psLondon Thoughts | How to steal your competitors’ market share when the economy hits turbulence

Keep your brand engine at full power - or better yet, rev it up

4 December 2022

In many ways, this year has been full of optimism. Restrictions lifted, businesses recovering, families reuniting. Events, festivals and holidays became a reality, and lockdowns a distant memory (even if we hadn’t missed being squished into someone’s armpit on the train).

Thankfully, it seems we are through the worst of the pandemic. However, as we settle into the autumn and look to the new year, we can’t ignore the reality of our current economic situation.

Once again, advertising and marketing budgets are under the microscope. Advertising spend can sometimes be perceived as a ‘dispensable luxury’, and therefore an obvious overhead to cut when the going gets tough. [i]

But how does it impact a brand long-term? Is advertising a ‘dispensable luxury’? Or is it smarter to maintain or even increase marketing spend when times are lean?

“The sales of a brand are like the height at which an airplane flies. Advertising spend is like its engines: while the engines are running, everything is fine, but, when the engines stop, the descent eventually starts”. Simon Broadbent.

Broadbent’s comparison of advertising spend to an airplane engine reflects its critical necessity. Advertising increases mental availability (also known as brand salience) - the probability that a buyer will notice, recognise and/or think of a brand in buying situations [ii] – and therefore propensity to buy.

According to the B2B Institute, for example, the vast majority (95%) of B2B customers are not yet looking to purchase within your category when they encounter your brand communication. Advertising (in all its forms) is an effective tool for engaging future shoppers because it works by building and refreshing memory links to the brand. These memory links activate when the customers does think about buying in the category. [iii]

So what happens when the engines stop... and brands stop advertising altogether?

One key study from Byron Sharp and colleagues at the Ehrenberg-Bass Institute considered the long-term effect on sales when a brand stops broad-reach advertising. The study found that, in the majority of cases, there was a steady decline in sales over time after advertising was stopped (see Figure 1). This decline became more common and greater in magnitude as brands went longer without advertising. [i]

Figure 1.

The study also found that smaller brands suffered greater decline than bigger brands (see Figure 2). Lack of advertising means brands cannot build or refresh mental networks through mass communication – but people are still exposed to bigger brands through the increased likelihood that they will use or see the brand, and the relative ease of being able to find and buy it (physical availability).

The airplane engine analogy is embodied within this study: turning off the advertising engine decreases the probability that a consumer will think of your brand when in a buying situation, which starts the descent of sales [i].

Essentially, the greater mental and physical availability that bigger brands enjoy likely better insulates them from decline after stopping advertising, compared to smaller brands. [i]

Figure 2.

This research did not consider how a pause in advertising applies to non-consumer goods brands, how sales are affected when considering forms of activity that drive a brand other than mass media, or when advertising is simply decreased rather than paused altogether. However, we found similar findings within our own work.

Back in 2018, the University of Bradford was seeing a decline in student recruitment. One key factor that contributed towards this was the university spending significantly below the market norm on student recruitment advertising, after years of budget cuts. This major fall in share of voice contributed to a 5% decline in student numbers.

After doing audience insight work and developing a rebrand with psLondon, the University of Bradford went back into the market with a relevant message and creative – and a sensible spend. The decline began to reverse. The number of students recruited in September 2019 increased by 14.8% on the predicted numbers before the campaign began. The increase was worth over £8m in fee revenue, giving the campaign a ROI of 16x.

Stealing your competitors’ market share

During the Roaring Twenties, two companies dominated the American packaged cereal market – Kellogg’s and Post. When the Great Depression hit in 1929, Post took the logical approach, battened down the hatches and waited for the storm to pass – but Kellogg doubled its ad budget, charged ahead with bringing a new product to market, and aggressively entered the radio advertising space. [iv]

It’s no coincidence that, in 2022, you’ve heard of one of these cereal brands, but not the other. As famed marketer Rory Sutherland would say, it doesn’t pay to be logical when everyone else is being logical [v].

Despite the story of Kellogg’s success, most companies will take the same course of action as Post. The behavioural economics principle of loss aversion demonstrates that people are more worried about “sinking the boat” (a risky decision failing) than “missing the boat” (not jumping on a great opportunity) [vi].

But businesses that increase their marketing activity during a recession do significantly better than those who slash ad spend [vii]. During the last recession, 60% of brands that increased media investment saw ROI improvements. What’s more, these brands saw a 17% rise in incremental sales, whilst those that cut spend lost 15% of business to competitors who spent more [viii].

Keeping your brand engine at full power is essential for brand salience

Stopping advertising, even for a year or two, can be detrimental to brands, putting them on a downward sales trajectory. Without refreshment through brand communications, brand salience created by those precious memory-based brand linkages diminishes. During the time of an advertising pause, the situation is compounded by consumers seeing your competitors communications, ensuring they are even less likely to think of you.

So when you experience turbulence, pause and consider what feels like the illogical approach. Keep that engine at full power – or better yet, rev it up - and you’ll land much greater opportunities.

Here are some ways you can navigate the current challenges:

  1. Create real cut-through by thinking differently – because maintaining or increasing media spend for poor creative won’t be effective! Check out our recent article ‘Mischievous marketing: why we must dare to be different’ by Ellie Atkinson to discover more.
  2. Recognise and empathise with what your consumers are going through right now, and how your brand is positioned to alleviate their pain points. A well-timed, culturally relevant campaign can have a real impact on positive brand sentiment.
  3. Run an analysis on what your competitors are doing – there could be an opportunity for you to increase your share of voice if they are decreasing their marketing efforts.
  4. Undertake some audience insight work to deeply understand your target market. If you aren’t communicating your brand in a way that resonates with your audience, they are unlikely to engage regardless of your reach. 

If any of the above feel like something you want to explore, get in touch! We are here to help increase your brand’s effectiveness during these challenging times. Problem. Solved.
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