Why Advertisers Should Continue Media Investment During Economic Uncertainty

Stock markets and global economies, by nature, are known to fluctuate. But oftentimes, those fluctuations are based on patterns or predictable events that savvy businesses can anticipate, and then adapt their strategies accordingly.

What’s harder to plan for is uncertainty. In an economic climate defined by massive roller coaster swings in the stock market, wide-ranging tariffs, the threat of a looming global trade war, and the second lowest consumer confidence level we’ve seen in 50 years, it’s nearly impossible for businesses to plan for the upcoming quarter — to say nothing of long-term strategic planning.

Divest or Invest? The Age-Old Question for Advertisers During a Recession

With the risk of an impending recession looking likelier and inflation still taking a wallop out of consumer spending, brands are undoubtedly weighing short-term savings against long-term wins. Competition for the consumer dollar will skyrocket as many curb their spending in a recession. Meanwhile, marketing and media spend is usually first up on the chopping block during times of economic uncertainty or downturn. 

There is a familiar playbook for brand spending during recessions: advertising budgets are minimized or cut entirely to save cash, only to massively return once the economy recovers. While this may seem logical, history shows brands that invest in advertising during recessions experience 4.5 times higher annual market share growth than brands that reduce ad spend. 

PepsiCo, for example, increased its marketing and advertising investment during the height of the COVID-19 pandemic and recession, particularly around its food and beverage brands. This investment resulted in strong net revenue growth for major brands including Tostitos, Cheetos, and Ruffles.

Conversely, rival Coca-Cola suspended all marketing activities across multiple markets during Q2 and Q3 of 2020. This reduction in ad spend led to decreased brand visibility that impacted consumer engagement and sales, further enabling PepsiCo to make notable gains against its core competitor. 

The Case for Media Diversification in an Economic Downturn

We know that today’s consumers rely on more channels and touchpoints than ever before when searching and shopping online. This necessitates a full-funnel approach to media investment so brands can capture these consumers and win market share over their competitors — especially during a recession.

A vast majority of global consumers (80%) say they’re likely to switch from their preferred brands to lower-priced brands or products during an economic downturn. This creates a huge market opportunity for brands to generate awareness and capitalize on this massive shift in consumer behavior if they invest in and diversify their media portfolio accordingly. 

Conversely, 60% of brands that go dark and cease all advertising during these instances see declining share of voice after just six months. And if you think it’s easier to regain market share and profitability once you divest in advertising during an economic downturn, think again. A report from the Advertising Research Foundation found it’s ultimately more costly to regain market share and brand recognition that’s lost from cutting ad spend than to increase, maintain, or diversify investment during recessions.

As brand loyalty becomes malleable during a recession and consumers are open to shopping with new brands that are visible and engaging with the market, investment in native search advertising can position brands to effectively capture and convert these consumers as they express purchase intent. Advertisers who diversify their media portfolio beyond legacy search engines and invest in native search advertising can:

• Reach new consumers across the apps, sites, and platforms they use in their everyday lives
• Drive upper-funnel impressions with lower-funnel performance
• Reduce risk and volatility by not relying on just one search media channel
• Grow their market share and achieve efficiency at scale

Diversify with adMarketplace

adMarketplace’s exclusive media placements with premium open web publishers directly connect consumers with relevant brands and products across their entire shopping journey. With native search media unavailable on legacy search engines or affiliate networks, advertisers who diversify with our media solutions can improve the efficiency of their next media dollar, reduce costs, grow market share and brand visibility, and ultimately tap into incremental outcomes and revenue.

For example, retailer New Look diversified their search media investment outside of Google and Bing with adMarketplace’s exclusive media placements on privacy browsers like Firefox and buy now, pay later (BNPL) apps like Laybuy to improve their target cost of sale (COS) goal by 35%. Additionally, our native search media generated a 27% higher average order value (AOV) than Google non-brand for the retailer.

One thing is certain during times of economic uncertainty: scaling back on marketing and media investment isn’t the path of least resistance and easy savings most businesses think. To learn more about adMarketplace’s native search media and why approaching media diversification during an economic downturn could turn into your short and long term competitive advantage, contact us today.