The first thing we do when the economy is struggling is reduce our wasteful spending. Brands also do this.
Nearly everyone anticipates a global economic downturn. As a result, businesses are implementing safety measures. They reduce the costs they believe are unnecessary. Among these costs, advertising takes the lead.
However, there is a serious issue at hand. Can you make sales without advertising?
The practice of corporations reducing their advertising budgets during economic downturns is not new. We have observed that during numerous worldwide crises, advertising spending has substantially decreased. This, however, is a practice that dates back to a time when conventional advertising predominated. Things have changed a little since then.
The structure of advertising spending is where there is the most disparity. In traditional advertising, having a high advertising budget nearly always equals success, but in modern advertising, a significant influence can be made with a lesser budget if it is used wisely.
So, this business isn’t as dangerous as it used to be, and if you’re smart, you can make a difference with a small budget.
Budget cuts for advertising during a crisis are highly risky. Let’s look at the reasons for this.
If You Lose Your Voice, You Lose Your Market Share
When a brand cuts its advertising budget, it creates a huge opportunity for its competitors. This circumstance has occurred frequently throughout history. The most well-known of these instances was when McDonald’s in the 1980s reduced their advertising spending. Following McDonald’s error, Pizza Hut and Taco Bell upped their advertising budgets and saw significant revenue growth.
Today, that still holds true. Brands have the ability to seize market share from rivals by acting aggressively during times of crisis.
The Consumer’s World Changes
The intensity of the economic crisis alters the worldview of the consumer and, consequently, the connection they form with your brand. Consumer trust is poor during these times, and the brands they are loyal to go through significant shifts. The consumer’s confidence in you will be undermined by your absence during this transformation. Consequently, it will be quite challenging to protect your current sales.
Advertising Is Not an Extraneous Expense
At the beginning of our article, we said that we cut some expenditures that we deem unnecessary in times of crisis. We made sure to emphasize that one of these costs is advertising. This is a significant error, though.
Like any of your finances, your advertising budget might need to be reduced during a crisis. However, drastic cuts to your advertising budget could leave you unable to support current sales and risk permanently ceding market share to rival companies.
There are some options available to you.
- Examine your marketing spending plans. Focus on efficiency.
- Recognize your consumers’ struggle. Create campaigns and messaging that are specific to these challenging times.
- Be reassuring and upbeat. People need to relax.
- Keep track of every dollar you spend. Consider receiving a return on your investments more than ever.
- Don’t keep your voice down. However, concentrate on generating a return on your assets more quickly.