Beware the temptation of a bunker mentality. Photo / Getty Images
Decisions made over the next 10 to 12 months will define the next decade for most businesses.
This stern warning, on the eve of what’s shaping up to be a tougher recessionary period than was initially forecast, comes from FCB global chief executive Tyler Turnbull.
The latest economic data from ASB Bank anticipates GDP to fall by around 2 per cent by early 2024, with a recession now expected to stretch into the new year. Any hopes of New Zealand having a soft landing have been diminished by the Reserve Bank’s aggressive efforts to bring inflation under control.
The threat of recession almost always shifts business owners into a bunker mindset, the first symptom of which can be seen in slashed marketing budgets. At face value, this thinking seems sound: when money gets tight, cuts need to come from somewhere. So why not advertising?
Speaking to the Herald during a recent flying visit to New Zealand, Turnbull points to a study conducted by his team looking at how businesses responded to and emerged from four recessionary periods over the last 50 years.
What this showed was that businesses that increase marketing spend during a recessionary period will often increase their market share against their main competitors.
“But this discussion isn’t just about increasing investment,” says Turnbull.
“If you just maintain your marketing investment year over year and treat it as a fixed cost, your chance to build market share is better than ever.”
The reason for this comes down to the widespread adoption of bunker thinking elsewhere across the business community.
“The majority of brands are going to pull back,” says Turnbull.
“They’re going to wait, pause and just see what happens. And if you stay in the market, chances are that media rates will be cheaper because of the pullbacks. So you can reach more people and you have less competition.”
The impact of decisions made during the recession will also have a lasting impact.
“The next 10 to 12 months for most marketers will define their next decade because we know that after the recession, there is going to be an expansionary period. The boldest marketers who are just maintaining investment will outshine their peers.”
It would be easy to dismiss the remarks of Turnbull as an example of an executive looking to protect the territory he’s dependent on, but history is replete with brands that have become examples of this error.
FCB global chair and chief creative officer Susan Credle, also recently in New Zealand, says that even leading brands in a sector have made the mistake of becoming overly conservative when the economy starts to turn.
“Reebok did it,” Credle says, “then Nike doubled down, tripled down on their investment. And Reebok has never caught up. Pizza Hut did it too. And Domino’s, the challenger brand at the time, said ‘this is our time to accelerate’. Pizza Hut has never caught up. It’s very expensive to pull back in the long run.”
Brands that pull back into the darkness of those bunkers will need to come out into the light again once the storm has lifted. What they might find is that the market has drastically changed in their absence – and because they haven’t been as present in the public consciousness, consumers might be more tempted by the brands they’ve actually seen more consistently during those tougher years.
Marketers often talk about ‘share of mind’, jargon referring to the idea that a brand should be the first one that pops into the mind of a consumer. Think Coca-Cola for fizzy drinks, Hoover (or perhaps Dyson) for vacuum cleaners or Vaseline for petroleum jelly.
The problem is that when you aren’t present in the market, even when times are tough, you greatly undermine the potential of being the brand that niggles at the shopper’s brain even when they don’t realise it.
“The mistake in marketing is that we talk about marketing dollars as spend rather than an investment,” says Credle.
The difference is that spend is often viewed as money thrown at a nice-to-have, whereas investment is generally focused on the future. But getting executives, founders and managing directors to buy into this semantic shift can be tricky, especially given that marketers rarely feature on boards for key decision-making areas of the business. There’s a reason that marketing is still sometimes derided as the colouring-in department.
But there is a difference between good marketing, which shifts consumer behaviour, and meaningless promotions that inspire little beyond a polite chuckle.
“Creativity just for the sake of being cool and creative is not acceptable,” says Credle.
“Creativity just to win awards at shows where our peers go, ‘Oh, that was a cool idea’, is not acceptable… What happened in our industry is that we started doing really cool stuff that impressed each other, but which didn’t really get to the business opportunity or the brand building.”
So, what does good marketing look like on the eve of a recessionary period?
Credle and Turnbull’s trip was to commemorate the 150th anniversary of the agency that employs them.
This would be considered a pretty remarkable run for a business in any sector, let alone one toiling away in the fickle, cut-throat world of advertising.
In that time, the agency has seen its fair share of complex business problems. One example that has gone down in folklore at the organisation is the story of Sunkist oranges, which faced a dilemma at the turn of the 20th century on account of the business not selling enough citrus fruits.
“They had a big business problem: prolific orange groves, which gave them way too many oranges,” says Credle.
“They asked the agency to get people to eat more oranges. They said: ‘Like one a day, please get them to eat one a day.’”
Then-agency boss Albert Lasker went away and mulled this problem over for a while, looking for an answer.
“He came back and he said, ‘I don’t think I can do that, but I can get them to use three a day. You see, I’ve been squeezing oranges into a glass, and it takes about three oranges to make a little juice’.”
Not only did this solve the very specific business problem of a surplus of oranges, but it also changed the way that people have breakfast – a legacy still with us today.
Credle says that this is what good advertising looks like.
“What we’re telling our teams is that we have to come up with Sunkist... We have to look at business opportunities and problems and, through the brand, solve those.”
Credle says you don’t need to look far to find issues that are begging for a creative solution, pointing to the recent example of beer advertisers bemoaning the impact of the rainy Auckland summer on sales.
“Crisis is a catalyst for creativity,” she says, explaining that brands should have been faster to respond to that challenge.
“Somebody should have done the campaign saying ‘when it rains, it pours’, and somebody should associate the rain with a reason to have a beer. It’s just a mind shift from the idea that you have to drink beer in the sun… On our best days, we make you rethink things.”
FCB describes this as the relationship between timely and timeliness, or the notion that well-timed marketing has the potential to shift perspectives and linger in the mind of the consumer.
Another campaign Credle applauds comes from Hyundai, which in 2008 launched a campaign that offered to take back new cars at no cost if people lost their jobs within a year – giving consumers the power to walk away from their loan obligation without making a big loss.
This came at a time when many were deeply concerned about the economic situation and hesitant to buy new vehicles due to the risk of being tied into a loan they couldn’t afford to pay back.
It was risky, but Credle says “they ran the numbers and realised it was going to pay off”.
Over the next 10 to 12 months, major brands across the country will face the choice of scurrying away to their bunkers or looking for ways to stay in the public consciousness.
History has shown time and again how this generally plays out. And for every Nike, there will be a few Reeboks. For every Domino’s, a Pizza Hut. And maybe, just maybe, we’ll have another Sunkist rising from the darkness of a recession.
The event is described as a series of aggressive sales pitches.