Marketing in a recession: Why quiet is a dangerous path

Sep - 2020


It’s official: New Zealand has entered its first recession since 2008’s global financial crisis, with GDP falling by 12.2% throughout the second quarter.

Many experts, however, are expecting the country’s economy to bounce back swiftly, including Westpac’s Senior Economist Michael Gordon, who said: "We expect the June quarter's record-breaking GDP decline to be followed by a record-breaking rise in the September quarter.”

Despite the potentially short-lived nature of the COVID recession, a recent report from the UK’s Institute of Practitioners in Advertising (IPA) stresses the importance of brands not ‘going quiet’.

The report models the hypothetical marketing spend of a brand and its competitors throughout the years during and immediately following the global financial crisis, demonstrating the positive impact of marketing spend on market share and profitability.

Using past recessions as a parameter, the report suggests that marketing investment in a recession not only helps brands protect and even expand on existing market share, but also positions brands to take advantage of future upswings.

The Communications Council's 'Winning or Losing in a Recession', co-authored by expert marketers Peter Field and Rob Brittain, outlines some critical points of advice for advertisers and agencies in this challenging economic climate:

1. Do not go dark

If you can afford to advertise, do it! History shows that the cost of going dark can be difficult to recover from. 

2. Do not accept decline as an outcome

Retain your existing share of voice as a bare minimum to fast track profit recovery when conditions improve.

3. See recession as an opportunity for growth

Take advantage of market share growth opportunities brought about by rivals cutting marketing spend. 

4. Exploit weakness amongst your competitors

Monitor competitor share of voice and pricing changes closely and utilise this valuable information to guide your response in future recessions. 

5. Do not go short – keep the balance of brand and activation

Continue to invest in long-term brand building and carefully consider the balance between this and investment in short-term sales activations. 

6. Put your budget behind proven brand-building strategies

Research shows that warm emotional advertising strategies perform particularly well during economic downturns.