Regardless of whether we’re in a recession, chances are good that you may be feeling the effects of inflation and the perceived reduction in consumer spending.
These feelings become much stronger emotions once you begin looking over your financial statements and start trying to decide what can be reduced or even eliminated altogether.
Have you started seeing your numbers take a downward trend?
Are you trying to decide where to cut back to free up a bit more cash flow?
Or maybe you find yourself in the opposite position, and your business is thriving right now.
It doesn’t matter which side of the coin you’re on, I want to show you why right now may, in fact, be the time to start increasing your marketing budget.
But to make my case, I’ll need a bit of help from an expert in another field—archeology. You see, Rod Polasky is an archaeologist who happens to have spent a great deal of time researching the effects of the Great Depression and recessions on businesses. So, if anyone has a solid, qualified perspective on how we as entrepreneurs should market during an economic downturn, it’d be Rob.
Cars, Cigarettes, and Soap
During most of the 1920s, Ford was selling on average 10 times as many automobiles as General Motors (GM). But by 1931, that had been reversed, and GM took the lead and became the number one selling automotive manufacturer in the United States.
How did a company that was such an extreme underdog take the lead? There happened to be an event that began on September 4, 1929, that made this victory possible for GM—the Great Depression.
You see, when the Great Depression began, Ford executives did what all of the other businesses were doing, and what you may be tempted to do right now—they began making budget cuts. And their marketing budget was a line item to which they made significant cuts. However, GM went against conventional wisdom and actually began increasing its marketing budget.
Increasing their marketing budgets while others were making significant cuts clearly worked for GM, but what about for a consumer goods company?
The world was a bit different in the late 1920s. Tobacco was a BIG business. At the start of the Great Depression, more than 62% of men in the United States smoked cigarettes (compared to less than 12% of men today).
Lucky Brand cigarettes was the number one selling brand in America at the beginning of 1929. But by 1935, Camel had handily taken the lead—a lead they would maintain for several decades. What happened between 1929 and 1935 that allowed Camel to take the lead? You guessed it—they made dramatic increases to their marketing budget.
Spending more on marketing worked for cars and cigarettes, but what about soap?
Forget the competitors. Yes, Procter & Gamble had plenty of them going into the Great Depression. But you guessed it—they increased their marketing budget and even pioneered a new method of advertising on the radio—soap operas, which is a fascinating story in and of itself, but we don’t have time for it today. Yet, they still came out as the top brand in their field.
Here are three important lessons we can extrapolate from this small sample of Rod’s research about how companies marketed during recessions and depressions.
Act as though there is nothing wrong
Research indicates that companies who continued with their marketing efforts as if nothing were wrong not only survived but in most cases thrived. They didn’t wait for things to get better; instead, they kept on marketing. They didn’t wait on public demand for their products to increase; they created more demand for their products even during the worst economic downturn in US history.
If you want to continue expanding your market share, you should do the same. Don’t begin by looking at how to cut back your marketing budget; instead, ask how you can create more demand for your products with your marketing dollars. This often means you’ll need to shift from a more generic brand-building style of marketing to a more offer-based marketing approach.
People become more discriminating with their spending . . . but they don’t stop spending
During downturns, consumers don’t stop spending money; they simply become more discriminating about how they do it. They become more conscious of deals. This isn’t about price; it’s about value. Which product offers them the most value for their money? This was exactly how Kellogg’s took the lead from CW Post during the Depression. Kellogg’s positioned their cereal as a better value than CW Post, so consumers made the switch. Once the Depression ended, they remained loyal to Kellogg’s.
How can you position your product or service as being a better value than your competitors? Are there add-ons you can easily include to your existing offerings? Do you need to shift to a more value-based language in your marketing messages? What can you do to give consumers a reason to make their purchasing decision now instead of waiting? What do you need to say, do, or communicate to ensure your product or service is the only logical choice?
As others pull back, put more in
When things slow down, marketing budgets get cut, and that’s wonderful news for you. As an increasing number of businesses are beginning to cut back on marketing, there is less competition for new eyeballs. For example, we spend over $50,000 each month on Facebook ads, and over the past quarter, we’ve seen those dollars starting to go much farther. This is because fewer ads are being run on the platform.
Look for opportunities. If you notice a competitor has cut back or cut off their advertising, it could be the perfect opportunity for you to take some market share. Once you begin taking market share, don’t look back and keep investing in your marketing.
Warren Buffett said that it is wise for investors to be fearful when others are greedy and greedy when others are fearful. Fear is rampant through much of the business community right now. There’s tremendous uncertainty about what will happen with inflation, the stock market, the job market, and the economy in general; however, all of this fear is your opportunity. Capitalize on it and take their market share.
Now is the time to review your marketing plan. Your plan must include two parts:
the specific strategies you will use to attract new customers
the exact actions required to convert your existing customers into evangelists for your company.
If you have those two parts nailed down, this is shaping up to be an amazing opportunity for you to keep investing in your marketing. Be greedy while others are being fearful . . . and as they say, “fortune favors the bold.”
Is your marketing strategy pulling its weight? If not, we should talk. Shoot me an email (email@example.com), and we’ll put some time on the calendar.