Marketing in a Recession: How to Adapt?
Negativity and uncertainty are rife through the media coverage of the Recession. The only silver lining for marketers is that while we have no clue when the recessionary curtain will drop across our businesses, we know from experience how we should handle things once the recession hits.
We gathered four leading marketing professionals, who have lived through a few recessions and are still here to tell the tale, to share their thoughts: Tina Fegent – a leading marketing procurement consultant; Adam Rubins – former agency owner and now agency growth advisor; Cindy Yendell – Founding Partner of Leonardo Advisory and senior advisor on organisational culture with 25 years’ boardroom experience; and Simon Oldfield – Former Head of Sales and Marketing at GM, Mercedes Benz and Hilton International and our CEO & Founder, Stephen Knight, hosted the discussion.
ADVICE for BRANDS & AGENCIES
Do. Not. Retreat.
The first and primary risk for brands is not to retreat. It’s vital you stay connected. It would be easy to become disconnected as consumer preferences change so quickly. Cindy suggests staying tightly tapped into three things in particular:
- Your Cost base
- Your Cash flow
- Your Culture
Track Your Culture
Culture is a source of competitive advantage. For two reasons, it will help you recruit and retain talent, and it will enable you to optimise your performance.
If you’ve got a really healthy, strong culture, where you’ve got people united behind a common cause (that might be keeping close to clients, it might be bringing your cost face down, it might be maintaining the culture) it will optimise your performance.
During times like this, everyone needs to be responsible for both the cost of the organisation and the culture, and you need to track and measure it on a weekly basis. In the same way you track what your competitors are doing and what your cost base is doing, you should also be tracking how your people are feeling. Is the culture still open, transparent, inclusive? How am I feeling? Encourage each of the team members to be reporting back on that.
Culture needs active management. Give people a safe environment. Give permission for people to say “This is not fair. This is difficult. This is changing. There’s contradictions going on here”. With more of us working from home, you can’t rely on the water cooler moments. So it needs to be structured and it needs to be habitual.
In Cindy’s experience, organisations that had open, transparent and inclusive cultures outperform their competitors by 40%. If organisations want to stay resilient, and helpful, and relevant, having a culture that is open, transparent and involves the relevant people, will keep them ahead.
As fast as business culture can improve. It can also go downhill. So you have to keep an eye on it.
Mental Health is Not an “Efficiency”.
Mental health and well being is not an “efficiency”. So, if there are budgets put aside for supporting your team – they must remain. That, if anything, is going to help productivity not hinder it.
That is something that needs to be implicit, part of the business culture and needs to be represented at board level. Typically, when you’re making efficiencies, it wouldn’t be these areas – marketing budgets, training and development budgets, or non-billable costs – that get reviewed first.
Travel is a sensible thing to cut. Especially because it has an impact on sustainability. Adam expressed how fondly he thinks of businesses that call that out, and that, in itself, can work as a retention tool.
Slashing non billable costs can be a false economy if it results in staff churn or even mental health issues. In Adam’s experience, he’s sat in board meetings where “stakeholders have said we need to protect the margin, cut this, cut that and then three months later, you win a huge client, and you’re desperately trying to hire bodies.”
Don’t do anything today that will cost you tomorrow.
The Importance of Strong Leadership
The way people behave and work together is the essence of business culture, and the behaviours are set by the leaders. Those leaders need to be acutely self-aware about the impact that the recession is having on the way they’re feeling, thinking, the stresses and the pressures, because it will shift the culture of the organisation.
“We say the culture is set by what the leaders talk about,” says Cindy, “what they spend their time doing, what they spend their money on, who they promote.”
People are watching that, and therefore the leaders need to ensure, during these times of pressure, they are not unintentionally shifting their focus. For example, the way that they manage redundancies will affect the culture of the organisation.
Good leadership is about time, money, process, focus and communication. You have to communicate with honesty and confidence, kindness and empathy. Recession is a time where we need to see and hear from our leaders. Leaders can offer wisdom of experience and can provide context and evidence. It’s always better to over communicate during these times.
