Marketing in a Recession Examples

With all this chatter about a recession (will we, won't we; are we, aren't we?) a previous blog post looked at whether or not organisations should carry on spending on marketing activity or save their money.   

You might be surprised to know that my first recommendation is NOT to tell you to increase your marketing spend!

You can read the post - Squirrel or Spend: The Recessionary Marketing Dilemma here

I thought it would be useful to share some examples of the companies that continued marketing during previous downturns so you can see what the impact was for them.  This will hopefully help you in your own decision-making. 

First I've shared some global research, then examples of individual companies I have found.... I hope this is useful.

Spend on Marketing Strategically  

Multiple pieces of research indicate that it is important to think strategically when considering your marketing investment during a downturn.  This is my own mantra anyway, but when money is tight it becomes even more critical:

• Global consultancy firm Bain & Co's global research found that companies who continued to invest in growth during the GFC (Global Financial Crisis) achieved a 17% compound growth rate during the economic downturn.  Rather than continuing existing spend, they optimised their investment by shifting dollars into high-ROI tactics.

• Another global consultancy, McKinsey & Company undertook a longitudinal study of 1000 companies after the GFC and found that, while most companies tightened their belts, those that performed best over time, were those who kept focused on long-term growth.  These businesses swapped lower short-term profitability for long-term gain and also refocused rather than cut spending. 

• They also found that successful companies actually spent more money (as a percentage of sales) on marketing during the recession and less during periods of growth.

• Insights company, Kantar Millward Brown found that 60% of the brands that stopped TV ad spend for six months during the GFC saw brand use decrease 24%, and brand image decrease 28%.

I have included a number of different examples here, as I think they are all interesting and demonstrate what many of us know - that opportunities do exist within tough times.  "Marketing" doesn't stand alone in any of this,  the fundamentals of a business need to be solid and some of these examples show how a refocusing can actually build a stronger business.   

Expedia & VRBO

Expedia-owns the holiday rental marketplace VRBO.

Prior to the pandemic, Airbnb had almost 20% of the lodging market, but during the pandemic their revenue dropped dramatically and so did their ad spend.

VRBO increased its market share by outspending Airbnb 10 times in advertising during this period.  The numbers are a bit eye-watering: $90.8 million in advertising from January to February 2021 versus $8.9 million for Airbnb.

VRBO bookings recovered by 61%, while Airbnb bookings dipped by 15% over the same period.

Samsung

During the 2008 recession, Samsung saw an opportunity to rebrand itself.

Unlike its competitors, Samsung maintained its marketing spend and focused on rebranding itself as an innovation company.

Prior to the 2008 downturn, Samsung ranked number 21 in global brand value.

Today, it is number 6.

Xero

Kiwi-success story and market-challenger, Xero continued to invest heavily in marketing and sales during the GFC, despite challenging economic conditions.  Their strategy was to invest in marketing during the downturn to differentiate their product offering, build brand awareness and help drive their long-term growth.

This strategy paid off, albeit they are hitting wobbles right now with recent redundancy announcements. 

Pushpay

Pushpay started out as a mobile payments platform for churches and non-profit organisations.

During the COVID-19 pandemic in 2020, Pushpay continued to invest heavily in marketing and sales in order to build brand awareness and long-term growth. 

They experienced significant growth in the year following the pandemic - they are now a global company and saw revenue grow by 49% year-on-year.  

​Lego

I still love Lego and am constantly amazed at how innovative they have been and how appealing they continue to be considering the heart of what they do is tiny little bricks! 

Prior to the GFC Lego's main market was the USA.  The GFC impacted Lego with declining sales and profitability.

They decided to implement a turnaround strategy that focused on innovation, cost-cutting measures, and a stronger emphasis on its core product offerings.  They expanded into other global markets in Europe and Asia.

This strategy proved successful and the company began to experience a turnaround in its financial performance.

Kellog's

This is an old one, but I like it as we all know Kellog's and no-one knows Post, so it aptly explains the point!

In the 1920s, Post was the category leader in cereals but during the Great Depression, they cut back significantly on their advertising while their rival Kellogg's doubled their advertising spend, investing heavily in radio and introducing a new cereal called Rice Krispies, featuring

“Snap,” “Crackle” and “Pop.”

Kellogg’s profits grew by 30% and the company became the category leader, a position it has maintained for decades.

Will You Squirrel Your Money Away or Invest in Growth?

I think it is fair to say spending on marketing on its own will not get any company out of a hole if your business fundamentals need addressing.  Get your house in order - don't waste money.  Go back to the marketing fundamentals (strategic alignment) - see the post Squirrel or Spend: The Recessionary Marketing Dilemma here for more on this.

Assuming that you are in a good place - consider your marketing activity:

Don't just cut back

Don't just spend

Have a plan & understand what you are doing, why & how it supports your long-term business objectives.

If you can continue or increase spending - do it.