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Episode 112

Marketing Moves That Win in a Downturn

94% of advertisers are concerned about how tariffs might impact their budgets according to an IAB survey. Of those planning cuts, 60% expect a 6-10% decrease in ad spend, while 22% anticipate cuts of 11-20%.

This week, Elena, Angela, and Rob explore what the research says about marketing during economic downturns. They discuss how brands that maintain or increase spending during tough times consistently gain market share, why creative thinking matters more than ever, and the smartest ways to adjust your strategy if budget cuts are unavoidable.

Topics Covered

• [01:00] Current economic landscape and marketer uncertainty

• [05:00] Predicted impact of tariffs on US media ad spending

• [07:00] Research showing companies that increased ad spend by 50% during recession saw 1.5% market share growth

• [09:00] Creative marketing examples from economic downturns

• [13:00] Ways to reduce marketing spend without damaging your brand

• [17:30] Where to double down if you have available budget

• [21:00] Finding personal comfort rituals during uncertain times

Resources:

Tellis, Gerard & Tellis, Kethan. (2009). A Critical Review and Synthesis of Research on Advertising in a Recession. Journal of Advertising Research. 49. 10.2501/S0021849909090400.

Today's Hosts

Elena Jasper

Chief Marketing Officer

Rob DeMars

Chief Product Architect

Angela Voss

Chief Executive Officer

Transcript

Elena: Hello and welcome to The Marketing Architects, the Research First podcast dedicated to answering your toughest marketing questions.

I'm Elena Jasper on the marketing team here at Marketing Architects, and I'm joined by my co-host, Angela Voss, CEO of Marketing Architects, and Rob DeMars, the Chief Product Architect of Misfits Ed Machines.

Rob: We're ready for a spicy episode.

Elena: Yeah.

Angela: Good to be with you.

Elena: We're back with our thoughts on some recent marketing news, always trying to root our opinions and data research and what drives business results. Today we're talking about something that is probably top of mind for every marketer at the moment. What should I do with my marketing strategy in times of economic uncertainty?

Rob: Spicy.

Elena: Very spicy and I'll kick us off with some research in a moment. But before I do that, I thought it might be helpful to talk about what exactly is going on at this point, because to be honest, it's kind of confusing and messy. We've got headlines about tariffs, inflation sticking around longer than expected, and there's plenty of uncertainty about whether we're headed into a slowdown or if we're already in one.

So, Angela, from your perspective, what are you seeing and hearing right now when it comes to the economy and how do you think all this uncertainty is impacting the way marketers are making decisions?

Angela: It does feel messy to me. I sit on a couple of ad councils and it's just interesting hearing different perspectives either from brands or agencies. We've got new tariffs entering the conversation again. Now potentially as of today, as of this morning, I don't know, maybe it's gonna go down. Maybe it's not like inflation that just won't cool off and this strange split screen reality. The data says the economy is still growing, but sentiment sort of feels like a slowdown.

And I think in that kind of environment, most marketers I talk to are stuck in what I would call a bit of strategic limbo. They're like ready to go, but they're not pulling the trigger. They're holding budgets, pushing approvals to the last minute, running more scenario plans than campaigns in some cases, or at least doing scenario planning, which is not a bad thing to do, of course.

I think during these times, you tend to see marketers, although I haven't experienced a ton of it personally, shift back towards short-term performance tactics. We see this in the marketplace when uncertainty spikes, but as I'm sure we'll get into today, history and marketing science tell us that that's usually the wrong move.

The brands that keep investing in reach and in salience during volatile times are the ones that gain market share while everyone else is waiting for that green light.

Rob: Yep. I mean, here's the thing.

Elena: Sorry, Rob.

Rob: We are in a weird time right now and for us to even talk about this topic, it may not age well unless you do a live podcast, right? But I think at the end of the day, I don't mean this to be a political statement. All right. This is just my but the US just coughed in the face of the planet.

Elena: It's gross to think.

Rob: It is a little. We're all sitting around going, is this a bad dream or not? And I think the reality is starting to settle in, right? The genie is out of the bottle and that genie is not gonna go back into the bottle 'cause the bottle's been shattered, and every boardroom is scattering for contingency plans right now, and they should be.

