Marketing Is Never More Vital Than in a Bad Economy

About 10 years ago, on one of our early dates, my now-husband asked what my favorite economic principle was. My sporadic attendance at Econ 101 didn’t adequately prepare me for this question, and I mumbled something about the psychological elegance behind the principle of diminishing marginal returns. Unimpressed, he patiently and thoughtfully corrected my misconceptions (yes, he’s an economist, and yes, his dating chat wasn’t great) and set himself a personal mission to make me economically literate. His investment in my education paid off. While I still only have a laywoman’s understanding of his complicated mathematical proofs, I’m inclined to spot the general principles of economics everywhere, loosely shaping and facilitating my judgment and decision-making on a range of business issues. In the last few months, due to Russia’s invasion of Ukraine and the rising cost of living, marketers’ 2022 goals and priorities have shifted due to two powerful economic forces: those of supply and demand. I’m mainly interested in the tools marketers can use to navigate these circumstances that are largely outside of their control. On the supply side, one thing seems largely inevitable: Some brands will struggle to deliver their products due to supply chain disruptions, and certainly at the same speed and cost as before. If that’s the case, how can brands retain loyal consumers if they can’t deliver the goods? Scarcity as opportunity If the problem lies on the volume side, the luxury industry and brands like Glossier have made scarcity marketing a dominant tactic for maintaining consumer interest and driving demand. While this won’t, and can’t, apply to all types of goods, marketers have an opportunity to be upfront about their decreasing stock and set expectations that may help soften the blow when those products aren’t visible on shelves. Being upfront about scarcity can help maintain, and even increase, future demand for those goods. Everything from countdowns to when goods will be back in stock to giving people the ability to register their interest for your product on a waitlist may help continue to drive demand, even when supply is low. Over 70% of creative is underutilized and inefficient, which, for some, can mean millions in wasted advertising spend. It’s also inevitable that businesses will raise their prices, and marketers will have to bear the brunt of communicating those changes to consumers, whose ability to weather those pricing increases will be at an all-time low, especially if inflation continues to hike. If pricing increases are nonnegotiable, marketers have an opportunity to take those lemons and use them to tie pricing to a larger shift they’ve been meaning to make, like moving to more environmentally conscious suppliers or packaging. According to Nielsen’s 2022 Annual Marketing Report, evaluating whether a necessary price increase could lead you to a business change that elevates brand purpose can turn liability into opportunity. Paradoxically, the worst thing to do is go dark and cut your advertising spend. Looking at advertising trends during previous economic recessions, a study published in the Journal of Advertising Research shows brands that increase advertising during a recession experience higher sales both during and after. For example, companies that advertised aggressively during the 1980 recession had sales 256% higher than those that did not continue to run ads. In fact, increasing advertising during a recession has been shown to double market share gains in comparison to boom time, as competitors are more likely to reduce their spend, thereby creating an opportunity for you to get ahead. If others are ramping down, ramp up if you can. Number crunching But with budgets being under immense scrutiny, efficiency is key. One of the surest ways to get more efficiency out of your budget is to optimize the creative. Hundreds of studies based on millions of impressions have demonstrated that there are indeed some basic creative first principles, like the need to brand your asset or feature your product upfront, that have repeatedly been proven to move the needle on performance in a statistically meaningful way—yet only about 28% of creative assets adhere to these principles. This means over 70% of creative is underutilized and inefficient, which, for some, can mean millions in wasted advertising spend. On the demand side, it’s clear that demand for nonessential products will fall, especially among the lowest earners, as food and energy prices increase across Western Europe and the U.S. But the risk that I’ve seen few people talk about is the all-too-realistic danger to a brand’s own demand generation engine, namely your own marketing team. Though cost of living is increasing, our salaries (most of which are evaluated annually) are not keeping pace, and some fear that a general malaise will set in that has only one viable scapegoat: the employer. If, all of a sudden, I feel that my quality of life has decreased because I’m no longer able to enjoy the same financial security, it’s hard to blame the invisible hand of the economy, and much easier to blame the party you can see. Combined with a hyperactive job market, with demand far outpacing supply, marketing teams are at an increased flight risk, and managers need to think about how they get ahead of this problem. Depending on the size of your company, this may not be fully in your control, but you can push your HR and leadership teams to communicate that you’re aware of the pressure people are feeling on their personal financial side and evaluate how this year’s salary increases can account for inflation. While guaranteeing annual salary adjustments that keep pace with inflation is risky, committing to salary reevaluation and getting a sense of the engagement and happiness of your team beyond just their compensation could be a prudent way to prevent a mass exodus. Battling macroeconomic forces that do not bend or respond to your individual actions may feel especially futile—but if history is any indicator, these are precisely the times when market leaders get dislodged and new category winners are born.