With an economic downturn looming (if not already here), it’s important to look at the implications of a brand’s digital presence and why marketing is still a necessity. We are far more digital now than we were during the economic downturn in 2009. Facebook’s ad revenue was $69.6 billion in 2019 compared to 1% of that in 2009. Still, we can look at previous recessions to determine what the role of marketing is and how a brand’s presence in the market is affected. The opportunity to reach the most relevant and engaging users across digital platforms will be prevalent before, during, and after an economic downturn.

 

Case Studies

A 2009 study, covering research from 10 individual studies, analyzed the statistical significance of maintaining advertising during difficult economic times. The findings all point to the same conclusion: advertising during economic recessions produces stronger results once the recession ends. Organizations that either kept their same marketing budget or increased advertising saw higher sales and stock prices than competitors who decreased budget, across every recessionary period since the Great Depression.

Outside of these studies, there are plenty of available cases where firms pushed their advantage during a downturn. Toyota, for example, was able to weather the storm of the 1973-1975 recession by putting their marketing foot on the gas instead of pulling back. Once the recession subsided, Toyota emerged as the premier imported vehicle in the US.

 

An economic downturn also presents unique opportunities that do not necessarily exist when the economy is in full force.

Share of voice

If we operate under the assumption that a brand’s competitors will stop all marketing, then the opportunity to grow the brand’s share of voice is significantly improved. Going off of the Great Recession, we know that digital marketing will likely remain more consistent than other media; only 2% of online ad spending dropped compared to 22% for radio. Conversely, if we assume a brand’s competitors will continue to market at their current volume, then the brand is in an unfortunate position to lose share of voice among potential consumers.

Market Share

A 1982 study published by the Strategic Planning Institute examined the change in market share during recessionary periods by 1,000 businesses and found those that remained consistent or increased their advertising saw greater market share advantages than those that dropped their marketing. Expanding market share can then lead to substantially higher return on advertising investment.

Consumer perception

Marketing is the most important form of communication between a brand and a consumer. Ceasing marketing, therefore, means ceasing a primary means of communicating with those who matter most. From a study during the recession in 2009, almost half of respondents claimed that a lack of advertising indicates that a business is struggling. Negative brand perception can last even after a recession subsides.

 

Source: Harvard Business Review, April 2009

 

Sector-by-Sector

Healthcare:

A study a few years after the 2008/2009 recession concluded that while revenue did drop significantly in those years, there was no “permanent” change in revenue for healthcare institutions, regardless of size.

Higher Education

A Stanford economist determined that the Great Recession actually increased interest from students in enrolling, continuing the trend from previous recessions. Cuts to financial aid were not only minimal but near-nonexistent for most institutions.

Food & Beverage

The USDA estimated that food-away-from-home spending dropped beginning in 2010, but had risen to almost pre-recession levels by 2016. During this time, consumer spending shifted slightly toward groceries while away from home spending increased every year after 2010.

 

Historically, we can see that continuing to advertise during an economic recession leads to stronger results once the recession is over.  If you are interested in communicating with your customers through advertising or want to learn more about options, contact our team today!