Advertising Strategies During Economic Downturn

Many retailers think they should cut their advertising budget during economic downturn or when looking historically year-over-year quarterly or monthly. However, those that continue to maintain share of voice and a share of market during tough times have shown a longer-term improvement in profitability that outweighed the short-term savings.

But first, how do you accomplish a successful brand and marketing program?

No matter during ‘normal’ periods (if there is such a thing) or economic downturn, there are four crucial silos in any organization. And as the old adage goes, “You are only as strong as your weakest link” — all four must work harmoniously in order to create and execute a successful brand and marketing campaign.

First and foremost, operations. Operations is responsible for managing profitability and every aspect of the company’s operation, including defining, managing and defending your brand. This starts from the top-down. Next is merchandising. Having merchandise that will defend your brand with the goal of exclusivity to increase gross margins and decrease competitive situations is key for the next two steps. Third is sales. Salespeople must be passionate about your brand and know product features inside and out. And lastly, marketing. Whether in-house or if you use an agency, this silo is responsible for combining all the aforementioned, determining and defining the strategic marketing plan and opportunity, as well as crafting a breakthrough message that entices the targeted consumer to respond. If any of the first three silos fail, then you can do all the advertising and marketing in the world but you will just be ripping up hundred-dollar bills.

Now, let’s dig a little deeper.

Operations or leadership chooses the market position for your company. Leadership also oversees each silo to ensure the brand and message can be defensible and delivered 100 per cent of the time.

Merchandising needs adjustments from operations based on brand position. Merchandisers define loss leaders who will support promotions and design store layouts for marketing products that will illustrate the perceived advantage of value, quality and price.

Salespeople are the frontline and where the company is most valuable. Operations and merchandising must make sure the sales team is prepared so they can passionately defend the brand promise and position. Training on products is vital to enable salespeople to communicate and sell all the features and benefits.

Marketing must work seamlessly together with the other three silos to create breakthrough events and promotions, and maintain fiscal responsibility of the advertising dollars being spent. Your brand position, promise and creative are the engines that drive the train. Be selective to be effective. Don’t default to just making everything fit within a budget. Measure everything and consistently adjust as needed to ensure the best return on investment (ROI).

More Effective Marketing
There are countless opportunities for retailers that choose to take a long-term view on their business and customers. Common advertising strategies, particularly during economic downturn, include aggressive promotions, short-term price breaks, seasonal events like those held outdoors and focused messaging on the value that your brand provides.

Today’s successful advertising is 50 per cent the medium and holding those accountable; the other half is the messaging. As the consumer navigates through the plethora of retail options, you must remember that unlike yesteryear, flooring brands have become blurred. And what will be more increasingly important is why the consumer should come to your store.

Consumers are asking, How can I afford this? Why do I need this right now? What makes this option better for me and how? How should I choose?

Other considerations are creating messaging around new customers versus existing ones, finance or cash buying, style versus functionality and in-stock versus custom ordering. Today, you are the brand and the stronger the brand promise, the more powerful the brand position and the increasingly formidable the ROI will be with your marketing and advertising investment.

Content is King
Your content needs to continually re-educate the consumer, be memorable, match the medium and make it easy for consumers to understand the value and benefits so you engage them to call, click and, most importantly, shop.

Content is defined by where you are trying to reach the consumer. It must be relevant to the platform because in most cases you have very limited time to make a strong impression. You only have 15 to 30 seconds to do so on broadcast, OTT/CTV or organic YouTube advertising, and five seconds for fully watched paid advertising. Facebook and Instagram provide an average three seconds, as people scroll their feeds. For TikTok, the page just has to load.

When it comes to advertising spend, annual marketing budgets are generally five to eight per cent of sales. So, for example, if yearly sales amount to $5 million, then ad spend is between $250,000-$400,000 annually or $21,000-$33,000 per month. This can fluctuate slightly during flagpole events and holidays, but should not fall below your monthly average spend, ever. And it’s better to spend money over a consistent period of time instead of peaks and valleys advertising.

Christopher C. Hunt is director of digital sales at Knorr Marketing. Christopher is a seasoned strategist and business development professional with 30 years of experience in training, planning, development and creating omnichannel marketing solutions that drive customer revenue.