August 30, 2022 / Point of View
The following article was originally published in MediaPost.
What’s that sound you hear? It’s marketers gritting their teeth as they’re being asked to give up their precious advertising dollars to help insulate their brands from the looming recession. Or you may have heard the marketers or agencies say “Let’s only focus on hardworking media,” which typically means lower-funnel, digital-only, highly targeted, easily measurable, promotional campaigns designed to boost short-term sales and eliminate “waste.” They’re all part of the marketer’s recession playbook.
But should they be?
In reality, we should all consider a different path forward: Now is an opportune time to shore up brand awareness and loyalty by increasing media investments with brand-building, mass-reaching, highly creative advertising campaigns. Before anyone rolls their eyes or shrugs this off as old-school thinking, let’s take a look at the data to unpack why increasing or even maintaining advertising spend is so important and what hardworking media really is so that we can evolve the old recession playbook for today’s economic climate.
The economic outlook today is different from the Great Recession — especially for advertising and media. Despite inflation and concerns of a recession, unemployment is at historical lows and consumer spending remains strong. Sure, there are signs of a slowdown in certain sectors like housing, but 2022 is not like the recession of 2008-09. Just look at the advertising sector. While U.S. ad spending decreased 17.5% between 2008 and 2009, today’s US ad market is expected to increase 13.2% year-over-year and should continue to rise at least 8% through 2024. The recent 2022-23 upfront was incredibly strong too. Disney reported its strongest upfront ever, with $9 billion in commitments and double-digit CPM increases led by increased investments in linear TV and streaming video. All major holding companies are still projecting global ad spending growth year-over-year as advertiser demand remains incredibly strong.
History has proven that stopping advertising is a bad idea, especially in times of recession. As our industry strives for more predictive models, let’s look to history to help predict the future. While marketing expenses are often the first thing companies cut, the impact of reducing or eliminating ad spend can be detrimental for brands. A legacy Ehrenberg Bass study reconducted in 2021 found that stopping advertising had a devastating effect on sales: -16% after one year, -58% after five years and -71% after nine years. Additionally, effectiveness researcher Peter Field analyzed over 600 brands across industries and found that brands which maintained or increased ad spend during times of financial crisis or recession saw significant market share gains — up to three or four times higher — than those that decreased ad spending during the last major recession. Even during the recent COVID-induced economic crisis, Procter & Gamble reported its brands increased advertising spend by 10%, seeing 4.8% growth in 2020 and another 7% jump in 2021, whereas those companies that cut spending saw their revenues decline.
Brand-building and broad-reaching media outperforms performance media over time. And great creative really does matter. Whether analyzing multiple studies by effectiveness research pioneers Les Binet and Peter Field, P&G’s recession playbook or the just-published report by Analytic Partners titled “The Rules of Recession-Proofing,” all evidence suggests that marketers who emphasized emotional brand-building advertising across broad-reaching, contextually targeted, video-led channels delivered more growth over time than brands that only focused on rationally driven, tightly targeted, performance-based media like search, social and display. Don’t get me wrong; these digitally led tactics play a very important role in marketing effectiveness, but they’re not the only type of media that’s “hardworking.” The importance of mass-targeted, contextually relevant channels like linear TV and streaming video can be 1.2 to 2.5 times more effective than more targeted forms of digital advertising. And lets not forget that great creative really moves the needle. Multiple research studies indicate that prioritizing a famous idea and/or running award-winning creative campaigns actually lifts all key brand metrics, boosts lower-funnel efforts like search and is the number-one factor in sales contribution. Ironically, this data suggests that highly creative, brand-building marketing is more hardworking than the lower-funnel tactics that we typically call hardworking media.
This is all great stuff, but lets face reality. We all want to increase ad spending but it’s hard, and brands that deal with business declines as the economy twists and turns don’t always do it. Despite the data.
That’s why it’s important to remind ourselves and our CEOs that the new recession playbook states brands that maintain media spend without discounting the impact of hardworking, mass-reaching, brand-building marketing with great creative will have an even greater share of voice and ultimately deliver greater growth. Because in the end, isn’t growth all that matters?