12 May 2020
To go dark or not to go dark
In the last few weeks one group of giant corporates and global brands paused their marketing while another increased their marketing to take advantage of the opportunity! What’s going on? Underneath the veneer of sophistication, people were just being people. Some were panicking, others were bold and ambitious. In the Cut Camp, Coca-Cola stopped marketing, while in the Great Opportunity Group, Proctor and Gamble and Unilever pressed the accelerator. Proctor and Gamble owns Gillette, Fairy, and Tampax. Unilever owns Marmite, Pot Noodle, and Persil.
Why did one group cut and another steam ahead? It’s easy to understand why they might pause if they’ve been underperforming recently and their sales have been hit, as Coca-Cola’s have been (down 25% due to coronavirus and associated lockdown). And it’s easier to see why you might press on if your sales are strong and likely to gain from the pandemic, as both Proctor and Gamble and Unilever’s are. But for many companies, this an academic question. Their markets were forced to shut down, and survival is a question of time and cash flow.
However, most companies will survive, so the question is where, and what shape do you want to be in during the recovery and after.
After 100 years of brand building, whatever Coca-Cola decides to do in the short term will have little impact on its brand awareness, availability or desirability. Coca-Cola is strong enough to cope with anything.
But that’s not the case with brands in the construction industry. Even the strongest brands should think twice before taking a pause. They too can disappear quickly into the mists of time when they stop marketing.
The list of brands you once knew is a long one. Who remembers the retail paint brand Berger? It was No 2 after Dulux in the 1980s, and spent £3m a year on TV to keep it there. Persuaded by an ambitious Financial Director to take an advertising holiday, Berger stopped advertising for a year and therefore added £3m to its profits. In the first year it lost some share as B&Q reduced its shelf space, but the directors loved the bottom line, so they did it again. But at the end of year two, they were delisted by B&Q because consumers had switched to other paint brands. Berger never recovered and died soon after.
We’re in the strangest of times, in the middle of a Government-enforced recession, cocooned in temporary Government life support, with forecasters quarrelling over the shape and timing of recovery. Should we stop talking to the market and bury our heads in the sand until markets recover?
In fact, there’s a lot of evidence from large scale research that points unequivocally to the benefits of marketing throughout recessions, from the 1920s on. The findings are consistent and conclusive. Companies that increased their marketing in recession grew sales much faster than their rivals, both in recession and recovery. Companies that decreased their spend saw sales decline in recession and afterwards.
There has also been a lot of research on why marketing in recession is so rewarding. Most companies cut in recession, and that reduces the ‘noise’ of other advertisers competing for attention, and increases the effectiveness of the advertising of those that do. When the economy recovers, many more advertisers pile in so more advertisers are competing for the same set of eyeballs. So, it’s a lot harder to stand out and be seen.
If you can afford it, now is the best opportunity you’ll ever have to grow your share and substantially improve your sales and profits. Fortune favours the bold.
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