Last week, new UK Prime Minister Liz Truss announced a package of measures to limit the effects of rising energy prices this winter. As well as freezing prices for households at £2500 per year, there will be support for businesses initially for six months, then a review in early 2023.

However, this is already set against a landscape of decreasing consumer confidence, rising inflation and peak trading season galloping towards us at pace.

In light of these market conditions, many e-commerce retailers will be reassessing their marketing strategies as we head into Q4, to search out new opportunities and reach new audiences.

With a bumpy road ahead this winter, there will be a temptation for some brands to reduce marketing spend, as part of internal cost-cutting measures. Marketing can often be seen as the first cost to be reigned in, however, there are many studies and reports showing that this short-sighted approach to cost “savings” can indeed end up being a massive disadvantage when the tide turns back again to more favourable market conditions.

Here at Katté & Co, we’ve seen some big players in the industry coming out recently to defend marketing spend during periods of downturn and citing some compelling historical trends.

Invest in your brand

Last month The IPA featured their own advertising campaign in the Financial Times, targeting their C-Suite readership, to improve understanding of how to build a brand in the current economic landscape. In the advert, the organisation say that they have forty years of evidence to back up their findings that short-term reactions are never as effective as long-term investments for brands – or the economy.

This was also profiled in their 2020 report titled “When others go quiet, your voice gets louder”:

“In both datasets, businesses that increased marketing spend as a proportion of market size reported higher market share growth in the first two years of recovery than those cutting or maintaining budgets.”

An Analytic Partners study “ROI Genome” discovered during the last recession in 2008/9 that “brands that maintained or increased their media investment during the recession came out stronger – in both the short and long term – and saw a 17% growth in incremental sales and ROI.” And reported that:

“The biggest key takeaway: brands must not go dark in times of uncertainty.”

Pinterest have also released their own guidance on continuing media spend to weather the recession. A recent report recommended that brands should “find the most efficient channels where people are still spending—even spending more… in times of market contraction, it’s more important than ever to prove your channels are working.”

Innovate to survive

There are many brands like Britvic, who are using innovation to drive new product development and to counteract the effects of the recession. In a recent article in Marketing Week their Marketing Director said:

“Running at the fire is important, because if there’s one thing we’ve learned over the last couple of years is there’s a new fire every other day. The businesses that are running to these fires and working hard to adapt accordingly are the ones that are winning out there. Continuing to communicate the benefits of the brand and being available at a decent price point is the sweetspot.”
Bruce Dallas, Marketing Director, Britvic

So what about Google?

Google recently launched their own market assessment report “The Bumpy Road Ahead”, suggesting that profitability and market share are considerably enhanced by increased (or maintained) marketing expenditure during a recession*…

Focusing your paid media strategy

We advise that brands should focus their advertising spend on some clear areas:

  1. Driving performance:

    Keeping up marketing and advertising spend to reinforce your core brand proposition. This is in addition to ensuring that you’re communicating the uniqueness of your products and brand, differentiating from other competitors and reinforcing why you should retain market share. Google found that searches for “best” had risen and overtaken searches for “cheap”, suggesting that consumers are looking to spend their money more wisely on longer-lasting products.

  2. Capturing demand that exists now via automation

    This can be done with a combination of three methods – they predict that implementing all three in an integrated strategy gives 20% more conversions at a similar cost per action:

    Broad Match Targeting:
    This increases your search coverage over and above exact matches by including searches that don’t contain the keyword terms. It works best with Smart Bidding, setting a bid for each query and adjusts this depending on how it is likely to perform.

    Value-Based Bidding:
    This focuses on driving growth by targeting those conversions that are most valuable. The optimal bid can be based on the predicted performance of a keyword, and integrated with a client’s own data to optimise ROAS.

    Super-effective creative:
    Create the most highly targeted and relevant ads in both look and feel and messaging, on the right channel, wherever your customers are searching. This solid data foundation can then be measured accurately using tools such as Google Analytics 4 and Enhanced Conversions.

  3. Measuring to drive business growth:

    Proper analysis and measurement of your data, integrated with responsibly-sourced first-party data can give a +16% higher incremental revenue from digital media. Multiple sources of data should also focus on driving effectiveness rather than efficiency, focusing on longer-term goals to maximise growth.

So as we transition into Q4 and the winter ahead with its challenges, the temptation to reduce advertising spend and see a short-term saving will definitely be present. However, those brands that reduce costs in other operational areas and hold fast on their marketing activity will come out the back of this period stronger and with a larger share of voice with their audience. As the sunshine returns to the economy, consumer confidence and spending, continued investment will seal their growth trajectories and springboard them ahead of their rivals.

If you’re looking for a recession-proof paid media strategy to support your brand, then get in touch. We can conduct a free paid media audit to benchmark your current activity and recommend where you can get the most uplift.


*Source: Successful competitive strategies for recession and recovery, Tony Hillier, Market Leader, Issue 4, Spring 1999, see more details here. Reports analysis from the PIMS database of 1,000 companies coping with recession. PIMS evidence is drawn from a sample of nearly 1,000 businesses in the PIMS database of business performance, which have all experienced recession and recovery. A summary of this study can also be found in Marketing during and after a recession, International Journal of Business and Social Science, September 2015, see here.