Adam expressed his empathy and fear for leaders who are new to dealing with these issues and he strongly recommends that leaders create their own support network, where they can draw comfort from other people’s experiences.
Focus On What You Can Control
In times like this, we need to focus on what we can control.
Clearly, we can’t control the economy, the government or any of our customers. We have to focus on our strengths and use this time effectively to pivot the business or refocus the business on its core strengths.
Often when the economy is doing well, we diversify and invest in a number of new opportunities. When times are harder, we need to explore how successful these investments have been and whether we need to refocus the core business or become more efficient.
The issue is often at board level, various stakeholders or shareholders who are perhaps not as operationally involved can influence the business by squarely focusing on the bottom line. So we need strong leadership to stand against short term thinking and profit protection in recession.
ADVICE for AGENCIES
Don’t Hide – Be Proactive
Don’t sit back. Don’t hide and think “I’ve got my retainer. Let’s hope it just flows over me and I don’t get caught in the squeeze.” Be proactive because that’s what the CMO is looking for.
CMOs are under pressure from the board CFOs and they know they have to prove that they’re delivering value for money. They need solutions that they can take to the board and prove their value. So, be the agency who’s going proactively to the CMO with ideas about how to be more efficient, how to improve that ROI. Of course, work within the constraints that he/she might be being given from the board in terms of resources, both physical and financial.
Quoting an anonymous poll of senior clients and various different organisations, Stephen shared their responses when asked what they wanted from their agencies:
“Help us to see the wood from the trees with feedback and consumer sentiment insights. That’s incredibly important. Help us stay focussed.”
“Consumer insights. How are people feeling? What other brands are doing is hugely relevant. So thinking about what messaging they’re putting out in the context of where we are.”
“Help us balance our tone – we don’t want to be all doom and gloom or tone deaf. And don’t put communications out there that’s likely to offend or land wrongly”
“Keep an eye on what our competitors are doing. Seek to demonstrate value.”
Be proactive. Be ideas- and solution-oriented. You’ll be rewarded.
Quantify Your Return
Recession is a great test of how risk averse or risk tolerant we are. For marketers, risk is now about outcomes. So your success rate for innovation needs to show high return in a downturn. And creativity is the same. If you’re investing in creativity, you must be able to quantify your return.
This becomes harder (but not impossible) if you’re a PR agency, for example. We’ve shifted away from an awareness marketing world to a performance world. Adam suggests taking a global view: “when Brexit happened, our UK business really suffered as a result of the exchange rate. But our US business was worth so much more.” So how do we turn a negative into a positive? Is now the right time to develop into other markets?
“Agencies and agency owners, it really is down to you to demonstrate the value add and demonstrate what is and what isn’t effective, what’s working and what needs to work harder” says Stephen.
Exercise Your Flexibility (as an Independent)
For the groups, the process of reflecting on economic challenges and changing accordingly, is much more protracted. For Independents, we’ve got so much more flexibility and our business models can be adjusted to accommodate our clients.
In Stephen’s experience, we’ve seen this phenomenon before in previous recessions; independent agencies and consultants have actually done very, very well. You can be more flexible, more agile, lower cost, more bespoke in terms of client teams, more entrepreneurial, less red tape, you have more energy and more purpose. So the advice is always don’t focus on your shortcomings, really focus on strengths and points of distinction.
In Tina’s experience in Procurement, clients are fed up with going to a big agency that’s got four levels of account management, four levels of planners, four levels of creatives etc. “Why am I paying for that?” is the usual response.
It’s really a great time to be an independent agency.
Thanks again to our speakers for sharing their thoughts and advice.
If you missed this particular event, you can watch it here.
If you have a brief, however large or small, we would love to see if we can help. Please do drop Paddy an email at patrick.woods@pimento.co.uk or contact us here and we look forward to being of service.
The Role of the CMO Has Never Been More Critical
The role of a Chief Marketing Officer (CMO) has never been more critical. As businesses navigate through digital transformation, changing […]
Read more.
The Hidden Cost of Ageism: A Barrier to Innovation & Growth
Diversity and inclusion have become buzzwords in the corporate world. Companies strive to foster environments that embrace differences in gender, […]
Read more.