MARKETING SPEND

Yes – boosting your spend in tough times will benefit the brand

By our News Team | 2022

The knee-jerk reaction in a recessionary environment is to reduce spending on marketing. But study finds it’s detrimental in the longer term.

Marketing professors teach it at business schools, but in real life CEOs and boards tend to baulk at the concept of increasing marketing spending and head count in recessionary times.

Now a new study out of the US purports to show the dangers of cutting marketing investment in a recession, while emphasising the opportunities for bold marketers who maintain or increase advertising in these times.

Marketing Spend

Photo by Anna Nekrashevich from Pexels

A study by Analytic Partners – a cloud-based managed software platform that operates in the Americas, Europe and Asia-Pacific – entitled How to Maintain Advertising Effectiveness in Challenging Times found that 60% of brands which increased their media investment during the last recession saw ROI improvements, according to analyses of hundreds of billions in marketing spend. 

Brands that increased paid advertising also saw a 17% rise in incremental sales, while those who slashed spend risked losing 15% of their business to competitors who boosted theirs.

The study’s data shows that organisations which cut spend are likely to lose ground to rivals during and after a recession, while those who maintain or even increase spend stand to boost their ROI, becoming even more efficient at a time when efficiency is all the more important. 

Counter to driving success and shareholder value

“This challenges the consensus that the first move during a recession should be to cut paid ad spend and marketing headcount to preserve margins,” Analytic Partners notes in a media statement. “However, this actually undermines margins and is counter to what most businesses should be doing to drive success and shareholder value.”

The report also revealed strategies for brands to recession-proof their marketing strategies. For example: 

  • Using multiple marketing channels can increase advertising impact by 35%.
  • Half of brands that increased marketing investment during the last recession saw ROI growth in back-to-back years.
  • Brand messaging outperforms performance messaging 80% of the time, so refocusing exclusively on performance messaging will lead to losses.
  • Two thirds of the opportunities to improve video advertising performance lie in improving the quality of creative.

Overall, the study identified five main factors in advertising success. These are, in order of impact: amount of investment, creative quality, halo (the power of advertising for one product to boost another product), mix of media, and channel optimisation.

“The best way to get through a possible recession, and prosper on the other side of it, is to think long term by investing in your brand and your relationships with customers,” said Mike Menkes, SVP at Analytic Partners.

“Short-term thinking might make some shareholders happy at the next earnings report, but it undermines growth, and therefore margins and true shareholder value over both the short and long term. A strong advertising strategy will lead to continued brand success that is stable and here to stay.”

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.