Marketing lessons from the Great Recession
Marketing lessons from the Great Recession
The Great Recession was a terrible event, but we can learn from something.
This is the second part (part 1) of an article series about Marketing lessons from previous recessions. Even though every economic crisis is different, we can learn some things from the past to prepare for the future.
Marketing lessons from the Great Recession
As Marketers, we must never, never, never ignore consumer behavior changes. Search volumes, CPAs/CPCs/CPMs, values - all can change our traffic acquisition and retention and engagement channels.
In 2007-2009, consumers looked more for value and deals instead of brands. To be fair, that’s the case in every recession. However, it plays out differently every time because technology advances.
One interesting example is the alcohol industry. Total alcohol consumption in the US increased. Light drinkers consumed less but heavy drinkers drank more. As a result of the recession, pre-drinking became more common so consumers had to spend less at bars. People preferred smaller, more economic packs when buying alcohol.
A second interesting example of consumer behavior change was the shift from ownership to renting. Homeownership for 25-35-year-olds dramatically decreased and people rented more instead.
Some of that behavior has stuck until today (though houses also became more expensive than ever).
A third and last example is toys. Toy companies thrived during the recession. Lego saw +20% sales in the UK (2009) because its product is more durable. You can assemble the bricks in different ways over and over again (source).
How successful marketers reacted
What separated successful businesses and marketers from the rest?
First, as budgets were slashed by 60% across the board, Marketers had to learn to do more with less (source). That means identifying and doubling down on what works. Specifically, a paper that looked at companies in Hungary found the following strategies to be effective:
Sharing marketing resources with other teams
Re-evaluation of the strategy
Integrating sales & marketing functions
Finding new expertise and techniques
Strengthening key account teams
Second, discounts and offers. Online wine clubs grew and worked with heavy discounts to lure people in. A Cornell study that looked at almost 500 hotels found out that winning chains spend more on Marketing than those that lost. Winning hotel chains used loyalty programs, promotions and advertising to a greater extend.
Third, new avenues. Facebook reached significant size during the Great Recession and became an attractive advertising platform. Alcohol brands leveraged Facebook more for online advertising and saw good success.
Newspapers saw a -19% decline in revenue as a result of less ad spend during the Great Recession. The Seattle Times even saw -40% fewer ad placements (source). What happened? Businesses spent less money on ads because they had lower revenue and shifted more advertising to platforms like Facebook and Google because performance is easier and more accurate to measure.
What to learn from the Great Recession for Marketing
In the Great Recession, marketing strategies that strengthened the brand, emphasized value, and offered discounts and loyalty programs. The rise of Facebook gave Marketers another performance marketing channel besides Google ads.
Obviously, we can copy a lot of those tactics. Now that Facebook is established, we should ask ourselves what other platforms we can use to advertise on to a) lower advertising spend and b) reach out target audience.
Some ideas:
Twitch
Quora
Reddit
TikTok
Quibi
Youtube
Spotify
Amazon