With no foreseeable end in sight, The Great Resignation, skilled labor shortages, and the “is it, or isn’t it a recession” trifecta are forcing many business owners to make rash decisions when cutting operational costs, especially in marketing. Business innovators and disruptors are punching back against this economic upheaval by doubling down on advertising and recognizing the wisdom of the Law of Familiarity.
Approximately 80% of companies choose to cut their marketing and advertising budgets to outlive a fragile economy during such turbulent times.1 Supply chain challenges persist and are compounded by a growing generation of discontented employees who are “quietly quitting” or leaving the workforce for that ever-elusive work-life balance.
A natural response to a teetering economy is to step back and focus resources on more seemingly “practical” investments. But … What would happen if you opted instead to lean in? Rather than sacrificing your share of mind in the marketplace, why not pivot and reinvest in a new advertising strategy to capture an increased share of voice in your industry? By challenging the status quo, your business could reap benefits that can last for years.
Crisis management veteran, Karla Jo Helms, gives us a tour of the history of advertising in unstable economic times and how brands need to lean into thought leadership to reap the most benefits.
Culprits of Economic Turmoil
In 2021, more than 47 million Americans quit their jobs in a quest for more money, flexibility, and better opportunities for career advancement in a recent phenomenon dubbed “The Great Resignation.”2 Employees are starting to re-prioritize their personal life to be in better alignment with their work life.
To that end, workers are abandoning the concept of going above and beyond in their quality of work to simply get the job done with the least amount of effort possible in an underground movement known as “quiet quitting.” Sweeping layoffs and a precarious economic climate may have played a role in this workforce rebellion.3
Every new obstacle to business growth fails to thrive, leading to a laser focus online-item budgeting and ruthlessly cutting expenses, and the presumed luxury of advertising is often one of the first things to go.4
The most recent U–6 real unemployment rate from November 2022 was 7.4%. The U–6 rate includes the underemployed, marginally attached, and discouraged workers.5 A skilled labor shortage coupled with rising consumer demand for goods and services makes it harder for businesses to live up to customers’ increasingly higher expectations for seamless transactions when giving a company their business.
Advertising During a Struggling Economy
So, are businesses ultimately saving money by reducing their advertising spending? Is operating conservatively the right thing to do during an economic crisis? The research says, “no.”
In the context of a healthier economy, advertising revenue is a critical driver, contributing nearly 20% to the U.S. GDP, which is a key indicator of economic prosperity.6
In-depth research studies of recessions from the recent past — 2008, 2009, and 2010 — offer a roadmap for avoiding the same mistakes that crippled some businesses. The consensus among researchers is that reducing ad budgets damages a brand’s relevance and share of the marketplace in the long run.7
In early 2001, after the tech bubble burst, a Malik PIMS analysis showed that increased marketing and R&D spending was associated with greater success during an economic downturn.7
In 2008, a study by Millward Brown demonstrated that brands that halted TV advertising for approximately six months saw a 24% decrease in brand use and a 28% decrease in brand image.7 The more advertising dollars turned off were proportional to more negative long-term consequences.
The results of a global study of the effects of the COVID-19 pandemic on business revenues from 2020 to 2022 estimated that cutting back on TV ad spending will result in a significant 39% loss in brand awareness, potentially delaying a business’ post-pandemic recovery.8
The Law of Familiarity Says to “Lean In”
Crisis management veteran, Karla Jo Helms, has led brands through this cycle before and shares the best advice for companies brave enough to challenge the status quo and turn right when everyone wants to go left.
“The Law of Familiarity states that the more consumers see and hear about your brand, the more likely they will know, like, and trust you. This frequency and familiarity increase the likelihood of customer engagement with your business,” says Helms. Simply familiarity with a brand, logo, or product means consumers are 71% more likely to purchase.9
Helms stresses that “Losing out on key impressions and reach because of reduced ad spending can cause a significant decrease in sales. Advertising frequency increases familiarity, which increases the likelihood of consumers’ loyalty to your brand.”
About Karla Jo Helms:
Karla Jo Helms is the Chief Evangelist and Anti-PR™ Strategist for JOTO PR Disruptors™. Karla Jo learned firsthand how unforgiving business can be when millions of dollars are on the line—and how the control of public opinion often determines whether one company is happily chosen or another is brutally rejected.
Being an alumnus of crisis management, Karla Jo has worked with litigation attorneys, private investigators, and the media to help restore companies of goodwill back into the good graces of public opinion—Karla Jo operates on the ethic of getting it right the first time, not relying on second chances and doing what it takes to excel.
Karla Jo has patterned her agency on the perfect balance of crisis management, entrepreneurial insight, and proven public relations experience. Helms speaks globally on public relations, how the PR industry itself has lost its way, and how, in the right hands, corporations can harness the power of Anti-PR to drive markets and impact market perception.
By Karla Jo Helms