Everyone's looking at what does the second half of the year look like? And as marketers, we just have to be honest with ourselves. Of course. And I agree with you, Angela. I mean, the data's gonna show it like stopping marketing to save money is like stopping your watch to save time and we're gonna be having those types of conversations, but at the end of the day, our gunpowder for the back half of 2025 is gonna be wet as marketers. And we're gonna have to look at this and go, it's not about making it big right now, it's about making it count. And how are we gonna do that for the second half of the year?

Elena: That's a good point Rob. That kind of perception's reality also. So people are starting to get nervous and starting to hold spend and that's gonna impact things too. Even if all this crazy stuff goes away. It's like marketers are battering down the hatches and that's gonna have an effect on the economy too.

Well, I thought I could add like a little bit of flavor to this with some marketing spend predictions. Any marketer is particularly good at that. They did a forecast and showed how tariffs could wipe out all projected gains in US Media ad spending this year. Now, of course, like Rob said, things are changing daily.

It's probably gonna change even more after we record this episode, but I still think this context is kind of. Total US Media ad spend from 2021 to 2024 climbed steadily. It went from 312 billion to 395 billion. That's a pretty big jump and without any major disruptions. We were on track to hit 422 billion this year, but that was not the case.

And the forecast, what they did was they split it into three different futures depending on how tariffs shake out. If we get limited tariffs, the market keeps growing up to that $422 billion mark with moderate tariffs, growth slows and we end up closer to 407 billion. With heavy tariffs, a full on global trade war scenario, the market actually contracts dipping to 394 billion.

That's lower than where we're at right now. So that'd be a 6.6% swing in total ad spending tens of billions of dollars based entirely on tariff policy. So if that painted the big picture of how tariffs could drag down total media spend, I have a forecast that might turn some light on what marketers are actually planning to do about it, and it's not super pretty according to a February survey from the IAB.

94% of advertisers are concerned about how tariffs might impact their budgets among those who expect to cut back. What we're seeing is the majority, 60% are planning a six to 10% decrease in ad spend this year. Another 22% are expecting to cut by 11% to 20%, and 4% are slashing their budgets by more than 20%.

Only 14% say their cuts will be relatively minor, just zero to 5%. And this tells us something important. This isn't just theoretical anxiety. Brands are actively dialing back and it's happening at a scale that could ripple across agencies, publishers, platforms, basically everybody in the ecosystem. Okay, so we're gonna get into a lot today, but I wanted to share some research because while this situation is unique, we're not strangers to economic uncertainty and downturns.

The good news is that there's a lot of historical data that can help guide what we do today. And I chose a study, it's one of the most comprehensive studies on advertising during economic downturns. It's called a Critical Review and Synthesis of Research on Advertising in a Recession by Gerard Tellis and Keith and Tellis.

And this is the big question, should you keep advertising during a downturn? It's something marketers have debated for decades, especially when budgets tighten and pressure amounts to cut what feels like non-essential spending.

This paper, it explores over 40 studies across nearly a century, and the findings are pretty consistent. So first, cutting ad spend usually backfires. Across multiple studies, companies that cut advertising didn't see significant increases in profitability. Kinda what Rob was saying about, what was it you said, Rob, it was smart. I'm gonna watch in time.

Rob: Oh yeah, I stole that from someone else. Basically, stopping your marketing budget to save money is like stopping your watch to save time.

Elena: Right? So that's what these companies tried to do and they experienced lower sales, they lost market share, and they felt declines in long-term earnings. The other thing they found is that the winners, they kept spending and they gained ground. Companies that maintained or increased ad spend during recessions typically saw higher sales and market share, both during the downturn and in the years following.

The gains were especially strong when competitors were cutting back, and third, bigger risks meant bigger rewards. One study in the paper found that companies that increased advertising by up to 50% during a recession saw market share growth up to 1.5%. That's compared to just 0.2% of those who cut spend.

That's a massive competitive edge, especially in categories where brand loyalty is low. And fourth, it's not just about sales, it's about long-term value. A study by Camber in 2002 showed that ad spend during a recession was a stronger predictor of future sales growth than stock price, prior sales or credit rating.

