Recession is coming? Five reasons not to slash marketing budgets

The sky is not falling. Why slashing marketing budgets when a recession looms is a tactical mistake.

The most important rule of marketing is not to follow the herd. Never ever follow the pack. So why do so many companies instinctively do the exact same thing when the economy slows down? Panic, slash marketing, panic some more, then realize you’re either in business or you’re out of business. So stay in business. Because in actuality, an often overlooked opportunity arises during these challenging periods: doubling down on your advertising spend. While it may sound counterintuitive, allocating more resources to marketing efforts can actually yield significant benefits and propel your business forward. Here’s how.

Capitalizing on Reduced Competition:

During an economic downtown, so many companies slash their marketing budgets or pull out of the market altogether. This creates a huge opportunity for proactive companies to stand out and eat share. By increasing your marketing budget, or at least holding steady, you can capture a larger share of voice in the market, allowing you to establish a stronger brand presence. With reduced noise from competitors, your brand messaging has a better chance of resonating. And as we’ll discuss later, that share of mind space does not dissipate.

Maintaining and Expanding Customer Base:

As inflation rises, consumer behavior undergoes significant changes. That’s a nice way of putting it. We’re all a bit nervous. But nervousness should not dictate business decisions. Yes, people become more cautious with their spending, and brand loyalty may falter as individuals seek value and reassurance. But by increasing marketing efforts, you can maintain a strong connection with your existing customers, reminding them of your value proposition and reinforcing their loyalty. Moreover, well-executed marketing campaigns (and there should be no other kind) can attract new customers who are actively seeking alternative solutions due to shifts in the marketplace.

Leveraging Cost-Effective Channels:

Crappy times often present an opportunity to leverage more cost-effective marketing channels. Traditional advertising rates may decline, reps are better able to negotiate, and digital advertising platforms offer competitive pricing. And everyone is gonna flock to organic social which will make things even more glutted. By strategically investing in bigger channels, you can maximize your marketing dollars, reaching more potential customers at a fraction of the cost compared to boom times.

Exploiting Emerging Opportunities:

Bear markets often bring about changes in consumer needs and behaviors. IE, we all freak the f*ck out a little. As a result, new market segments may emerge. It’s a good time to do market research, identify evolving trends, and tailor your marketing campaigns to capitalize on the shifting landscape. Being agile and responsive during a downturn can help your business not only survive but also thrive in the long run.

Once Top of Mind, Always Top of Mind

This is especially important for startups. Plowing ahead is crucial when your competitors are panicking. Competitors will instinctively “pull back”, “ride it out” and “wait for the opportunity” and you’ll have dominated the market with a massive campaign, increased market share, and set yourself up for a huge windfall when things turn. And the space you’ve carved out in everyone’s mind will not disappear. When everyone else zigs, you zag. Bold, fearless companies act that way and they are rewarded for it.

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The Small Agency Blog is produced by Division of Labor; a top San Francisco ad agency and digital marketing firm that’s been named Small Agency of the Year twice by Ad Age. The award-winning creative shop services clients on a retainer or project basis. They also offer brand consulting services and hourly engagements for startups and smaller brands. Click here for a free consultation.

 

 

Cheap, Animated Cartoon used to Launch Billion Dollar Startup

Woo-Woo’s soon-to-launch explainer video looks nearly identical to every other explainer video out there. But the company notes their trademark “Boyyoyyong!” Sound effect is 37% more effective than traditional “Boyyoyyong!” sound effects.

Woo-Woo’s soon-to-launch explainer video looks nearly identical to every other explainer video out there. But the company notes their trademark “Boyyoyyong!” Sound effect is 37% more effective than traditional “Boyyoyyong!” sound effects.

After inviting four top San Francisco ad agencies to pitch for its business, Silicon Valley tech giant Woo-Woo changed course and instead contracted with 19-year-old Ben Clutterbuck, a Chico State sophomore who creates low-quality explainer videos with rudimentary cartoons and operates out of his dorm room.

Woo-Woo recently obtained nearly 100 million dollars in series B funding from four different venture capital firms and earmarked five million dollars for marketing and advertising.  But after sitting in on the pitches, Woo-Woo’s most seasoned intern, Valerie Peabody, offered up an alternative approach. “The agencies were quoting costs of $300,000 to $5000,000 in creative fees alone,” notes Peabody.  “And I thought, ‘that’s insane’ when my brother’s buddy, Dwayne could do the creative and production for, like, $500 bucks.”

Peabody arranged a SnapChat group so Clutterbuck could get to know the marketing team. After exchanging multiple dank memes, it became clear Clutterbuck understood Woo-Woo’s corporate culture exponentially better than any of the pitching agencies. “It wasn’t hard to see that crude animations and the occasional “Boyyoyyong!” sound effect would be just as effective as anything a full-service agency could produce,” says Woo-woo company spokesperson Victoria Pheferman.

Clutterbuck’s business model, which focuses on creating antiquated, two-dimensional style animations on the laptop his parents bought him, definitely appears to resonate with millennial tech executives who neither understand, nor value the complexity of an advertising and marketing strategy.

Clutterbuck, who runs his company out of the Royal Arms dorm-style apartment complex, says he’s stoked to be tapped. “This is lit,” Clutterbuck hooted. “Hundo P we will crush this.”  

Woo-Woo, a Silicon Valley darling since late 2018, has developed an innovative, new, cloud-based, SaaS procurement optimization portal module. “The product has a universal appeal,” says Phefferman. “This kind of innovation practically sells itself.”

The bold decision to 86 the company’s marketing budget was ultimately approved by Woo-Woo’s senior management team, which, incidentally, consists of five 26-year-old virgins with zero business experience.  “Every one of the guys in our c-suite is an Ivy League grad,” says Phefferman. What’s more, she notes: “Three of the five earned admission without bribes, fake athletic credentials, or cheating on their ACTs.”

And while the decision was a cost-cutting measure, it was also a change more in keeping with strategies at other large tech companies. “Our board said it was time to grow up a little,” says Phefferman. “And nothing says captain of industry like an animated explainer video with ukulele music.” 

The explainer video will have a soft launch on the company website and will be tweeted out extensively on Clutterbuck’s social media feed. “I post all my client’s videos on my Instagram page. For an extra $20 bucks, I’ll even talk you up on my finsta page,’” says Clutterbuck.

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The Small Agency Blog is produced by Division of Labor; a top San Francisco ad agency and digital marketing firm that’s been named Small Agency of the Year twice by Ad Age. The award-winning creative shop services clients on a retainer or project basis. They also offer brand consulting services and hourly engagements for startups and smaller brands. Click here for a free consultation.