Savanta: Advertising in a recession

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It’s tempting to reduce advertising spend in a recession...
...here’s why you shouldn’t
WHAT IS THE PURPOSE OF
ADVERTISING?
INTRODUCTION
In February, the UK entered a technical recession,
with GDP figures showing the economy contracting
by 0.3% in Q4 2023.. This will have major implications
for policymakers, consumers and businesses.
Those in marketing departments across the country
will be looking at severe economic headwinds, and
potentially being asked to further squeeze already
tight budgets. It’s tempting at this time to look at
your advertising budget as a ‘nice to have’ rather
than an essential.
However, our research shows that it’s absolutely
imperative that brands maintain their advertising
spend during a recession. The risk is, if you don’t,
consumers will forget your brand and it will take
a long time (and more budget) to become front of
mind once more.
By advertising, we really mean any marketing
communications which direct attention to a product,
offering or service. Its core purpose is to influence
the behaviour of a target audience, whether that is
coaxing tangible, commercial actions, like making a
purchase, or more abstract and emotional responses,
such as adopting a specific viewpoint about a
brand. The role of marketing communications is to
establish, maintain, and grow a relationship between
the advertiser and consumers. That relationship is
not unlike all other relationships in life: the more a
personal relationship is invested in, the stronger it
becomes, be it with friends, family or your partner.
Understanding the dynamic between the audience
and a brand is therefore equally crucial. Much like
many of our personal relationships in life, the strength
of the brand-consumer relationship is impacted by
the time, effort, and attention invested in it. It’s no
coincidence that individuals often cite a breakdown
in communication as a reason for relationships
weakening; the same holds true for marketing.
This is particularly important over longer-time
periods. In the 1989s Gordon Brown, co-founder
of Millward Brown, explained that long-term
memory lets advertising exert influence over brand
interactions across an extended period. Brown
claims a strong advertising execution will associate
“relevant messages and images with the brand in
a memorable way so that they are carried forward
through time to imbue the brand with interest and
status”.
But more than this, there is an opportunity for brands
to lean in. If you maintain your advertising spend
while many others don’t, there aren’t many easier (or
cheaper) ways to increase your share of voice in the
market.
HOW DO ECONOMIC RECESSIONS
IMPACT ADVERTISING SPEND?
To understand why, let’s look in more detail, at the
purpose of advertising, how recessions impact
advertising spend, and the risks and opportunities
for brands navigating these choppy waters.
According to HM Treasury, in the UK, a recession
is defined as negative economic growth, i.e.
contraction in national GDP for two or more
consecutive quarters. In the last 50 years, the UK has
experienced six recessions – the most recent (and
dramatic) taking place at the height of the COVID-19
pandemic in 2020.
So, what happens to advertising when recession
does hit? Simply put, marketing & advertising
budgets are often cut back significantly – and this
presents both risk and opportunity.
A closer look at the global annual advertising
expenditure over the past 20+ years reveals a
consistent upward trend, with the only year-on-year
declines occurring in 2008 and 2020. It’s not by
chance that these contractions coincide with the
world’s most recent financial crises; this alignment
underscores the very real hits marketing budgets
face across all sectors.
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It’s tempting to reduce advertising spend in a recession...
...here’s why you shouldn’t
WHAT SHOULD ONE CONSIDER
WHEN RECESSIONS DO HIT?
Actually, the options are probably very similar to when
the economy is healthy. They essentially boil down to:
HOW MUCH TO SPEND
ON ADVERTISING
Should you cut, maintain, or
increase?
WHERE TO DEPLOY
THAT SPEND
What are the best channels
during financial crises, and
what’s best for your brand?
EXECUTIONAL
STRATEGY
How are you addressing
your audience’s needs
(influential messaging), and
are you using the right tone?
“The sales of a brand are
like the height at which an
airplane flies. Advertising
spend is like its engines: while
the engines are running,
everything is fine, but, when
the engines stop, the descent
eventually starts.”
Simon Broadbent
How much to spend
Spending more or maintaining: opportunity
We believe advertising & marketing costs during a
recession should be regarded as ‘good costs’.