So in recent years, ad spend becomes the most powerful leading indicator of growth. Alright, so that's a lot of information and case studies. Research, but sometimes a story can also be a helpful way to understand how a brand can get through an economic downturn in a creative way. So, Rob, do you have a favorite example of how a brand might've used marketing to grow during a downturn?

Rob: Yeah, actually was thinking about this a lot and there's two of 'em that actually came to mind and I think they're great examples of why marketing even exists. Why marketers look at a situation and you go, how, what do we do? How do we pivot? How do we get creative? How agile? And the first one was from Uber and actually both came from the pandemic 'cause it's kind of fresh in our brains just in terms of being relatable and having, most of us have all gone through that now as marketers.

And Uber took the position of thanking people for not riding. I thought that was really powerful because they're in a situation where they weren't supposed to be doing the driving anyways in the real heat of the pandemic, but why not lean into that and actually use that as an opportunity to show that your brand has humanity and cares for people. And they did a thank you for not writing campaign, which literally told their customers, please don't use us.

Don't call us. Because right now we're about the greater good. And that's powerful. And I think it was something they were kind of needing to do anyways, just logistically speaking. But how do you flip that and turn that into a promotion that allowed for incredible earned media through that effort and really signaled their overall brand value.

So I thought that was. The other one was from Burger King. When their stores weren't allowed to be open, they started promoting the quarantine whopper. I dunno if you guys remember that, but it was such a great idea that, okay, let's expose the public to all of our secret components of our recipe so people can make them at home and start showing through social media their efforts for making a whopper.

Again, a great opportunity, a great positioning, bringing the home of the Whopper to your home, through a DIY effort that, again, went viral. So I just thought those are two really good ways of looking at, okay, what is it about our brand that we can take lemons and make lemonade out of this crazy situation. I think every brand has that.

Elena: Those are great examples too 'cause they were both in, I mean, the worst situation, like you said, like they couldn't operate at all at the beginning of the pandemic. So they were not left with a lot of options and they still found something creative to do. So we've covered kind of like past stories, history, the data, and how do you think that translates to what we're experiencing today? Because every single one of these we go through feels unique in its own way.

Angela: I know it is, and yet at the same time, like having that rear view mirror is still helpful. You know, I think what's important or interesting right now is that the playbook still applies, even if the playing field has changed.

'Cause we're not in a classic recession currently, but we are in a marketing slowdown. Budgets are in limbo, approvals are delayed, and it's all driven by these mixed signals. You're like, are we good? Are we not good? It's like sticky inflation. There's tariff noise, just enough softness to keep people nervous, I think.

But the Tellis research that you brought up, Elena, couldn't be more relevant in my opinion, because I think the core question remains, do you wanna play defense? Or do you wanna play for long-term advantage? And what the data shows again and again, is that brands that stay visible, stay relevant, keep investing in share of voice through uncertain times end up winning, especially when competitors are quiet.

So the opportunity now is to be one of the brave ones. To act on the facts, not on the fear. Stay top of mind when others fade, and increasingly do it in a smarter, more modern way, whether that's through efficient creative automation, AI integration, more flexible media strategies, but the principle's the same: visibility today is growth tomorrow, and marketers who remember that are the ones we'll be talking about when the next case study gets written.

Elena: Yeah, it's a good point that these case studies, they're looking at what happens when large groups of brands cut advertising spend. So it doesn't really matter how we got here, like it might matter for your particular situation, but as far as the data and the potential people are cutting spend, so we're in one of those situations where you're gonna have an opportunity to do something special if you can afford to do it well.

Speaking of what brands are able to do, some marketers are not gonna have an option to double down right now as much as they might want to, which is why we usually see in times like this performance channels like Google and Meta, they see increased spending because they're easier to measure, can invest smaller amounts in a more traditional quote unquote brand channel. So if a marketer has to cut spend right now or in the future, what do we think is the wisest way to reduce marketing expenditures without damaging your brand in the long term?

