How Startups Can Navigate The Downturn to Build Brands Of Tomorrow

Marketing spends are often the very first victims of a recession. As talks of an uncertain economy and budget cuts deepen, marketers need to find a way to do more with less, and chart long-term brand growth while meeting short-term milestones. 

Across multiple studies, data points and insights, one finding is clear: brands who invest in brand-building amid a downturn emerge stronger, more resilient, and see more long-term upside than brands who don’t. 

Brand Equity Drives Resilience

Savvy marketers know that a strong brand is more change-resilient. Whether it’s in the form of macroeconomic elements affecting financial growth, the increase of commodity prices amid supply chain disruptions or geopolitical affairs. During times like these, it may feel natural to batten down the hatches. However, a competitive business landscape and leadership expectations still demand positive results despite the pressure of macroeconomic headwinds. 

For brands thinking beyond next quarter’s results and are invested in building a long-term brand of tomorrow, a downturn presents an outsized opportunity for them to differentiate themselves while protecting core commercial metrics like retaining a premium on price.

Maintaining Pricing Power 

Consider this: As inflation rises, consumers too are tightening the purse strings and cutting down on discretionary spending. For brands, this means retaining an existing price premiumisation becomes tantamount to defending topline growth. Research shows that brands with a strong identity are less affected by price elasticity.

A study by the Harvard Business Review shows that products with stronger brands tend to be more price inelastic, which makes building brand equity a good investment. Simply put, price sensitivity is not a byproduct of consumer behaviour that cannot be helped, but a marketing outcome that can be shaped by brand builders.

Bouncing Back Better

Beyond pricing, investing in brand-building arms, can help businesses with bounce-back-better armour. 

According to research by Kantar BrandZ, robust brands that weathered the 2008 financial crisis recovered nine times faster. The economy will turn a corner eventually, and when it does, businesses that have carved a strong brand will be the first to regain their footing.

A Balancing Act: Short-Term Spikes Vs. Long-Term Growth

Evaluating the returns on marketing investments with a short-term lens can be myopic. Research by Nielsen, Nepa, and GfK to examine the role digital advertising plays in driving brand growth found that businesses are grossly undervaluing advertising if they only measure short-term outcomes. 60% of the Return on Investment (ROI) from advertising comes in the long-term. That said, a perennial marketing dilemma presents itself: How can marketers achieve quantifiable short term wins while optimising for long-term growth?

The ‘Dragontail Effect’ is a framework used at Meta that makes the case for high performance advertising, coupled with brand advertising, can maximise business performance in both the short and long-term. 

As illustrated, investing in brand campaigns ensures that the baseline of sales is growing over time, while performance campaigns add short-term spikes or ‘Performance Peaks’ on top of the baseline when activated. This leads to optimal short-term performance while sustaining and growing the brand’s underlying health in the longer term.

Another study by Analytic Partners revealed that during a downturn, brands that doubled down on their media investment saw their incremental sales grow by more than 17%. Meanwhile, brands that reduced their media spending recorded an average loss of -18%. While cutting advertising spending may save costs in the short-term, it corrodes long-term attributes like brand equity and saliency, which are much harder to regain. 

Companies must sustain their marketing investment even amid an economic downturn to maintain growth while building for the future. 

How Is Brand Building Changing? 

Multiplicity Effect In A Digital Landscape

Consumers today have a plethora of touchpoints at their disposal. The advent of new technologies, coupled with shifting consumer habits, means marketers need to meet their consumers where they are at. 

For marketers, a befitting term to think about how to connect with consumers is ‘multiplicity’ – the holistic effect of experiences arising from multiple entry points, touchpoints and channels that are optimised by machine learning. Leveraging a broad range of channels and touchpoints like Short Form Video, Business Messaging, Creators and cutting-edge technologies like AR/VR and the Metaverse is what enables brands to connect with consumers effectively. 

Another facet of multiplicity is interconnectivity between an ecosystem of apps. From an advertiser perspective, the ability to market to consumers through various channels like WhatsApp, Instagram and Facebook is an example of multiplicity.

Multiplicity also drives results. A study, ‘No Silver Bullet’ conducted by Kantar and Oxford University’s Saïd Business School, found that the campaigns that leverage and invest in a broad set of channels, including social media, are 2.6x more effective for brand outcomes. The study also suggested that many marketers have an opportunity to optimise their media spends as they are overinvesting in traditional channels like TV.

A Digital Shift and the Always-On Phenomenon

Ipsos’s recent ‘State of Connective Media’ report shows that the future of media looks progressively digital. Results from the study highlight that it will become increasingly expensive for brands to reach the next generation of audiences through traditional ad-supported methods like TV.

 

As consumers turn away from TV screens and towards mobile screens, a new ‘always-on’ shopping behaviour emerges. Gone are the days where specific pockets of time are set aside to shop – it’s now about always-on shopping and always-on experiencing. In tandem with shopping, consumers are also consuming content, all of which are opportunities for brand building experiences. For Gen Z, this behaviour is especially true. 72% of Gen Z social shoppers in APAC (Asia-Pacific) agree with the phrase, “I am always browsing for shopping inspiration when spending time online.”

Great Expectations: Diversity, Equality & Inclusion

One-size-fits-all marketing has never been particularly effective, but with changing consumer expectations, diversity and representation in advertising have become critical. In particular, brands invested in grooming the next segment of consumers need to pay attention to Gen Z’s inclinations. 49% of Gen Zers prefer to buy brands that are accessible to everyone and 46% prefer to buy from socially responsible brands. Catering to this group of consumers will be a big win for brands, considering Gen Z makes up 41% of the world’s population, with a growing influence on household purchases.

Now is the time for next-generation brand-building to take place in support of future demand. Brands must begin to invest in building up their younger audiences and focus on their media habits to capitalise on long-term growth.

Building Breakthrough Brands To Solve Key Jobs To Be Done 

Creating a holistic communication strategy is paramount and can truly transform the customer-brand relationship. Marketers can leverage integrated business tools and platforms within the Meta ecosystem to deliver desired outcomes on multiple surfaces — all in one place. 

In fact, it is the power of multiplicity, extending to 3.7 Bn monthly active users (MAUs) across Meta’s family of apps, that can help marketers reach diverse audiences. 

With this level of connectivity, the right tools are at the fingertips of savvy marketers. Consider  below a summary of the key jobs that need to be done (JTBD) and how these can be tackled using solutions within Meta’s technologies:

Maximize Full Funnel Experiences 

Marketers can apply the ‘Dragon Tail’ framework to combine brand and performance marketing to reap synergistic benefits across short and long-term horizons. Here is how Amazon India did it:

The global ecommerce giant leveraged digital solutions such as Facebook’s In-Stream Video to recruit new shoppers for its month-long festive shopping period by incrementally adding brand communication to performance marketing initiatives. The results? 85% of new consumers on Amazon India are from Tier 2 and 3 cities.

Harness Multiplicity

To promote its latest line of liquid lipsticks, Maybelline India worked with media agency Wavemarket to create Augmented Reality (AR) ads that allowed customers to try out the lip colours virtually. 

In conclusion, short-term marketing helps people buy, but long-term marketing helps people choose. The adage underscores the importance of building a meaningful brand that customers will trust well into the future. More than ever, now is the time to double down on brand-building investments. In the words of Henry Ford, “Stopping advertising to save money is like stopping your watch to save time.”