Why Brands Need to Advertise More During Times of Recession

“When Times Are Good You Should Advertise,
When Times Are Bad, You Must Advertise”

As consumers worldwide grapple with rising inflation and prepare for an impending recession, brands must decide how to respond. The stakes are high: with consumers cutting their spending, competition for those dollars is high and brand loyalty is increasingly fragile. As marketing spend inevitably reaches the chopping block, brands must weigh short-term savings against long-term wins.

There is a familiar playbook for brand spending around recessions: advertising budgets are minimized or cut entirely to save cash, only to massively return once the economy recovers. While this may seem logical, past recessions and the Covid-19 pandemic have shown that brands that invest in advertising during recessions experience 4.5 times higher annual market share growth than brands that reduce ad spend,[1] outperforming competitors. Samsung, for example, saw its ranking on Interbrand’s “Best Global Brands” list jump by 15 places during the 2008 recession after maintaining consistent media investment. For example, during the 2008 recession, Samsung maintained media investment to rebrand itself as an innovation-led brand, which convinced consumers of its higher-quality products and increased its ranking on Interbrand’s “Best Global Brands” list by 15 places, becoming a top 10 global brand.

Advertising has transformed over the last decade. Brands are focusing more on full-funnel marketing to capture consumers and market share. In this advanced advertising space, performance media is no longer restricted to lower funnel marketing and now helps brands increase both awareness and, more importantly, revenue. You may ask yourself: how?

52% of consumers are more likely to switch brands during economic downturns, putting brand loyalty to the test.[2] Awareness and consideration decrease when a brand reduces advertising, resulting in lower brand usage and image (-13% and -6%, respectively).[3] Conversely, competing brands that invest heavily in advertising during these same downturns sustain long-lasting consumer relationships, allowing them to increase their category share by positioning their brand at the forefront of the consumer decision-making journey. As loyalty decreases and consumers are open to shopping with new brands, it is vital to invest in non-brand paid search to capture consumers as they show purchase intent. Non-brand paid search creates an opportunity for brands to increase market share and fosters consumer loyalty by allowing brands to dominate when consumers are not brand-sensitive and are searching generic keywords. Brands that invest in advertising can maintain brand loyalty, increase market share and penetration, and increase profits by up to 5 times,[1] while brands that cut ad spend take up to five years to recover from budget-cutting during a recession.[4] Ultimately, it is more costly to regain market share and brand recognition lost from cutting ad spend than to increase or maintain investment during recessions.[5]

Brands must focus on long-term growth over short-term profitability during economic downturns to create a long-lasting relationship with consumers, thus positioning themselves for success and growth during the economic recovery period. With the impending recession and consumers changing their shopping behaviors, brands must invest in search advertising to portray stability, build consumer confidence, and capture consumers where and when they intend to shop. As nearly 60% of consumers state that inflation and rising budgets are driving them to use Shopping Apps, adMarketplace’s exclusive partnerships with leading shopping apps can allow advertisers to get ahead of the competition and in front of consumers looking for flexible payment options to drive them to the brand site seamlessly.[6]

During times of uncertainty, brands must allocate budgets to media partners with the most directly attributable and highest measurable ROI. adMarketplace sets up clients for long-term success with a suite of solutions that align with consumers’ privacy preferences and include full-service optimization and reporting integrated with advertisers’ preferred platforms. adMarketplace enables partnered brands to run paid search campaigns with a clear and precise impact on essential lower funnel KPIs, including revenue and profit, while having a full-funnel impact on driving brand awareness and consumer consideration. Additionally, an expert management team partners with each advertiser to regularly review performance, determine individual needs, and give feedback on campaign optimizations.

Continuing or increasing ad spend when competitors tend to scale back can increase the efficiency of ad dollars. The decrease in competition for consumer attention means brands can increase visibility and capture the top of mind spot. Before Covid-19, a leading apparel retail brand partnered with adMarketplace to drive incremental sales outside legacy search engines. In March 2020, while most apparel retailers chose to reduce ad spend, this retailer continued investment to capture the surge in online shopping intent. As expected, with decreased competition in the market, the brand enjoyed 12% higher conversions and nearly 2x greater return on ad spend year over year.[7]

adMarketplace’s exclusive, value-driven placements with premium publishers, including privacy browsers and shopping apps, don’t rely on third-party cookies or retargeting, presenting an opportunity for our partners to enjoy incremental lift to revenue that is easily measured and attributable to our ad campaigns. To maximize the efficiency of your advertising dollars while streamlining the path to purchase, consider combining adMarketplace’s suite of exclusive media solutions to capture consumers at the moment they express purchase intent –skipping the competition entirely.

Sources:

1. LinkedIn, ‘Advertising in Recession- Long, Short or Dark,’ January 2021
2. Business Insider, ‘Consumer Brand Loyalty May Never Recover for the Recession,’ September 2011
3. The Marketing Society, ‘Marketing in a Downturn,’ August 2008
4. Ebiquity, ‘Advertising through a Recession,’ April 2020
5. The Advertising Research Foundation, ‘When Brands Go Dark,’ February 2018
6. Credit Karma, ‘Consumers Rely on Buy Now Pay Later Amid Record Inflation, Use Credit to Pay it Off,’ March 2022
7. adMarketplace Proprietary Data 2019-2020