Lexi Coulter from Mediasmith explains how and why you should be doubling down instead of hitting pause.
A scenario that marketers are all-too familiar with starts with “Where do we cut?” when things start to look uncertain – whether that’s the economy or the inner workings of their business. The obvious choice, it seems, for many marketers (or more likely, CFOs) is to send the brand media budget to the chopping block. There are a couple reasons for this:
1. Compared with the ease of last-touch attribution friendly media like paid search, brand media is typically difficult to measure and tie back directly to business outcomes
2. Brand media is often viewed as a nice-to-have for growth-stage companies and perhaps unnecessary for established brands
I’m here to tell you that cutting brand investment – especially in times of economic uncertainty – is a huge mistake. But you don’t have to just take my word for it.
We can learn from what happened to brands during prior periods of economic uncertainty. Harvard Business Review analyzed the performance of companies during the three most recent recessions and found that 80% of companies that cut marketing costs hadn’t regained their pre-recession sales and profits in the three years following.
The flipside is this: companies that continued to invest in growth by maintaining their marketing spend during an economic downturn like the 2008 recession saw a 17% compounded growth rate during that time.
We can see the impact during our last period of economic upheaval: the COVID pandemic era. For example, the tech-enabled meal kit startup Blue Apron drastically cut back its marketing spend to shore up finances around the time of its IPO, only to see subscriber growth stall and revenue drop 12% in the next quarter.
The Ehrenberg-Bass Institute has found that if a brand stops advertising, its sales will fall 16% after one year and 25% after two years and that the recovery tax is real: it may take over a year of spend to make up for a one-year break.
Sure, maybe these companies that maintained investment had more money to work with – but if you don’t, you need to focus. A focused strategic investment in brand media will take you further than simply cutting and supporting only the bottom funnel. Here’s why:
Your competition is likely pulling back on their paid media investments. Beyond the simple share of voice opportunity, the current tariff situation has opened other opportunities within the advertising landscape. A media spend pull-back creates a supply-and-demand dynamic that favors ad buyers and lowers media costs. In the 2008 recession, advertising expenditure dropped by 13%. As a result, statistics show 3.5 times more brand visibility for the brands that maintained their marketing output. Brands that invested in brand media specifically saw five times as many large business effects (such as profit, pricing, share, penetration etc) and 4.5 times the annual market share growth.
Consider your brand’s positioning and its relationship to other companies that are more heavily impacted by the trade situation, or more reactive in pulling back spend.
Airbnb v VRBO: During pandemic lockdowns and the uncertain market conditions that the time brought with it, Airbnb reduced marketing spend while competitor VRBO dramatically increased its marketing efforts. The result? VRBO saw bookings recover by 61% while Airbnb’s dipped 15%.
HubSpot bets on brand: The fall of Silicon Valley Bank in early 2023 marked the official end of the zero-interest era of capital allocation and a significant change in the SaaS company landscape. Many B2B tech companies faced demands to extend runway and profitability, with brand media on the chopping block. Instead of cutting back spend during this time, HubSpot continued executing its marketing and community engagement strategy throughout 2023, and managed to grow its revenue 25% that year (to $2.17 billion) despite the broader SaaS slowdown.
Microsoft Azure drives growth: The cloud computing product doubled down on aggressive brand marketing specifically for key areas: AI and cloud in 2023 despite pressure to cut costs. This prioritization of brand media led to 28% YoY revenue growth in the Azure division and strong enterprise customer additions despite IT budget caution.
These examples demonstrate the classic pattern where one player’s restraint becomes another’s opportunity for market share capture.
Despite all this evidence you may still find yourself running into the common dilemma: how do I prove this to my CFO?
Brand media is notoriously tricky to measure and as a result to justify spend against without clear business outcomes. That is why a measurement plan is imperative to ensure that your brand media is 1) effectively reaching your target audience and 2) getting the recognition– and investment – it deserves. How do we do this?
Holdout testing for incrementality: Designing experiments that prove incremental value even in tough times
Scenario planning: Using test outputs or media mix modeling to optimize investment levels across different economic scenarios
Real-time adjustment: Building measurement systems that allow for tactical pivoting based off real-time media metrics that correlate to business results
Focusing on true measurable outcomes enables marketers to run effective brand media campaigns that prove out impact on verifiable business metrics. The numbers will work out if the groundwork is laid properly: 60% of brands that increased their media investment during the last recession saw ROI improvement, and brands that increased paid advertising also saw a 17% rise in incremental sales.
If your leadership has brand media on the chopping block, consider the following actions:
Brand investment is not a luxury. It’s arguably the piece needed to avoid loss and maximize your business outcomes during uncertain times.