Angela: You know, even when budgets are tight, the question becomes how do we get more from less without hurting the brand long term. And one of the smartest ways to start is just by rethinking how we spend, not just how much, but how do we spend whatever we're spending.

On this podcast, we talk a lot about the inefficiencies of hyper targeting, high CPMs, limited scale audience waste, and maybe you've heard that. Maybe you've heard us talk about that, but never had the reason or the runway to try something different. Well, this could be your moment to go, how do I reduce costs? And try a different strategy. Lean into broad targeting. Open up your aperture. You might actually find you increase impressions while lowering your costs and what a great win to bring to the organization. I think same goes for creative. If your production model is still rigid or expensive and traditional, now is the time to flex those scrappy muscles. AI tools are making it easier than ever to create and test and iterate fast, and you don't need to sacrifice quality, but you do need to evolve the process.

Efficiency doesn't just come from media. It comes from how you make and deploy your message as well. And I think through it all, just protect those fundamentals if you have to trim. Prioritize reach over frequency, stay visible, keep distinctive brand assets consistent. The brands I think that remain present smartly, efficiently, creatively are the ones that will maintain that salience and recover fastest when the spending actually rebounds from a consumer standpoint.

Rob: Yeah, those are all super good Ang, you know, especially chasing after like you said, the hyper targeting those bottom feeder retargeting pools that chase the same shoppers into oblivion. We all know where the waste is, right? But also just how do you kill the zombies?

You know, we as marketers, we always have skunk work projects that we're passionate about, but just, god dang it, after 90 days, if those things don't have a pulse, we just gotta start killing those things. And those are luxuries in times of war.

Elena: Yeah, that's a great point, Rob. I was thinking something similar, which is like, what are things that you've wanted to get rid of but maybe have been scared? One idea, third party data targeting, digital channels that you're wondering like, does, is this really impacting my business? Things like buying branded keywords, things you've maybe seen LinkedIn posts about it or read about it, like, oh, this isn't really effective.

Now could be a great time to push for, let's cut that and see what happens to our branding. Might be pleasantly surprised. Or if you're a part of an organization that's slow to adopt AI tools, this could be a perfect opportunity to push for that. Like can AI replace some expensive research you're doing?

Pre-testing, like Ang said, creative production. Just, I know that some organizations are a lot more hesitant than others to use AI. If you could show them the savings, this could be a great chance to flex those muscles. If you're working with traditional partners, agencies, third parties that have really high fee structures like we know most of them do, maybe it's time to try something a little more untraditional, not to plug us, but those high cost structures are especially painful in times of a downturn.

Rob: That's a great point, Elena. When it's a potential unlock in a lot of that marketers have had with AI, you know, again, in times of war you try new things. You're like, okay, let's give it a go. But it could be a real unlock, just like Zoom was with the pandemic. Like we all of a sudden all saw the value in this crazy platform some similarities there with the unlocks that are available with AI.

Angela: Well, and it's hard to sometimes innovate as deeply and disruptively as a business as sometimes you need to find new avenues of growth and to get out of biased ways or historical ways of working. We always say like, never miss an opportunity to innovate during a crisis. Maybe we don't go to crisis mode here, but this is one of those chances to go, how do I think differently about how I spend my money and try to get some learning out of this? And perhaps I stumble upon something that's actually a meaningful mover for my business in the future.

Elena: What's that political quote about? Never waste a good crisis. That's a political thing?

Rob: Never, never let a good crisis go to waste.

Angela: There we go. That's what it is.

Elena: Well let's talk about the opposite. What if you're a marketer that does have some extra budget? Maybe you're in an industry that's more resilient, where could you double down? If you wanna take advantage of this dip with your competitors, where should you double down your efforts?

Angela: Yeah. I'm interested in your thoughts, Rob, here, but like one of the first things that came to mind for me was I feel like when times are uncertain, clarity matters just in messaging for consumers and for marketers. That means doubling down on places that build long-term value and make those dollars work harder. Your brand's memory structures, that means the consistent use of those distinctive brand assets, your logos, colors, characters, taglines, anything that makes you recognizable without explanation.

