Given that most brands are already spending less, lowering their ROI to 50% median, further cuts in media costs can help further reduce ROI when brands need to maximize profits. The solution is not to reduce the budget, but optimizing the media mix and investing in channels that work well. If you find the right balance, ensure that your spending is appropriately allocated to reach, efficiency, and frequency. For example, an automobile manufacturer has recently increased its reach by 26% and its exposure by more than 39% by optimizing media allocation without adjusting its budget.
Investing in media during a recession can actually save on brand costs, because withdrawing the industry creates supply and demand dynamics that benefit advertising buyers and lower media costs. In fact, some brands actually boost media investment in recession. In addition to an advantageous media cost environment, brands can also create opportunities for competitors to shrink from advertising, creating opportunities for campaigns to have a greater impact.
Growth is possible even during the economic downturn.
Before assuming a sharp drop in sales due to a recession, brands should evaluate the landscape and closely follow consumer behavior toward changes in spending patterns. For example, changes in consumption habits from large to small ones create opportunities to grow in certain categories, such as lipstick, while contracting with other categories, such as meals and hospitality.
And as consumers become more price-sensitive, brands must change and match their media plans and messaging. A recession-friendly message can help strengthen the brand’s value and ensure consumer loyalty beyond the recession.
Brands and advertisers looking to take full advantage of potential category growth during a recession should analyze consumer behavior to optimize messaging and focus on increasing the impact of advertising spending.
Sometimes budget cuts are inevitable. If you know you need to adjust your spending, make sure you’re saving the right money in the right place to maximize the effect of the remaining dollars and minimize the negative impact on ROI.
