Marketing in a Recession: How 2008 Can Inform 2023 Strategy
Things have changed a lot since the 2007-2008 recession — In 2008, the first iPhone had just been released, Instagram didn’t exist yet, and many people still used CDs. But while much of life looks different these days, the challenges of that recession can give us insight into how to best navigate future economic uncertainty.
In 2022, we’re once again looking at a looming recession, so it’s time to strategize. We can look to the businesses that grew during the 2008 recession and learn from their success.
By being creative with your marketing budget, listening to your customers, and taking advantage of data, you can do more than just survive an economic recession; you might even grow.
Create an agile marketing strategy
When you cut marketing, you’re giving competitors a chance to dominate the market at a time when it’s usually less expensive to do so. Instead of just cutting your budget across the board, do an honest appraisal and make thoughtful changes. What can you do to better serve your customers’ needs during a recession? You may be able to cut your budget strategically and still keep your marketing momentum.
Making necessary spending cuts, while important, should be the byproduct of an optimized, strategically planned budget. That way, your cuts are actually making the business healthier and boosting chances for growth instead of inhibiting your ability to create and maintain meaningful connections with your current and future audience.
For example, in 2008, many successful brands moved money from TV (an expensive channel back then) to invest more in digital advertising (a newer form of marketing with lower costs). In fact, online advertising experienced significant growth during the recession. Looking for new channels is worth exploring, especially when you can adopt a new form of marketing early when prices are still low. CTV, for example, provides a clearer ROI than “traditional” TV, thus making any CFO out there much happier.
Another way brands got ahead during difficult years was simply by changing the sentiment of their marketing campaigns. Coca-Cola is famously agile in its marketing, quickly shifting course when an old campaign no longer feels fresh.
As soon as the recession hit, instead of pausing marketing, Coca-Cola invested in an entirely new campaign that better reflected the public’s emotional and mental state. The company moved on from the “Coke Side of Life” campaign to the “Open Happiness” campaign.
The “Coke Side of Life” campaign used colorful, abstract art and celebrated a carefree lifestyle — a message that can ring hollow when consumers are struggling to find work and make ends meet. The “Open Happiness” campaign, however, focused on appreciating the little things in life and finding joy and peace in small pleasures. The appeal of such a shift is obvious in a recession when people feel anything but carefree and crave affordable luxuries.
Thanks to its quick marketing shift, Coca-Cola’s revenue grew throughout the recession.
As you plan your own marketing strategy for a recession, keep Coke’s approach in mind, and look for ways to stretch your limited budget. Because many companies tend to reduce marketing during recessions, the costs of marketing tend to drop.
Listen to your customers
Customer behavior and expectations change during recessions. That means this is a great time to get to know your customers all over again.
In 2008, Starbucks was in a pinch. Sales were still decent, but its brand image was suffering, and share prices were dropping. Things were so bad, the company even closed all its stores in the U.S. for a day in February of that year to retrain employees.
Part of the problem was that the company had outgrown its original image as an up-and-coming coffee shop with a fresh spin on espresso drinks, and no one knew what to really make of it anymore. The brand was no longer unique as a social space to kick back and enjoy a good coffee. Starbucks had become a massive enterprise, and the stores were starting to feel more like gift shops than coffee shops, with trinkets for sale on every surface.
The company needed direction if it was going to survive the recession and evolve into its next form.
So, the company launched “My Starbucks Idea” in April and simply let its customers tell it what to change. It wasn’t just a simple site for collecting customer suggestions, though. It was a whole forum. Customers connected with each other and developed passionate groups that shared tips and news with each other.
In the end, some of Starbucks’ most popular changes were the results of feedback they received from this community: Its rewards programs, free Wi-Fi in every store, and mobile payment were all implemented thanks to this program. But that’s not all. During this time, customers also suggested flavor options. You can thank the enthusiastic users of My Starbucks Idea for flavors like the Mocha Coconut Frappuccino, the Hazelnut Macchiato, and even the instant version of the infamous Pumpkin Spice Latte.
By inviting customers in to be a part of its next steps, the company fueled customer loyalty while getting insight into customer demand. Starbucks managed to increase revenue in 2008, even as consumers cut back on daily expenses like coffee and snacks. Starbucks survived the recession and continued to develop a reputation for being customer centric.
Use data to support decision-making
While soliciting direct customer feedback is great (as Starbucks knows), adding other data (like market research, current customer behavior on sites and apps, and visit history) can add context that shows a fuller picture, helping you better understand your customers.
A great real-world example of the power of data can be found in the story of how LEGO managed to grow in the 2008 recession after struggling for years. Before the recession, the company’s creative process was closed to the public (so, there’s not much information available about it), but it didn’t yet involve a lot of data about its customers. Sales revenue was crawling at 2.9% in 2007.
The LEGO CEO, Jørgen Knudstorp, added market research to its creative process and discovered a market segment that many toy brands were ignoring: adults. Millennials had just started reaching adulthood, and their spending habits were different from previous generations. They were eager to spend money on collectible toys and franchise-themed LEGO sets.
LEGO immediately started releasing more themed sets aimed at adult customers and advertised to adults in its marketing too. Possibly the most notable release during this time was the Architecture series featuring LEGO versions of famous buildings. It was a stark departure from child-centric design and marketing. Sales revenue increased by 18.7% in 2008, and LEGO continues to dominate the market today with a passionate segment of adult customers.
LEGO’s story is a great reminder that assuming you know what your customers want can be a dire mistake. And using data can be the secret to success during tough times.
These days, data can do more than it could in 2008. Now, many brands offer services that use data to provide personalized insights into individual customers. For example, first-party data can help you offer customers personalized suggestions based on previous purchases or on customers with similar purchase histories. This can go a long way toward making customers feel like they’re getting additional value from your brand.
See the recession as an opportunity to adapt and grow
During a recession, the status quo is disrupted in big and little ways. This encourages even change-resistant businesses to consider new strategies. Wise brands will jump at the opportunity.
- Start by acknowledging that the changing economic landscape is going to change your marketing approach
- Work with your team to openly discuss the potential risks you face in an uncertain economy
- Use measurement platforms to identify and flag the parts of your current marketing strategy that could be misaligned during a recession
- Consider your customers’ changing needs, and work with your team to think of out-the-box ways to address those issues.
- And consider investing in novel marketing channels, like CTV
Brian Quinn is U.S. President and GM at AppsFlyer.