When a heavy storm wreaks angry havoc on your home, your survival instinct tells you to take shelter and hope to outlast Mother Nature’s fury. But can you afford to follow the same approach if your business is struck by an economic tempest?
The best minds in business say no: You won’t fare too well if you cram your whole budget into the cellar for safety.
Of course, many business owners’ instinctive approach to a pandemic-driven economic disaster is indeed to chop spending — and in certain areas, it may well be a wise move. Just don’t tuck your marketing budget away for too long.
The Money Is Out There
In spite of the burdensome financial toll COVID-19 has exacted, with businesses shutting down and millions unemployed, one encouraging reality lingers behind that storm cloud: People have more money to spend than you’d think.
As you consider your strategy, bear in mind that many markets boomed even as the pandemic punched so many businesses in the gut. In some cases, the flow of cash was pumped up:
- Yes, the number of jobs lost has been brutal. But workers in many professions remained untouched, and some industries have seen a serious spike in business — think e-commerce retailers, warehouses, and grocery stores.
- The federal government delivered a mammoth boost in the form of stimulus payments, supplements to unemployment benefits, support for freelance workers, and the Paycheck Protection Program that encouraged businesses to keep employees on their payrolls.
- While spending on restaurants and other services plummeted, people shelled out more money on goods to use at home. They couldn’t eat out at their favorite pizzeria for a while, but they could invest in a fancy pizza stone to bake a not-too-shabby version in their own kitchen. (And in some cases, even restaurants have seen more revenue during covid than ever before, including one of our clients).
To say this another way, people are spending in different ways, but they’re still spending.
Listen to the Customer
If you need more evidence that investing a little in marketing is a sound idea amid the pandemic, consider this: The majority of consumers surveyed by GlobalWebIndex either thought businesses should continue advertising or at the very least felt neutral about it.
In another study by Kantar, only 8% of consumers across 30 countries said businesses should stop advertising. A key piece from that research: Most people indicated they want to hear about how your brand is helpful in “the new everyday life” and how you’re making efforts to manage the struggle against COVID.
Craig Mawdsley, joint chief strategy officer at AMV BBDO, is among the proponents of spending on marketing even as the storm still rages. He echoed the theme of showing how your brand can be helpful:
“The data tells us people are looking for two things right now: help and comfort. If you’re able to help them to navigate the current situation, tell them about that. But they also want joyful distractions — things to make them smile in times of hardship.”
One thing is clear: If you can afford even a moderate investment in marketing right now, you shouldn’t wait. It can give you at least a modest lift in the short term, and you will reap more fruitful rewards later.
Don’t Be Too Negative — Or Too Positive
Multiple studies have examined the strategy and performance of companies during and after recessions to show what works and what doesn’t.
What they’ve found is this: Balance is key.
While focusing on cost-cutting measures is a common, natural, and understandable reaction to harsh times, it’s a misguided path that won’t ultimately lead you out of the rough economic woods.
Harvard Business Review’s deep study of three global recessions revealed that heavier cost-cutters were the least likely to prosper when the economy sprung back to life. Research by Bain & Company showed the same: Seeking to weather financial adversity primarily by way of cost reductions is likely to leave your organization on the losing side when the dust settles.
On the flip side, it doesn’t often prove wise to hammer away at an entirely positive-minded growth strategy, either. Too much investment may cause you to overlook negative fiscal realities and ultimately leave you scrambling to do what that other group was doing: slashing budgets.
Blend Efficiency With Investment
Which brings us back to that word again: balance.
A business stands the greatest chance of flourishing after a recession when it artfully combines improved efficiency — which doesn’t have to mean mercilessly hacking away at budgets — with a steady and thoughtful effort to boost R&D and marketing.
This is the formula that can keep you going through the harsher times and also lay down a springboard for a forward surge when the economy starts moving again.
The closest thing to a magical solution isn’t so magical at all: Invest even a little in marketing now, if you can, and pay close attention to the evolving behavior of your customers — listening as diligently as ever to what they’re asking for. It’s not only accommodating, but it’s also smart business to make tighter connections with the people you serve.
Mawdsley’s theme of offering help and comfort to your customers during unprecedented times can be summed up ever so simply: “Do the right thing, and keep doing it when the coronavirus situation ends.”