Innovating for success in a recession

Opinion

Marketing budgets should be seen as an investment, not an expense to be trimmed.

In periods of economic downturn, the natural reaction of CFOs and CMOs is to take fewer risks and spend less money, opting for marketing tactics that they know are reliable and safe.

And whilst this prudent approach has its obvious upsides, pulling the purse strings and eliminating risk should not be the go-to strategy. Multiple studies looking at one hundred years of recession and economic data all point to the same conclusion:

• those who invest in brand advertising emerge from the downturn stronger and more profitable than before.
• those who can maintain marketing spend in the short term will likely increase their share of voice (as competitors cut their budgets) capturing more of the market, leading to more effective ad spend.

Marketing budgets should be seen as an investment, not an expense to be trimmed.

Outside of the recession, the marketing world is currently experiencing a period of significant and tumultuous change. To quote Keith Weed, quoting Landmark Ventures’ Shelly Palmer: “The pace of change will never be this slow again”. It’s crucial to adopt an agile approach and a culture of evolution, as failure to adapt could quickly result in being left with an outdated model that is no longer fit for purpose.

Riding the recession wave

The golden rule to remember is that the recession will end, and the pace of change will accelerate.

Recessions tend to last for a period of 15-18 months, after which we tend to see brand confidence returning — with marketing and efficiency trends that were suppressed, now being accelerated to make up for lost time.

The end of the 2009 recession, for example, was the catalyst for the distinct shift to digital media channels. It is a trend that we have continued to see with year-on-year growth ever since (bar 2020), with non-digital media spend remaining pretty much flat to this day.

So what trends will we see accelerating after this recession? It’s likely there will be a laser focus on leveraging first party data across the whole end-to-end advertising process, and a real investment in talent, technology and vendors that can facilitate it. If this is the case, now is not the time for inertia and to prepare for that rapid shift. The big winners over the next two-five years will be the brands who are able to react quickly and move their program to coincide with these external pressures for excellence in marketing.

Innovating in a recession

Innovation is about seeking change for the better, improving efficiencies in the way we work. It’s a case of acting on the hypothesis that if we do ‘x’ differently, then ‘y’ will be better.

Innovation is something we need to keep doing, we just want to drop the risk associated with it, and make it more palatable during times of economic downturn.

Here are three key areas we believe need to be prioritised:

Focus innovation on areas which elevate everything you do

For the majority of digital marketers, measurement and first party data technology are likely to be the current priority areas of focus.

With the decay of the infrastructure that underpins the majority of performance advertising measurement – namely the third-party cookie or the device ID – new methodologies need to be found, tested and accepted by businesses to continue to efficiently invest in digital channels.

Combinations of MMM and in-channel measurement are emerging as the most reliable and accessible solutions, but they are not easy to design and implement.

First-party data will be a key ingredient to measurement going forward, but this is only one of the many (and increasing) utilities of first party data.

An increased focus on data ingestion, storage and deployment, as well as the technologies, processes and skills required to do that, is a trend that is permeating nearly all brands at the moment.

Whilst these are two broad areas of focus, there will be also be subsets of these which will require innovation across your organisation.

Isolate innovation risk instead of eliminating it

Ensure you know where the risk is, create acceptable parameters, and lower the odds of it happening, then let your marketing programme run.

For example, carve out an explicit percentage of media budget that can be used for testing new channels, tactics and vendors etc. This should have defined parameters for success and failure within a reasonable testing period — with acceptance that failure is ok.

Innovation risk can be significantly reduced using a robust testing framework with a rigorous hypotheses and pre-test assessment, and knowledge sharing with other teams that are also testing.

For larger scale innovation, such as introducing a new technology vendor or a major strategy change such as directing mweb traffic to an app, risk can be reduced and isolated too.

Carry out a robust needs, suitability, and risk assessment with all applicable stakeholders. Operational rollout of these changes should be done bit by bit, again within agreed parameters for success and failure within a reasonable testing period.

Prepare for the future

As previously discussed, there’s likely to an acceleration of innovation following a recession so start putting into place a framework of adaptability and testing in preparation for this.

Instilling a culture of understanding ‘the new’ — separating the hype from the utility — and understanding how this can fit into and help your current problems will pay dividends in the long run.

Allowing teams the autonomy to explore, test, and not fear failure will foster a culture of responsible agility – key for when the statement ‘pace of change will never be this slow again’ continues to prove itself to be an ongoing truism.

Battening down the hatches, standing still and waiting for the storm of recession to pass is not really an option. Change will continue to happen around you, despite what you do, and stagnation will only send you backwards as your competitors push forwards. It’s a balancing act, but you will need to tread carefully whilst maintaining momentum.

James Coulson is managing partner, consultancy EMEA at digital marketing services company Kepler