2022 has been terrible for businesses as the world battled inflation and economic uncertainties. The lingering covid-19 effects, Russia’s war on Ukraine, climate change and social pressures have all culminated in the looming threat of global recession.
At an unsettling time like this, running businesses and having a stable bottom line can be challenging. Industry experts say that marketers need to play it smart. Clever spending technique in marketing and technology could be the best way to get through a recession economy.
According to a report by IMF, global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. India’s global growth is expected to slow from 8.7% in 2021 to 6.8% in 2022 and 6.1% in 2023, according to the report.
With companies trying to keep themselves afloat, the first thing they usually cut down is expenses. Marketers need to apply proper research into their advertising and marketing plans to tide over the tough times.
A Harvard Business review paper of 2009 on marketing during the recession said, “when survival is at stake, it is easier to get companywide buy-in for revising marketing strategies and reallocating investments. Managers can defy old mindsets and creatively search for superior solutions to customer needs instead of relying on the next line extension.” Creative thinking is key.
The rule of smart spending
Viren Razdan, Managing Director of Brand-Nomics, talks about how marketers need to craft strategy based on market conditions. "So as the global hysteria gathers momentum, different countries and categories would have varying levels of impact - same storm different boats. Unfortunately, advertising and marketing become the first casualty.
"Strangely it’s in a low tide when the real test of marketing comes into play as demand has to be provoked and brands play out their strengths. Simply withdrawing and wait for the storm to pass on is often seen as a prudent strategy but the strength of a brand and the power of its marketing is tested here.
"Courageous marketers should leverage the quieter scenarios to build confidence and craft strategy accordingly. As ad budgets get slashed and companies play a wait & watch for the high tide to build back it’s such periods that could be an opportunity to cut through to your segments.”
Shashank Sharma, Co-founder & CEO of Expedify paints a picture of how businesses should spend their money and time in researching the perfect marketing mix for an uncertain economy. “In a recession, most companies are cautious with money and budget cuts typically begin with the marketing function. While most marketers react by bargaining for lower annual targets in light of curtailed budgets, the really inventive ones start spending more time and effort in customer profiling, marketing analytics and building a tech stack that enables them to laser focus on their core audience and provides them with even more value through the many marketing activities that are just as important as advertisements.
"Marketing is also about enabling the right consumer feedback to reach the R&D as much as it is about aiming for the ultimate marketing utopia - one-to-one conversation with the consumers. When budgets are constrained, evolved marketing companies start building the ecosystem that can get them closer to this utopia.”
“Marketing has always been about picking the right set of people to do business with and then delighting them with your product, service and communication. Now marketers can do this better. They can spend more time and money on creating an ecosystem that enables insight and communication on an individual level.
"Every penny spent on this today will save them many tomorrow. It’s been a decade of sweeping changes already but the landscape has shifted further still in the last two years alone. Any marketer not on top of these evolutions in marketing tech and data analytics is likely to believe that without huge budgets and a ‘viral’ idea he is helpless.
"The truth is that marketers today have the option to avoid large and expensive nets to catch the attention of their consumers. They can instead use an array of specially designed fishing hooks for each kind of consumer and lure them with unique offerings and communications tailored and customized for each,” Sharma adds.
Ashray Malhotra, CEO and co-founder of Rephrase.ai firmly believes in the advanced technology to be the safe haven for marketers during recession. “I think we will see companies being divided into groups. There’ll be some companies that will continue to be aggressive, and try to communicate with customers. For all of those companies, I do believe that using AI technologies to create video content is a much more efficient use of their dollars.
"Hence, we should be expecting more and more marketers to, instead of actually doing real human shoots for every single content that they need, start to rely more and more on AI technologies. Now, to be completely honest, I do see a category of marketers take a step back across the board and not do any marketing activity whatsoever.
"I would expect the vast majority of aggressive marketers to move to instead of cutting back on doing the work in the first place, just trying to do their work in more efficiently and using AI technologies, which will be at least two orders of magnitude cheaper than doing any real-time shoot.”
Karan Taurani of Elara capital explains how marketers need to find the most effective medium during a recession and spend on that instead of on everything. “During the global recession we see every company cutting ad spends. We saw this in 2008-2009 when there was a huge negative impact in terms of ad spends. We have seen this now in the Russia - Ukraine war times where ad spends have been cut drastically, not only in India but globally as well. So, a lot of estimates basis that has got challenged."
According to Taurani, India’s digital advertising growth of 25% to 30% will be revised downwards to 20% to 25% during recession times.
“I think one will actually try to measure the ROI and effectiveness of every medium, and then try to make a call in terms of where the advertising budgets need to follow. And like the normal times when you have got say 100 rupees, you will definitely allocate it to TV, radio, and digital segments separately, but if your budget has come down from 100 to 80, marketers will think of the most effective medium that will emerge as a winner. In the mediums, which are low, and which don't have a proven ROI, those are the most severely impacted in terms of space,” Taurani adds.
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