The dreaded R-word in marketing is making a comeback. No, not retargeting. Recession.
In the US, the partial shutdown of the federal government imperils an economy that may already be slowing. In the UK, businesses are heading into the unknown abyss of Brexit with no ad budget growth last quarter. For the first time since the Great Recession, marketers may see significant budget cuts in 2019.
After the 2008 stock market crash, newspaper advertising spend in the US fell by 27%; radio, 22%; magazine, 18%; outdoor, 11%; TV, 5% and online, 2%. The entire ad market declined by 13%. Moreover, ad agency revenue growth is historically a lagging indicator for GDP – meaning that any change in economic growth hits agencies a few quarters later.
So far, it is not looking good. Last week’s Bellwether Report (PDF on my website here) from the UK’s Institute of Practitioners in Advertising (IPA) found that business confidence is falling. (Predictably, short-term marcom spend is also increasing in response while long-term allocations are decreasing – more on that later.)
If marketers see leaner times this year, it will be critical to focus on profitable effectiveness – rather than empty “growth” – more than ever. After all, the economic principle of opportunity cost mandates that one dollar spent on one thing cannot be spent on another.
For this column, I reviewed a 2008 report from the IPA on marketing during downturns (PDF here) and its 2015 Creativity & Effectiveness Report (PDF here). An IPA spokesperson told me that the organisation may produce an updated version of the 2008 study. I also obtained a past Millward Brown (now Kantar Millward Brown) white paper on survival tactics during recessions (PDF here).
I also remembered my own experiences and interviewed marketers who have seen downturns to see how companies can help both short-term survival and long-term growth. Here is what I found.