance of maintaining a “voice” during challenging times.
Plans are in the works to re-open the economy in phases, meaning the medical part of this crisis will be devolving into an economic crisis where lessons of recessions past, apply. The unprecedented of the past few months will become precedented.
There is no one size fits all for every local business as to what level they again should advertise but the key is not being late to the party as the new normal emerges.
The first article, ARF Chief Provides Insights for Surviving a Downturn, can be found here. The ARF (Advertising Research Foundation) is comprised of 400+ member companies, which includes agencies, media companies, research companies and is the research gold standard in the advertising and marketing space.
What follows are several observations from Scott McDonald, the ARF’s CEO:
If possible, continue to advertise: Research shows that brands which “go dark” in a downturn take five years, on average, to recover market share.
In some cases, it will make sense to diversify your media mix to get greater reach at lower costs. The key is to try to make sure that your share of voice is greater than (or at least equal to) your share of category; brands that follow that rule generally emerge from the crisis with enduring market share gains.
Though advertising is frequently one of the first things to be cut in a financial crunch, research from past crises consistently shows this to be perilously short-sighted.
Media prices tend to fall in times of crisis even as media audiences swell, so smart brands capitalize on short-term media market distortions and gain share of voice at bargain prices.
Remember that this too shall pass: “We need not only to survive the downturn, but also to plan for gaining share during the post-crisis expansion.”
The second article appeared in Ad Age titled, Ignore Short-Term Panic to Recession-Proof Your Brand, which can be found here. Analytic Partners, a top-notch econometric company shared the results of their findings which spans hundreds of billions of dollars in marketing spend across more than 700 brands across 45+ countries:
Recessions or downturns do not mean lower ROIs. More than half of brands saw improvements in ROI during the last recession.
Media spending contributes to short-term growth and longer-term brand building, even during a recession. On average, brands that increased media investment realized roughly a 17 percent growth in incremental sales.
Eliminating media, guarantees losses during a recession. On average, brands that removed media investment suffered an 18 percent loss in incremental sales.
When brands allow short-term thinking to dominate, they do so at the expense of brand equity, which drives long-term success for the business.
The third article appeared in WARC titled, Maintaining Share of Voice is Key in Recessions, and can be found here.
It’s premise is that maintaining share of voice is critical for advertisers during a recession, both to stay top of mind with consumers in the downturn as well as to position their brands in an optimal way for the recovery. Christian Polman, Chief Strategy Officer at Ebiquity, a leading global marketing and media consultancy:
Market share is related to share-of-voice. This applies in a recession as well.
Not just maintaining but increasing ad spend in such periods of disruption can lead to “substantially higher market share” in the post-crisis period. There is a considerable body of research in support of this claim.
The final article also published in WARC, The opportunity to Grow Market Share is Clear, But Marketers Aren’t Taking it, can be read here.
It’s about understanding that advertising has both short-term and long-term impact. Untrained competitors who do not know this will cut back on ad-spend, your excess share-of-voice will increase relative to competitors as a result.
There is the long-standing idea that a brand’s market share tends to stand in equilibrium with its share-of-voice. But by pulling the SOV lever and increasing share-of-voice you can nudge market share higher. And in recessions, as the category reduces its ad spend, a brand has to just maintain its existing spend level for an opportunity to grow market share.
Now is probably a good time to get a good deal on media, which is drawing in a record audience, delivering more for a brand’s money.
As various states re-open their economies, the playbook that applied in previous economic downturns will once again apply. Businesses that remain active in media will generate a more efficient share-of-voice and enhance their chances of rebounding to profitability faster, often increasing market share in the process. History will repeat itself.
Bob McCurdy is now retired and can be reached at [email protected]