There, I said it, that word on everybody’s minds that few dare speak: “recession.” Fear of economic downturn has dominated the business dialogue since we entered 2023. This despite real signs that most companies are still doing kind of ok. Sure, taken together, the economic indicators look quite bleak, but you have to wonder in the chicken and egg world of macroeconomics, how much does preparing for a recession ensure its inevitability?

Regardless of how we got here, here we are. Most marketing leaders have been asked to prepare for the worst, and many are already being proactive about reducing their cost base. Now is the right moment in time to consider that jiu-jitsu thing of how to turn a negative force into a source of advantage, and come out of the back end of whatever this uncertainty is, better than how you entered it. It is possible, but it will require marketing leaders to swim against the tide of fear and boldly lead.

There is no company/brand/organization/division that does not need some form of fundamental reinvention, so why not use this moment of change as the burning platform that drives yours.

Recession Marketing Lessons

As a famous resident of my town in New Jersey once said, “it’s like deja vu all over again.” The economic cycle is just that, a repeated cycle. We’ve been relatively blessed over the last 30 years to have had to deal with this very infrequently – although the downturn of the late aughts is seared in the minds of many marketers who are now in positions where they have to make some extremely tough choices.

So what happens? We cut too hard, often the wrong things, we get to it too late, and we are slow to read the signs about when it’s time to get back in the fight. The recovery often gains steam quickly, so there is little organizational appetite to look backward at our recessionary efforts and assess what we gained and what we lost. So inevitably, we end up repeating the cycle again and again.

Let’s unpack the typical recessionary marketing actions and their sadly typical consequences:

• Those who cut in-market programs too aggressively, do harm greater than their savings, as those who maintain their spending realize a windfall in share growth.
• More than lost share, is the risk of losing a brand’s most valuable customers, as more come into play during uncertain times.
• We let brands erode in favor of down-funnel spend and create an opening for disruptors to reframe our categories away from now voiceless incumbents.
• We delay hiring, often inflicting the most pain on high-potential new spaces which have less current revenue to protect.
• We lay off staff without “rethinking” the work they do (did), so those left to pick up the pieces, and in particular, the strong ones with options, leave. Then we scramble to rehire top talent during the recovery in a seller’s market.

One of the most ironic consequences of recessionary marketing cuts pertains to the timing of cause and effect. For most categories, marketing spending, particularly top of funnel spending, has little immediate impact on your brand. There is lag effect, which, depending on the category and metric, can be as much as 12-18 months. This is about as responsive as steering a supertanker through a slalom course. So, the spending you cut during a downturn has less impact on the market when demand is suppressed and there’s less to gain than it does during the rebound when pent up demand is released. Said another way, the actions your current self takes will weigh most heavily on your future self. Pretty deep, huh?

7 Ways to Create Marketing Advantage in a Downturn

That’s enough negativity. Let’s look at this from a glass half full perspective and discuss how to make the most of this “crisi-tunity.” Let’s introduce 7 ways your brand and business can rise to this challenge. As General George S. Patton once said, “pressure makes diamonds.”

1. Reset your marketing priorities to do more with less
2. Rethink and reduce marketing work – not just headcount
3. Find the small pots of wasted spend that add up to big savings
4. Take this opportunity to clean house with your brand portfolio…
5. …Then high-grade your brand portfolio spending
6. Get aggressive – target others’ high-value customers while defending yours
7. Be proactive – get ready now for the coming post-downturn boom

***
In our next edition of Reinvention Notes, we will dive into each of these opportunities. Until then, stay strong and think about how your organization can seize this moment as a mandate for reinvention.

The post To Recession or Not to Recession? appeared first on Vivaldi.

Kevin Lane Keller and Erich Joachimsthaler discussed modern marketing strategies.

Here are some of the key principles of Kevin’s Marketing expertise:

1. It is critical to define your product and services, then to determine collaborations. The intent of your company must be clear before considering potential partnerships. All companies are part of a broad ecosystem that serves a purpose and relates to one another.

Collaborating is not something new and has been done frequently in the past, but Kevin expresses how the function of collaboration has evolved into an integral part of marketing. Partnerships tell a story behind the companies. There is a resulting creation of new customer segments with fortified and enhanced offerings.

“It’s really important to not think of yourself as a marketer or as a company selling products or services, but that you’re satisfying needs, supplying benefits and solving problems.” – Kevin

2. With customers driving the company’s purpose and direction, marketers are no longer in control as they were in the old push-pull world. In the past, marketers are the ones prescribing how customers consume their products and services. Currently and in the foreseeable future, the customers are the ones creating a culture around the product and services through their natural response.

