If you own a business during a recession, will you cut down on marketing expenses or maintain them? Just like in budgeting, to make money, you either earn more or cut your expenses. Either way, cash outflow should be less.
In this recession, the money that goes around is definitely less. The initial reaction is to cut the budget in marketing. However, some companies didn’t cut their ad spending. Just like a paradox of sorts, what they did is actually the opposite.
They maintained and even increased their marketing budget. Some of these companies saw opportunities in a recession. These companies that continued their ad spend either increased their sales, dominated the market, or innovated the industry.
Here are some companies that beat the odds during a recession.
1. Papa John’s
Ever hear the adage where you don’t take your foot off the gas pedal? If you do, it would only slow your opportunities (to earn).
Papa John’s is one example of a company that upped its marketing budget by investing in new kitchen equipment such as dough spinners. They also increased productivity by reviewing and making adjustments on how employees can make pizza faster.
Aside from the productivity boost, their marketing department took their time to shine via the rollout of the Papadia flatbread quesadillas, stuffed crust pizza, and Shaq-a-Roni pizza. The Papadia was introduced last January and delivered strong sales growth of 21%.
With no signs of stopping the ads, Papa John also continued to practice ‘fortressing‘ or creating more locations near each other, shortening delivery time and carrying out more orders.
Out of sight, out of mind. During the Great Depression, Post was the number one choice of ready-to-eat cereals. However, they cut back on their advertising spend. As a result, Kellogg’s doubled its advertising budget, and people began to see more of Kellogg’s.
“Never miss out on an opportunity like a good recession.” – Jack Welch.
Sometimes, an existential crisis can bring out what’s truly important. You may have that mother-in-law who turned nice after surviving cancer or a parent who kicked out his 50-year-old lazy daughter from his home after he suffered a heart attack.
To Airbnb, the existential crisis that brought clarity was COVID-19. After a historical plunge of 72% in April 2020 compared to the year before, Airbnb has finally made an increase in gross bookings by 1% in June 2020.
During this pandemic, the marketing team was on fire, focusing on how to enhance cash inflows. After hundreds of brainstorming and analyses, Airbnb is now seeing income.
How did they do it?
Airbnb returned to its core business — hosting and offering experiences. Investments that had nothing to do directly with this business core were scaled back. Because of the restrictions in travel, renting of local stays surged. As a plus, marketing introduced Online Experiences, which turned out to be a success.
4. Burger King
However, with a high chance of being infected from COVID-19 through contact, Burger King has introduced two restaurant designs with a 100% touchless experience. Using the Burger King app, customers can park at the restaurant and have food delivered at curbside pick-up areas.
Because experts see the COVID-19 virus returning regularly despite the vaccine and lowering case numbers, many said that these types of innovative restaurants would be most apt. And addressing the three issues mentioned, this contactless setup is effective. Most importantly, it meets the post-pandemic world head-on.
Who doesn’t know KIndle? How could anyone forget how Amazon’s sales increased during the recession in 2009? Profits amounted to $199m or 68% more than the same period the previous year.
New Kindle products were introduced in 2009, helping to spur more interest in e-books than printed ones. The Kindle products became the best-selling item by Amazon across all product categories on the website. As a result, sales grew more as Amazon became known as a company offering lower-cost alternatives.
This quarantine, Asos has adapted quite effectively. The largest online-only fashion retailer in the world has put headlights on exercise and loungewear, including some gadgets for remote work. New clothes focusing on these two niches are introduced almost every week, offering diversity to twenty-something shoppers. As a result, sales have surged, with a quadrupled upward spike in profits.
In October last year, its customer base ballooned to 23.4 million, adding 3 million more shoppers to its already raving customer base.
Also, Asos is known for its agility in delivery and returns, and they still practiced this strategy. Further, the company has bought Topshop, Topman, HIIT brands, and Miss Selfridge early this year.
Many establishments have closed due to the pandemic, but not Uniqlo. On the contrary, the Japanese casual wear giant has even increased their numbers, including a bigger interactive space and a combined store and museum in Tokyo.
Their marketing and design team must be in cloud nine as sales recovered during the pandemic. Uniqlo’s mask with their breathable AIRsm fabric took off, with the item being the hook or inspiration to visit the stores.
Afraid of revenues spiraling down, businesses during a recession usually cut back on marketing expenses. Just like in 2008, ad spending in the U.S. dropped by 13%. However, there’s proof that even during a recession, some brands do make it after all.
“A man who stops advertising to save money is like a man who stops a clock to save time.”
– Henry Ford
The times are different. Current technology made sure that we can still see and hear ads digitally. Unless your sales are spiraling downward or your business is bleeding cash profusely, it really makes no sense to stop marketing. Remember, if people can see or hear your product, more often than not — they will buy it.
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