Are you preparing for a post-pandemic recovery?
By Gary Jenkins, Managing Director
There are many predictions about life after lockdown, one of which is that the world will need to prepare for possibly the worst recession it’s seen in decades.
Whether this recession is U-shaped, V-shaped or any other shape, the indications are it could hit us with an intensity many of us have never experienced before.
As we know from history, during a recession it’s inevitable consumers will reduce their spending. Businesses too.
Times and situations like this often force us all to reconsider our priorities, so we’re stricter about where we spend our money. Rightly so, as – whether you’re a consumer or a business – getting a return on your investments is important when every penny counts.
For many businesses, including ours, the bottom line may have taken a short-term dip during lockdown and the typical response for many is to shave costs, reduce prices and postpone new investments.
Marketing is often one of the first cost centres to take a hit. But should it be?
Listen to Mark
I listen, read and respect a guy called Mark Ritson, who holds a PhD in Marketing, runs a mini MBA in Marketing and is a regular columnist for Marketing Week.
I love the way he talks because nine times out of ten I walk away thinking – sometimes over-thinking – through some of the topics he throws to our community. He’s a straight talker and I respect that.
Recently, during a webinar you can view here, he showed us a graph of brand spending in recessions since the start of the 20th Century, and it struck a chord with me that has stuck. Head to 32 minutes and watch to 45 mins if you’re short of time J.
He showed how the brands that invested more in their marketing during previous recessions grew significantly more market share than those that contracted spend (21 per cent increase on average for those who increased advertising to 3 per cent decline in those who didn’t). These were huge swings in market share that lasted way beyond those initial recession periods.
So, I did some more reading on this to see if it was true in more cases. And the results are quite staggering.
Invest to grow
This piece in Forbes shows how Kellogg’s smashed their competitor Post as the ready-to-eat cereal category leader in the 1920s by doubling their marketing spend in a recessionary period when Post cut back significantly. Kellogg’s’ profits grew by 30 per cent, Post’s dropped, and it’s been category leader ever since.
During the 1990-1991 recession, Pizza Hut and Taco Bell did the same when McDonald’s slashed its marketing budget. Pizza Hut and Taco Bell sales soared (by 61 per cent and 40 per cent respectively), while McDonald’s sales declined by 28 per cent.
This piece on LinkedIn, based on countless hours of research, shares some intelligent insights from Millward Brown from 2008 that shows the companies that ‘went dark’ during the economic downturn saw ‘brand use’ decrease by 24 per cent on average and ‘brand image’ decline by 28 per cent.
Harvard Business Review carried this fascinating piece on marketing in a downturn, and suggest evidence shows ‘indiscriminate cost-cutting (of marketing spend) is a mistake’. Instead, brands should focus on ‘evolving consumption patterns’ and ‘fine-tuning’ comms strategy.
What all these reports tell us is that our decisions around marketing spending right now and during the recession really do matter – not only to our short-term futures but our long-term futures too.
Do we invest to grow, or do we cut back and hope to hold on to what we have?
The winners in the long term, it seems, are the ones who do the former.
Mitigating your risks, managing the fallout
The government interventions to help protect jobs – such as the furlough scheme – have been welcome for many, but as we know these measures are now being wound down.
Whilst these interventions have helped prevent mass redundancies during the initial ‘shock’ phase of this pandemic, we’re starting to now see the delayed big decisions being made by businesses and brands.
In recent weeks, we’ve seen brand after brand, business after business, announce wide-scale job reductions, new investment rounds or business relaunches as they navigate to the new normal.
More will come, that’s inevitable, but it does present us with a taste of a new reality.
I shared our thoughts on crisis communications in this blog recently, but similar principles also apply to change communications, which will be central to all these major adjustments for so many businesses.
People will need to understand the reasons why big decisions – whether that’s following a new path, developing new products, diversifying the business model, or downsizing the team – are being made.
I’ll say it again. Effective change communication is at the heart of the challenge.
It’s important it’s done right – with honesty and clarity. The people who will be there to drive a business’s recovery, need communication so they can move forward with a collective view of how changes will be made, why they matter and what the opportunities might be to thrive in the crazy new world we’re living in.
As an agency we’re helping some businesses deal with this ongoing challenge – through the shock phase of the pandemic, through the lockdown, into recovery and, we hope, into many brighter days ahead.
If you have similar challenges, then find someone who’s been through this before and talk through the successes and failures they’ve experienced when it comes to communicating change.
Alternatively, I’d happily speak to anyone who’s going through this challenge right now and share some of my own learnings through the countless change communication programmes I’ve experienced in my 20-year career in corporate communications working with amazing leaders in business.
Ready for recovery?
The challenges of this pandemic could run and run, but it’s important to get ready for the emerging recession, but also to get ready for the recovery because it will come.
So, think about the changes you need to make and how you’re going to communicate them – both internally and externally. Build and plan and action it, as intent without action is meaningless.
And think about your marketing spend and how you need to focus it. If you need to cut, use a scalpel, not a hatchet.
Spend smart and think integrated – using cost-effective channels to reach consumers or B2B audiences isn’t as complex or costly as you may think. You just need to make sure your PR, social media, SEO and content marketing strategies are all aligned.
I appreciate these are the big decisions every business leader is taking right now, but they’re crucial ones in order to both survive and thrive no matter what this recession throws at us.
When other agencies like ours have chosen to ‘go dark’, and some are falling away, we’ve chosen to be more proactive than ever for the long-term prosperity of our company.
All we can do is consider all the options we have, evaluate the risks and rewards of what we consider to be our optimal strategy……and then give it absolutely everything we’ve got.