A significant amount of opportunity is created
because of the tendency to cut budgets; when
budgets are scaled back to such an extent, it creates
a vacuum in the market.
But this vacuum is not as ominous as it sounds.
It’s an arena of opportunity where agile brands can
strategically increase their Share of Voice, or indeed
achieve Excessive Share of Voice.
When competing brands reduce their activity,
those that maintain it become more noticeable to
consumers, creating a positive side-effect. This can
also make a smaller brand appear to be a much
larger player in its category than it really is.
This is the principle of Excessive Share of Voice,
which has long been regarded as a pre-requisite
for share in market growth. But in a recession, this
principle is another reason for a brand to hold its
nerve and continue investing in advertising.
Mark Ritson’s explanation of the Excessive Share of
Voice concept can help us understand these effects:
“It is the closest we have to a scientific law of
advertising, and it says an equilibrium exists
between a brand’s share of voice and its share of
market. If a company increases its relative share
of voice above its share of market, the equilibrium
will eventually restore itself and market share will
also grow.”
Mark Ritson
Spending less: risk
Cutting spend completely: tempting but don’t do it
– it carries significant risk and as such represents
making a false economy.
Against the backdrop of economic turmoil amid
COVID, Peter Field reflected on cutting ad-spend:
“What is certain from the 2008 experience and
earlier recessions is that ‘going dark’ by pulling
all brand advertising brings the real risk of
permanently weakened business performance.
It is sensible to debate the tone and nature of
brand advertising to recession-hit customers,
but not the importance of it.”
Peter Field
Savanta’s own campaign evaluation research attests
to this. We’ve found that maintaining momentum
is critical to our clients’ brand equity building -
interrupting a campaign, even for just two weeks, can
be detrimental to brand health. We also see instances
where removing spend for any length of time not only
weakens the brand but allows competitors to exploit
the situation and steal share of mental availability.
As Simon Broadbent put it: “when the engines stop,
the descent eventually starts.”
In fact, this was demonstrated recently in London,
via a bizarre example of the impact of removing
confectionery advertising, claimed in 2022 by The
Mayor of London’s office. In February 2019, The
Mayor of London directed Transport for London
to introduce advertising restrictions on certain
food types, especially confectionery. A test vs
control study (monitoring London against a region
with similar purchasing trends, but without such
restrictions) found that consumption in London was
reduced by the equivalent of one and a half milk
chocolate bars less per week.
Another fallout from packing in the ad spend is the
cost of acquiring new customers to replace any who
abandoned the brand in the absence of advertising.
Acquisition cost is easy to forget when there are
more immediate demands to save money.
Since length of a recession can vary significantly,
brands should refrain from the temptation to “go
dark” during these times. Instead, they should seize
the opportunity to remind consumers they are still
there for them. This carries significant weight in
an instance like a recession, when consumers are
already concerned about their finances. A simple
reminder that familiar and beloved brands are still
present can offer a surprising sense of reassurance.
It’s like a reliable anchor amid turbulent times,
providing comfort and stability - a subtle reaffirmation
which holds more significance than we may realise
at first glance. Just as good friends would be for
someone going through a difficult time.
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It’s tempting to reduce advertising spend in a recession...
...here’s why you shouldn’t
Deploying spend
If you are obliged to reduce spend, certain hacks can
help with efficiency of effect. Product placement can
be particularly effective. In many cases, it is a more
budget-friendly option.
From 2018-2021, Savanta ran a project for a leading
high-street coffee shop chain. The client, in the face
of the COVID-19 pandemic, maintained a relationship
with both current and prospective customers thanks
to consistent marketing communications. Forced to
close its outlets on the high street, the brand used
product placement in a popular TV show to keep the
brand present in hearts and minds during the 2020
lockdown. In doing so, it became well positioned in
the category as consumers emerged from staying at
home.
The brand experienced positive growth in both
explicit and implicit brand image. Trust in the brand
increased to 91% (8 percentage-point increase).
