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How brands should invest in this downturn

How brands should invest in this downturn
Opinion

First, recognise the blind spot in our current marketing theory.

 

There is a substantial body of multi-year evidence, published by the IPA, showing that when businesses cut marketing investment in response to tough economic periods they weaken their brands in the near-term and limit growth and profitability in the longer term.

Indeed, the IPA has assessed how more than a thousand businesses invested throughout different recessions, and the brands that resisted cuts could record five times as many significant business effects — such as profit, share, and penetration — and four-and-a-half times the annual market share growth.

Moreover, brands that invested in an excess share of voice (eSOV) of more than 8% during a recession were “significantly” more likely to report subsequent very large profit growth, and more likely to record larger increases in market share.

This is all good marketing practice and should be endorsed. However, a blind spot in our knowledge exists because this data only incorporates paid brand building media, utilises no Google data, and relies on evidence that is sometimes decades old.

That is not to say the marketing strategy it underpins is incorrect, but media and advertising has changed dramatically since the IPA began collating its evidence, particularly in the last few years with the lockdown pivot to ecommerce and the rise of online-born brands.

Therefore, there is certainly an argument — building upon the existing theory and best practice — to approach recessionary channel investment with more nuance and a clearer understanding of what is different about today’s market than in the past.

Because this isn’t just about brand econometrics, it’s about other, more contemporary channels too — and search engine optimisation (SEO) in particular has a valuable investment argument to hear.

A reliable proxy

Before we get there, however, it’s also important to understand how share of organic search (SoS) has become a reliable proxy for market share and brand strength.

This was first outlined in 2020 by Les Binet, head of effectiveness at adam&eveDDB, who tested the theory across three categories — automotives, energy (gas and electric), and mobile phone handsets — and indeed found it to be true.

Furthermore, SoS could act as an ‘early warning system’ because it precedes the market share data it proxies — sometimes up to a year ahead.

Binet also concluded that all forms of advertising impact share of search, and that organic search was a good tracker of brand saliency and consideration.

But crucially, seeing information quicker than the market means a brand can react to it, and therefore further refine channel investment. In a downturn, when budgets are tight and markets shrinking, that counts for much more.

Today we stand on the cusp of recession, with historically high levels of inflation impacting both consumer spend and media prices. Buyers across every market are becoming more tactical, and as markets contract the very definition for success has to be market share; if you can’t grow a market, you must take share from competitors.

Three elements marketers should pay attention to

For the search market, where the majority of searches are for products, this has three distinct elements marketers should pay attention to. First, if a brand is not visible it is going to lose out on revenue opportunities today while finding it harder to improve a Google ranking in future.

Second, because non-brand product search is also an excellent way to bring in new customers, securing them during a downturn makes them highly valuable marketing targets during an upturn.

Third, and most importantly, there is a unique multiplier effect in organic search not present in pay-per-click (PPC).

Because the organic search results at the top of Google get the most traffic, when a market grows again post-recession, those high-ranking businesses will stand to multiply the benefit.

For example, if a market is indexed at 100 today, and in three years it indexes at 150 because it has grown by 50%, the businesses in the top ranked search positions stand to gain the majority of that growth because that’s where the majority of the traffic resides. Indeed, research shows that 25% of all traffic goes to the top, organically ranked link.

Certainly, those businesses that fail to invest in organic search will have a terrible time trying to get back onto page one — and will likely waste months being unable to capitalise on any market growth.

So, the message is clear: invest throughout a downturn, but do so with a clearer understanding of how different channels will achieve different outcomes, and factor the contemporary differences when considering the historical evidence.

And recognise too that search is now a highly reliable — yet under-used — proxy for market share and brand strength. At a time when boardrooms require true confidence that any sort of investment is worth it, that really does count.


Adam Freeman is managing partner at digital marketing agency MediaVision.

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