Marketing in Recession – How are we doing?

A lot has been written about the need for marketers to fight their corner in recession, to defend brand investment and to get creative with what they have (see Advertising in Recession – Long, Short or Dark?). But how are they doing? An intriguing new study of B2B and B2C marketers by LinkedIn examines how they are managing, and reveals some fascinating insights into the response of marketers and their companies so far during this pandemic. It also shows some unexpected differences between B2B and B2C marketers. The study of 1200 marketers in the UK, France, Germany and Brazil (600 pure B2B, 400 pure B2C and 200 hybrid B2B/B2C) explores the challenges they face, their investment priorities and the reasons behind these.

Unsurprisingly, the top challenges are the same for B2B and B2C marketers, though slightly more intense for B2B marketers. 

Coming a long way in front are budget cuts - a challenge for 73% of B2B marketers and 67% of B2C marketers. The scale of the challenge they report implies the cuts are considerable, as the fall in advertising activity confirms. However, if they want their brands to emerge from this recession in a healthy state, they need to up their game in defending budgets. This is obviously a tough fight but it is likely to be the most important one they will face for many years to come.

The second challenge they report is much easier to overcome, because the research evidence suggests that most marketers do not actually need to change the content, messaging or tone of their marketing (see What Should Ads Look Like in the Time of Recession). Consistency is helpful if you are trying to make every dollar count, so not only is change unnecessary, it may also be counter-productive.

The evidence from past recessions suggests that smart advertisers are consistent with their commitment to long-term brand advertising during recession, because the key benefit will be felt 6-12 months later during recovery, when markets are rebounding and the returns on that investment will be much greater. On the other hand, short-term direct response advertising during recession is likely to experience reduced returns because its effects occur immediately, while sales are generally still depressed. Despite clear evidence to support this, there was a strong swing towards short-term activity during the last recession and the results of this LinkedIn survey suggest that exactly the same is happening now.

This chart shows that the key beneficiaries of marketing mix adjustments during the pandemic are short term media such as Search and non-video Online display. In fact, the pattern of increased channel share of mix virtually mirrors the extent to which channels are associated with short-term direct effects. Meanwhile, proven long-term brand media such as OOH and TV are much less likely to have benefited. Whilst reducing OOH might have been understandable in the early phase of lockdowns, it makes much less sense now. Sadly, the picture for B2B marketers is no different from the general picture – a shift away from brand-building appears to have been the main response.

Of even greater concern are the reasons behind this shift. A look across brand-building media such as TV, Online video, OOH, experiential etc. shows just how confused the thinking is. Marketers are not factoring in the long-term benefits of brand investment to their analysis. How can it be logical to reduce brand marketing but not search marketing because “Supply chain constraints are impacting our ability to deliver”? Brand marketing is not primarily for the now, it is for the recovery that is coming in 6-12 months. Search advertising is only for the now. In that context, the lower brand advertising costs seen now are relatively inexpensive and this is the right time to advertise.

Despite the stronger challenge B2B marketers faced to their budgets compared to their B2C counterparts over recent months, they are markedly more confident about their chances of defending budgets over the next 6 months. 

It is clear that B2B marketers are fighting equally tough internal battles as their B2C counterparts, but it looks like B2B marketers, not B2C, are currently the ones fighting their corners hardest. Both groups, however, have largely been forced down an unwise path, focussing on the here and now rather than preparing for the recovery that we know will follow. Success will require a stronger focus on brand investment.

LinkedIn is calling on cross-industry collaboration and knowledge sharing on its platform to help prepare the marketing industry as we enter an economic downturn. Please join the conversation #DiscussB2BMarketing – or by commenting below. #AD.