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There isn't a singular definition of a recession, but it's commonly defined as a substantial downturn in economic activity persisting for more than a few months. That's how Statista defines recession before showing critical trends worldwide:
Statista also explains that the worldwide economy hasn't yet bounced back entirely from the effects of the COVID-19 pandemic. Meanwhile, the conflict between Russia and Ukraine has begun to erode global economic progress, and this situation is anticipated to deteriorate further. Moreover, as inflation steadily climbs on a global scale, the chances of a recession also increase. This is why, in times of crisis, many companies opt to cut their marketing budget and base their action plans on reducing prices of their products. But… is that business model truly strategic during recessionary periods? Let us spoil you: absolutely no.
Advertising Trends in Crisis
According to the Statista report on “Advertising in times of crisis”, ad spending falls during crises. The favorable news is that the advertising industry quickly recovers by resuming or even surpassing previous spending levels one to two years after the downturn.
What about the forecasts for the following 5 years? Total ad revenues were predicted to grow by at least five percent annually until 2028, nevertheless advertising spending will have a flat growth during the same period.
Strategic Shifts
In the article “Reimagining Marketing During Recessionary Times” by Bain, they remark that during rough times, many of the traditional approaches often serve as temporary band-aids. Instead, a reimagined approach rooted in data, segmentation, and a robust experimentation mindset emerges as the cornerstone for sustainable success. We will share to you what they recommend:
1. Harnessing the Power of Data
The foundation lies in data collection and segmentation. Brands must mine insights from diverse sources, enrich customer profiles, and segment them strategically. The shift towards first-party data (1PD) has gained traction, especially in navigating the evolving landscape of privacy laws and the demise of cookies. Successful case studies showcase how companies have leveraged 1PD transformations to fuel marketing capabilities and drive unprecedented results.
Additionally, customer segmentation unveiled intriguing behaviors, such as high-spending airline customers actively engaging with loyalty programs despite grounded flights.
2. Validation through Experimentation
Segmentation provides insights, but validation comes through experimentation. Testing hypotheses on customer behavior and market responses is pivotal. Case studies reveal how targeted experimentation yielded significant revenue boosts.
Take, for instance, the airline company that shifted from offers to educational emails for engagement, witnessing a remarkable nine-percentage-point uplift in revenue within a month. Similarly, the retail company's shift towards digital channels for customer engagement led to a 14% increase in sales revenue from social media ad exposure.
3. Personalization at Scale
The final stride involves scaling insights for personalized customer experiences. Applying learnings from small-scale tests across broader segments and customer databases paves the way for impactful personalization.
In the case of the airline company, scaling insights on optimal email timings led to a 30% surge in email open rates and eight times higher click-through rates. Meanwhile, for the retail company, scaling the learning from social media ad success resulted in a 2.2% increase in in-store sales.
Recessionary Ad Spend: Impact on Market Share
Reducing advertising expenses during crises may appear appealing, yet it could prove ineffective. A survey conducted by Statista encompassing recessions from the 1980s to the early 2000s revealed that maintaining or elevating ad investments during economic downturns proved advantageous in the long run. Brands that upheld or increased their spending in challenging periods experienced greater boosts in market share post-recession compared to those cutting marketing costs.
Conclusion
The transformative power of data-driven, experimentation-led marketing strategies cannot be overstated. Brands that reimagine marketing operations through data insights, targeted experimentation, and scalable personalization are poised not just to survive but to thrive in recessionary times.
Amidst economic uncertainties, maintaining a strategic presence in the market remains crucial. Explore the potential of Retail Media to fortify your brand's visibility and engagement. By leveraging Retail Media services, you can seamlessly integrate your brand within the consumer's shopping journey. Maximize your marketing impact by partnering with us to navigate these challenging times and elevate your brand's prominence in the retail landscape!