The percentage of those agreeing the brand is
“for someone like me” also increased to 76% (12
percentage-point increase). The brand boosted its
Brand Likeability, which averaged 77% before the
pandemic, but increased to 85% after.
The approach reminded UK consumers of the brand’s
value to them, and the significant place it had in their
lives, and which it would do again. The placement
ensured people kept the brand in their heads and
hearts when they couldn’t have it in their hand.
Once outlets reopened, they were more “go ready” to
welcome back their customers, who couldn’t wait to
purchase from them again.
Being faced with a challenge is often the time when
people are most inventive and when ingenuity and
creativity thrive. What comes to mind here is to
“improvise, adapt, overcome” - an unofficial slogan
among the U.S. Marines popularised by Clint
Eastwood’s character, Sergeant Thomas Highway in
the movie, Heartbreak Ridge.
If TV advertising is not an option for a brand, or if only
a reduced level of TV activity can be afforded, there
are still options. Radio, for example, can successfully
be used to prolong the memories of TV advertising
by reminding people of more memorable ads, cost
effectively extending campaign frequency. One of the
best examples of this goes back almost 20 years to
Nescafé’s “Funky Old Cortina” ad which transitioned
so well from TV to Radio, thanks to its earworm of a
soundtrack. The one caveat here, is that it must be
sympathetic to any current Zeitgeist.
Executional strategy
In the midst of a recession, precision in executional
strategy becomes paramount. Crafting messages
that resonate amid rapidly changing priorities
requires leveraging your brand’s distinctive assets,
and a deep understanding of audience needs. A
robust executional strategy, rooted in these principles,
forms the bedrock for strong and effective creatives.
Distinctive assets
One effective strategy is to exploit the brand’s
heritage by referencing or emphasising a brand’s
distinctive assets that may have been developed
over time.
When we talk about a brand’s distinctive assets,
we really mean anything consumers associate
with a brand that they don’t associate with others.
Essentially, these are shortcuts to draw on previous
advertising memories and investment. This could
be slogans, products, logos, characters, or even
colours. For example, LV’s “dum di di dum” jingle,
McDonald’s Golden Arches, or Deliveroo’s distinctive
teal blue colour.
In the world of FMCG, for example, an advantage
of distinctive assets is that they make products
easy to spot – not just in advertising, but on the
crowded shelves of supermarkets – or perhaps on
another brand’s product as part of a collaboration,
for example, Cadbury x Oreo bars.
They’re particularly effective since they remind
consumers of previous advertising memories and
experiences. Psychologists suggest there are three
types of long-term memory: semantic, procedural
and episodic. Understanding how these memory
systems work can provide a window into how
advertisers can create content that resonates and
stays in consumers’ long-term memory.
Addressing the needs and behaviours of your
audience
It is also important to note, recessions do come to a
close. But just because the economy is getting back
to normal, it doesn’t mean consumers’ purchasing
patterns will.
“In deciding which marketing tactics to
employ, it’s critical to track how customers are
reassessing priorities, reallocating budgets,
switching among brands and product categories,
and redefining value. It’s therefore essential to
continue investing in market research.”
John Quelch, Katherine E. Jocz
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It’s tempting to reduce advertising spend in a recession...
...here’s why you shouldn’t
When people face adversity, they respond
in different ways and will have different
needs, motivations, and priorities.
During a recession, understanding these
needs becomes even more imperative
as competition for consumers’ mental
availability hots up.
Getting the message right is critical:
consumers’ changing emotional needs
will go some way in influencing their
behaviours, as emotions and motivations
are drivers in most decision-making.
The message must truly resonate with a
consumer and will do so better, as long as
it meets a need.
The COVID-19 pandemic provided us with
an example of a supermarket (Tesco)
which successfully addressed these
needs from a brand perspective, and
itscompetitor (Sainsbury’s), which did so
less successfully.
When essential food shopping was one
of the few permitted reasons to leave the
house in early 2020, many shoppers were
afraid to leave for fear of contracting the
virus. While both brands understood this
pain-point, only one executed it well.