Kevin stresses how “Marketing Myopia” should still be a solid foundation. There is less of the traditional structure nowadays because of the organic synergies that take place through the audience. It is imperative to pay attention to these interactions that produce signals and opportunities to integrate them into the marketing strategy.

“We as marketers are really orchestrating value creation— orchestrating communications and orchestrating your Four P’s rather than designing them all.” – Erich

3. The Engagement Forum is the main ingredient in modern marketing. Word of mouth has been migrating to the digital world, but not entirely. When we interact through interest-driven communities in real life, it also becomes a marketing platform. Setting up a forum for these interpersonal interactions, both digitally and physically, has become one of the primary responsibilities of Marketing Managers.

As Kevin and Erich discussed, each of these niche interest-driven communities have varying dynamics and operations. Keeping track of people’s social and emotional signals in these communities and responding to them allows relationship building while making it feel less transactional.

“I’m changing knowledge and changing the way people think, feel, and act in a way that is going to help my brand and or help the mission of my brand. I’ve got to make sure that that happens.” – Kevin

Companies need to consider having a “Customer-First” mindset:

• Building communities as part of the business model: In the world of hyperconnectivity, value creation is synergetic and not one-sided. The culture built around company offerings and the consumption habits within communities become essential components of the business model.
• Letting consumers create the brand: Making customers feel like they are part of the brand’s co-creation process will increase their brand loyalty. The resulting interaction themes could be reinforced to help lead new insights and new practices.
• Creating value that withstands constant change in the consumer landscape: Companies must connect a business to a brand, not only with the value proposition but also with their promise to the customers. Marketing has evolved over the years, but its value proposition must have an adaptable quality with customers’ relationship as the foundation for decision-making.

Conclusion

The rules of marketing are changing as platforms and interactions become more democratized and digitalized. The connection culture of communities, collaborations, and customers have grown to be key players in creating successful company offerings. Orchestrating the organic synergies among these audiences provides informative trends and signals that will allow them to acclimate and demonstrate resilience in marketing’s ever-evolving consumer landscape.

Watch the full event here:

• 9:56 – The next steps in terms of brand marketing  
• 15:24 – The whole is greater than the sum of the parts in building an ecosystem 
• 18:14 – The consumer creates the brand 
• 31:36 – The importance of brand purpose and communicating it to your audience 
• 36:52 – Beyond branding and new opportunities 

This segment was part of The Interaction Field Series of our LinkedIn Live Events. Please connect with us on our LinkedIn page to stay updated with our upcoming conversations.

The post Customers & Communities First: The New Drivers of Marketing with Dartmouth College’s Kevin Lane Keller appeared first on Vivaldi.

There you are – nearly through Q1 of a successful year, your carefully crafted strategy is starting to move the needle as in-market communications numbers are starting to come in. And just like that — an epidemic of never-before-seen proportions changes not only your customer’s lives, but your business from end-to-end. Sound familiar?

You’re not alone.

You would also not be alone if you thought immediately, “Do I maintain, increase, or cut spend?” Of course, figuring out the answer is easier said than done. Most don’t get this right in good times, let alone in a pandemic of never-before-seen proportions.

And today, when—and how—you make these decisions matters. After all, CMOs are no longer building brands—you’re building a business!

There’s one thing you definitely can do to help your company and brand right now and that is to increase marketing effectiveness and figure out how to get more for your marketing spend.

However, the way to increase marketing effectiveness is not how you think.

The standard recipe is to review your current spending and cut initiatives, efforts or campaigns that underperform. One of the common discussions is about balancing the budget between short-term initiatives that drive immediate sales versus brand building initiatives that ensure longer-term growth (over 6 months). Backed by decades of research, Les Binet and Peter Field recommend spending 60% on brand building and 40% on immediate sales activation.

With falling sales, the pressure to maintain or soften the blow is high, leading brand investments to typically get the cut.

From our experience, we know that there are three key factors that you should consider in optimizing marketing effectiveness. These factors have become powerful in recent years and will continue to do so as the hyper-connectivity in our world increases.

The three key factors to your success are: network, viral, and learning effects.

Let’s look at these factors one by one:

Network effects.

Network effects kick in when a product or service becomes more valuable as more people use it. Think Airbnb. The more Londoners offer their spare rooms or stately homes through Airbnb, the more valuable the service becomes for both tourists and the London renters. Tourists get greater selection, increased availability, more variety and choices. Since tourists get greater value, they use Airbnb more, creating more customers for the London renters.