Second, I would say doubling down, like we'd said before on broad reach. This is a time where most brands are considering budget adjustments in some capacity and some brands will pull back in spending, which creates this opportune time to ramp up share of voice. We've had many cases over the years with our own clients where they maybe did have to pull back a little in budget, but their competitors pulled back even more.

And the marketplace softened in terms of demand, and so CPMs dropped and all of a sudden you've got like a double win scenario where your dollars are just gonna go further. So be strategic about the channel mix based on your competitive set. This is a great time to challenge assumptions and test broader targeting strategies that might actually improve efficiency.

Rob: I would add to that everything works at zero cost. So how do you weaponize your own channels? You know, looking at email lists, SMS, PR opportunities, social communities, all of these really marginal to low cost channels can really war chest in a time of. Sorry. Way too many war references.

Elena: Yeah, Rob's ready just to go to battle.

Rob: I'm ready to fight.

Elena: We're killing zombies. We've got a war chest.

Rob: Zombies. We're, you know, this is, come on people. No, I think as we've said earlier right now, safe ads are a luxury that we just can't afford. We have to make sure that our creative is punching above its weight class and getting every impression count.

Elena: I like that idea of like aiming for fame, no matter if you have, if you have a lot of budget, maybe that means I'm gonna go raise my share of voice on TV. This is my chance to like finally outspend my competitors, or the Whopper example is a great one of, maybe you don't have budget, you're gonna do a social campaign, instead, you're gonna get creative with PR, you're gonna use your earned channels.

But just right now, there's gonna be more of an opportunity to make your brand known. So whatever you can do to be distinct and stand out, whether that includes budget or not, worth a shot. Well, that wasn't so gloomy for a kind of a negative topic sometimes. I'm excited. I'm ready to just go to battle right now. Rob, I'm just inspired.

Rob: Absolutely, and I really hope that this podcast doesn't age well and that we.

Elena: We release it. Everything's back to normal.

Rob: That yeah, we will be looking like chicken little, so that would be actually a fantastic thing.

Angela: That would be a great outcome.

Elena: Yeah. Let this be like the TikTok ban. It just never ever happens. It just continues to be a threat forever and ever. Or you know what? Another one of those things is cookies. Cookies going away. The cookies are leaving, they're leaving. It's like.

Angela: I know.

Elena: Well let's wrap up with something kind of fun. When life feels uncertain, what's your go-to comfort item or ritual? We'll start with Rob.

Rob: Wow. You know what? It doesn't matter what is going on in politics or the planet or my personal life. I have two goldendoodles that are so happy when I take them for a walk. And just watching these two lovely animals who could care less about all the problems in the world find pure joy just for me walking them, that's my go-to.

Angela: It's a good one. Pets are so good. They're so helpful. Do you want me to go next? Okay. I usually reach for structure. I know that's really shocking, but I'm a big believer that small little rituals can create calm in the chaos. So for me, it's like a morning routine coffee notebook, five minutes to write down what I'm grateful for, what really matters that day. It's like grounding and just reminds me that while I can't control the headlines, I can control my energy. And that's usually enough to get me through my first conversation with Rob. At least.

Elena: Then all bets are off.

Angela: And then it all falls apart.

Rob: Then redo.

Angela: Yeah. What about you, Elena?

Elena: Yeah, I was thinking about this one and like trying be really honest with myself. Like what actually makes me feel better. And I, I think the biggest thing is going for a run. Something like exercise or something about like before your run versus after. But it must be the runner's high, the endorphins or something. But even if the run felt terrible, you feel better 'cause it's done. The best thing about running is when it's over. So.

Angela: Yes. Exercise is so good for that.

Elena: Alright, well do you think we covered everything? The good stuff. I.

Angela: I think we did. Got us into a positive mindset for whatever's to come.

Elena: Are you ready, Rob?

Rob: Not really. I'm actually just refocusing right now.

Elena: You were like leaning back, like you're going like, you know, when you're going up a rollercoaster or something. Like that's how you look.

Rob: Yes. Yeah. I kind of need to recalibrate right now.

Elena: Yeah. Let's just get going.

Angela: Get it together is what she means. Yes. Yes.