Tesco responded to this shared sentiment
aptly, and fast. An ad depicting “little helps
for safer shopping” included real staff
members who demonstrated how to
shop safely in-store, thereby reassuring
shoppers that their visit to Tesco would
be as smooth as possible. Smiling,
uniformed staff members demonstrated
how to queue using social distancing,
and progress around the store, until they
were ready to pay, where they’d be met by
a friendly cashier tucked away behind a
Perspex screen.
The ad was big on human interaction and
adopted just the right tone, drawing on
humanity through compassion, and warm
customer service. This created strong
empathy.
By contrast, the equivalent Sainsbury’s
ad did not feature actual humans.
Instead, Sainsbury’s opted for animated
“matchstick” figures to depict all the same
experiences. However, without real human
beings, the human response to their ad
was not nearly as strong.
Data from BrandVue Retail - Savanta’s
daily brand tracking and market intelligence
tool - shows that for this period, Positive
Buzz for Tesco increased in tandem with
Advertising Awareness. In turn, Brand Love
for the supermarket soared, and ultimately
slowed the decrease in store visits. Data
for Sainsbury’s suggests its ad did help the
brand, but its efficacy did not nearly match
that of Tesco.
Tesco succeeded in humanising its
brand by connecting emotionally with its
audience. The brand positioned itself as
one that could be trusted – and consumers
were reassured enough to quite literally put
their health in Tesco’s hands!
SO, WHAT DO WE ADVISE?
Don’t ghost your consumers
Avoid the temptation to “go dark” – organisations and brands need to
keep close control of their spending but failing to support brands can be
detrimental to future brand health, equity and even their survival.
Make your voice heard
Use the opportunity to shout louder than you might previously have been
able to. Recessions are the unique instances where this is possible to do
even if one maintains existing ad spend.
Use your brand heritage
Exploit your brand’s distinctive assets. Remind consumers of what
your brand stands for. These facets help brands stand out, and remind
us of previous advertising memories and experiences, thereby driving
advertising efficiency.
Invest in research
Market research will help you keep tabs on changing consumer needs,
how they think and what they feel. Knowing these will let you address
needs and concerns efficiently and empathetically.
Prepare in advance
Outside of recessions, pay attention to your brand’s relationship with
its customers. Ensure you’re always available and responding to your
customers’ evolving needs and desires – and reward your customers
for their loyalty. A brand that has been successfully and consistently
supported in the run up to an economic downturn is likely to be better
placed when one does hit.
savanta.com 8 9 savanta.com

It’s tempting to reduce advertising spend in a recession...
...here’s why you shouldn’t
...here’s why you shouldn’t
ABOUT US
Savanta is a leading full-service market research agency renowned for its excellence in campaign
evaluation research.
Our media team are experienced in helping brands and agencies navigate recessions and economic
downturns. From informing media plans to optimising creatives, we help our brand & agency clients
identify opportunities to exploit and build their resilience. Savanta will fuel your success - even in
tough economic climates.
Get in touch here to elevate your advertising strategy and give your brand or agency the maximum
chance of success.
Paul Baker
Senior Director
Paul is a Senior Director in our media team and has specialised in
brand & comms research for over 30 years, including ad testing, ad &
brand tracking and multi-media modelling. Paul looks after much of
Savanta’s sponsorship evaluation and product placement research, as
well as advertising funded programming. Paul has worked with industry
giants across the FMCG, finance, energy and transport sectors, working
alongside media owners and agencies to help guide them through the
last three recessions.
paul.baker@savanta.com
Shaun Austin
SVP, Media
With over fifteen years of experience in media, advertising and
marketing communications research, Shaun currently works with some
of the world’s largest media owners and brands, conducting research
on brand, marcomms and the evolving media landscape. Shaun is an
experienced conference speaker, presenting at many events including
MRS Data AnalyticsConference, WARC’s Measuring Advertising
Performance symposium, the Chartered Institute of Marketing’s Digital
Summit, Qual360 and the Media Research Group’s annual conferences.
shaun.austin@savanta.com
better.decisions@savanta.com
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