This means that you shouldn’t just look at your marketing in terms of how much it drives sales or creates brand-building impressions. Look at what it does to the value of the product or service to all of your customers. In Airbnb’s case, customers include not just guests, but also hosts. Not to mention other partnerships and ecosystem complementors.

Sadly, it’s been reported that Airbnb reduced marketing spend by $800 million a few weeks ago. Tom Ajello (VIVALDI’s Chief Creative and Digital office who also happens to be an Airbnb Super Host) had this to say:

“The marketing spend issue with Airbnb is a complicated one. On one hand you might see it just typical budget cuts. On the other hand, the negative effects of those cuts reverberate throughout an interdependent system they (Airbnb) are ultimately responsible for.”

1. They cut marketing spend but didn’t consult, warn or engage us, the hosts they make money off of.
2. They allowed guest to back out of their stays with hosts (and again, didn’t consult us) — forcing hosts to “hold the loss.”
3. They didn’t advocate for hosts (THEIR NETWORK) in the face of government loan opportunity.

“These were not wise decisions— creating a perfect storm of the NEGATIVE Network Effects,” Ajello said. With the drastic negative impact Airbnb’s marketing spend decision had on its hosts, it is no surprise that some investors call for the resignation of its CEO Brian Chesky.

The second factor is virality.

As people find value in a product or service, they voluntarily become advocates for it, encouraging others to join. This advocating leads to free, authentic marketing. Think GoPro, the action camera that has a commanding market share among extreme sports enthusiasts, surfers and snowboarders. The Hero 8 camera is so good that it doesn’t need much advertising; however, GoPro still spends in the millions. Should it maintain its spending? Yes. GoPro benefits from the viral effect with campaigns that encourage surfers to share their pictures or videos on popular social channels, like Tik Tok and Instagram. When people post Go Pro-created content on their social media, they concurrently promote GoPro to all of their followers. GoPro can also repost the best content to its own social channels, making people want to shoot content only possible with a GoPro. In plain English: the virality effect creates more camera sales.

Similarly, Chipotle leveraged the viral effect with its Tik Tok challenge last May. After a Chipotle employee went viral for flipping a lid to seal a burrito bowl, #ChipotleLidFlip challenged its fans to replicate the move. Partnering with Youtuber David Dobrik, there were over 111,000 video submissions and 230 million video views. Every time someone posted a #ChipotleLidFlip submission, they simultaneously communicated to their followers that they enjoy eating Chipotle and connect with the brand enough to participate in one of its challenges.

This means that you should also look at your marketing in terms of how much it encourages users to post about, and therefore authentically promote, your product or service.

The last factor is the learning effect.

The more consumer data the brand gathers and synthesizes as a result of a marketing campaign, the more valuable the campaign becomes. That’s because, obviously, data is invaluable when companies can leverage it to better target consumers in their future offerings and marketing.

Campaigns can achieve the learning effect by generating consumer data in two ways. First, campaigns can collect data directly from customers’ interactions with the campaigns.

Consider Naked Wines, the platform that enables wine-lovers to fund and access unique wines. Their ongoing email campaign provides users with personalized recommended wines, based off the users’ past wine purchases and ratings. As users purchase the recommended wines, Naked Wines gathers more data on its users’ shopping behaviors and wine preferences. The emails also ask users to rate more wines, as more ratings will enable Naked Wines to provide them better recommendations. With a deep, growing understanding of its customers’ wine preferences, Naked Wines can continuously provide users recommendations that keep them purchasing more wine.

Consider your marketing in terms of how much actionable data it garners, whether directly in the campaign or through acquiring new customers whose product or service usage then improves your offering and marketing.

We believe that the combined power of network, viral, and learning effects on marketing effectiveness and business value can be extremely powerful. It’s worth evaluating every marketing initiative or campaign in terms of how they support these effects.

——

^[i]  https://analyticdashboards-wordpress-com.cdn.ampproject.org/c/s/analyticdashboards.wordpress.com/2020/04/10/myths-on-marketing-in-recession/amp/

^[ii] https://www.prweek.com/article/1678649/airbnb-pause-marketing-amid-covid-19

The post Three ways to increase marketing effectiveness in challenging times appeared first on Vivaldi.

In February 2016, our CEO Erich Joachimsthaler wrote an article for Forbes.com analyzing when it would make sense for advertisers to pay for a Super Bowl ad. He presented cases for buying ad space, but also argued the case for why the Super Bowl may not be the best avenue for most brands. Read the full article here.

The post Is the Super Bowl Really the Route to Take? appeared first on Vivaldi.