As the cost-of-living crisis tightens its grip, it’s becoming ever more vital for brands to highlight the value for money their offerings provide and differentiate themselves from the competition. The problem for many firms is that they’re having to find savings themselves – and the marketing budget is often among the first to get trimmed.
With purse strings tightening everywhere, advertising agencies and their clients must therefore innovate and find the most cost-efficient ways to deliver returns on what in many cases are diminishing investments.
This could include harnessing methods that adjust the tone of ad messaging to recession psychology or deliver greater levels of personalisation. Other techniques, such as generative AI and micro ads with deeper targeting, could be used alongside product labelling with digital IDs or QR codes that link to visual storytelling.
“During challenging economic times, innovation can be the difference between survival and downfall,” stresses Sarah Salter, global head of applied innovation at media agency Wavemaker.
According to Wavemaker UK’s latest research into the cost-of-living crisis, struggling consumers are looking to brands for assistance. This could include tailored information to help them make better purchasing decisions. Salter notes that emerging technologies such as conversational and generative AI are enabling such personalisation.
Innovation in this context is about solving each consumer’s problems, she says. “Personalisation can make a solution feel individual and revolutionise their experience.”
Salter’s approach to innovative advertising during a downturn also entails focusing investments on hero products and “selling the future”.
She explains: “During past recessions and even the world wars, advertisers were working to give people hope for the future. Focusing on emerging technologies that would help to shape a new way of living, they placed themselves as key players in building a future that people wanted.”
A sea of sameness on the high street
For agencies, understanding clients’ appetites for risk and what they really mean when they say they want to innovate has become key to delivering ROI. Some brands may be keen to invest in technologies of the future – the metaverse, for instance – while others may simply want to produce a series of podcasts for the first time.
The so-called 10:20:70 rule in marketing recommends that 10% of the budget should go towards innovation and 20% should be devoted to relatively new methods that have withstood an initial test and are worth a second try. The remaining 70% should be used on well-proven techniques.
A global survey of more than 1,700 senior B2B marketers by LinkedIn in October found that 76% had high hopes for their strategies for the next six months, despite budget cuts. Two-thirds of respondents were planning to maintain or even increase expenditure on brand-building activities.
All you need to do is listen and respond to consumers. It’s not necessary to reinvent the wheel
Matt Rhodes is chief strategy officer at House 337, an ad agency with clients including M&S, Santander and Tesco’s own apparel brand, F&F. He suggests that increasing economic uncertainty will prompt more consumers to look for new products to try for the first time as they seek more value for money.
“To cut through the sea of sameness on the high street, marketers must think innovatively about how they talk about quality,” he advises. “There is huge innovation within digital product IDs that hold information about a garment’s manufacturing and sustainability credentials on the blockchain. This helps brands to prove the value of their products through information transparency.”
It’s also important to focus on customer experience, according to Anne Stagg, CEO of Merkle in the UK, who works on this with clients including Hilton, Subway and Currys. She believes that building loyalty through innovation and relationship-building is especially important during a recession, noting that the most effective approach a brand can adopt when times are tough is to “put your customer first”.
Stagg adds that during a downturn “the usual demands from consumers become essential needs – and a business’s survival becomes dependent on its ability to adapt to this”.
Listen and respond to consumers
Sid McGrath, chief strategy officer at Wunderman Thompson, observes that many consumers feel that they’re losing control of their situation during periods of austerity. Clear and simple messaging helps to reassure people in such circumstances.
“All you need to do is listen and respond to consumers. It’s not necessary to reinvent the wheel,” he argues.
McGrath suggests that making things simple could extend to measures such as expressing discounts in pounds and pence rather than percentages. This ensures that “consumers don’t need an economics degree” to understand the value of a special offer, for instance.
He also advocates setting out all the “rational benefits” of the product or service, while not making drastic changes to the type of messaging from the brand that consumers are accustomed to.
For Salter, setting your offering well apart from the competition is the most important marketing priority in a recession. Firms that come out of downturns in a stronger position than their rivals tend to have achieved “distinctiveness by focusing on the master brand and a few hero products”, she says.
“It’s not the time to invest in a long list of second- or third-placed stock-keeping units that people are switching away from. Using innovation to drive distinctiveness is key.”
