A CMO Playbook for Economic Uncertainty

With the outlook on the global economy seemingly changing daily, now may feel like a tough time for marketing leaders to make confident and informed marketing decisions.

That’s why all business leaders should know about recent data showing that pulling back on spending during turbulent times can actually negatively impact future growth. This analysis looks at what brought long-term success to businesses during a recent period of economic uncertainty—the beginning of Covid-19—and can help arm you with the facts you need to navigate difficult decisions about managing investments in the current, ever-changing business environment.

Increasing spend brought sustained advantages

According to an analysis conducted by Analytic Partners, businesses that increased media investment at the start of the pandemic actually saw sustained improvements to ROI compared to those that pulled back. In the study, 60% of brands that increased their media investment during the last recession saw consistent ROI improvements, and over half of brands that increased marketing investment saw ROI growth in back-to-back years.

In other words, while it may seem counterintuitive to increase spend during uncertain economic circumstances, this data suggests that being more aggressive during such times actually leads to sustained advantages—and not just during the moment, but for an extended period of time.

The key driver of these brands’ advertising effectiveness could be the synergy achieved across media channels, according to the report. As consumers interact with brands across more surfaces and on more formats than ever, the report found that keeping up marketing across channels impacted marketing efficiency for surveyed brands by 35%.

Additionally, brands that maintain spend have a greater share of voice in the market than competitors that pulled back spend. According to the report, there’s a cost to losing this share of voice and dialing down spend as competitors dial it up. The study predicted that the average brand could lose almost 15% of its business if a similarly sized competitor doubled its marketing investments.

The long-term return on brand equity

Businesses that reduce spend are also at risk for brand equity decline that can impact long-term sales well beyond any period of economic uncertainty. Another study commissioned by Meta and conducted by Nielsen, Nepa and GfK showed that digital channels often drive significant long-term sales impact for brands that you won’t see in your weekly performance reporting. Across media types, categories and countries, long-term sales impact made up 60% of total advertising ROI.

According to Analytics Partners, product- or promotion-focused advertising may help in the short term but not have as high an impact over the long term as brand messaging. Balance is key, and businesses should keep in mind that brand-building strategies and creative executions have a larger impact in the long term than short-term activations.

3 steps for crafting a successful spend strategy

Of course, pushing forward with marketing spend amid uncertainty requires a strategic approach. The Analytic Partners report found that optimizing creative quality, maximizing the halo effect that raises performance for other products and brands in a portfolio and finding the right mix of media and channels all make a difference. As you consider how to craft a marketing strategy for these dynamic times, consider the following best practices and Meta solutions to guide you in maximizing your long-term gains.

First, strengthen your foundational capabilities. We’re seeing promising results from advertisers who adopt Meta’s “Performance 5” strategies, which aim to help advertisers navigate challenging times. This framework provides guidance on account simplification, partnering with creators on solutions like branded content ads and using diverse creative formats. Performance 5 also includes strategies for ensuring that your Conversions API is optimally set up to help maximize performance and for using Meta’s Conversion Lift solution to validate business results.

Brands that maintain spend have a greater share of voice in the market than competitors that pulled back.

Next, maximize the halo effect and unlock efficient growth with machine learning. To sustain growth in volatile times, it’s important to reach all potential customers—not just repeat customers—and to attract audiences to the full range of products that your brand offers. If you limit traffic at the top of your funnel, you may lose out to competitors who are pursuing growth more aggressively across the funnel.

To find the right customers at the most efficient price, leverage broad targeting and automation tools like Meta Advantage, which automatically finds your most relevant audiences or ad placements and simplifies campaign optimization, as well as Advantage custom audience, which intelligently expands your current audience reach to improve delivery performance.

And finally, embrace a test-and-learn mindset. Sustained testing and learning is key to continually identifying the most effective strategies—and absolutely imperative to maintain if you want to avoid falling behind your competitors. In fact, research has shown that brands running fifteen experiments in a year achieve about 30% higher ad performance that year on average compared to brands running no experiments. As conditions evolve, measurement is essential to understanding what’s changing and how to adapt.

Without a doubt, these are challenging times for leaders. While there is no one-size-fits-all approach and every business is unique, we recommend returning to the fundamentals described above to help guide your marketing strategy and support your brand in both the short and long term. Hopefully these learnings empower you and your colleagues across your organization to make informed, thoughtful decisions as you navigate and learn what makes your brand stronger both in this moment as well as in the years to come.