So you’re increasing your advertising investment this year, right? Right?
In many companies the bean counters are pushing back on marketing investment decisions, seeing it as wasteful spend by characters who struggle with basic arithmetic. While that’s sadly far too true in our profession, cutting investment heading into this recession is short-sided and it’s easy to explain.
I can’t recall where I saw this and want to give proper credit. Please tell me if you know where this came from and I’ll update this post.
A way to think about this is 5/95 or 2/98.
In normal times perhaps 5% of your target market is “in-market”, i.e. actively looking to purchase the product while 95% are not “in-market.” (An aside: You can find lots of people offering to sell you audiences of about 330 million people in the U.S. that are “in-market” for automobiles. Hilarious on such an obvious level.) As we go into recession and people spend more carefully, the denominator (the size of the target audience) doesn’t change. But the numerator, or number that are actively in market for the product goes down, at least for a while.
In normal times, in a target market of 10MM, the in-market number might be 500K, with the remaining 9.5MM in other purchase flow stages. In recessionary times, the in-market number may contract to 200K, while 300K sit temporarily on the sidelines among the now 9.8MM not in-market.
Your competitors, who understand share of voice (SOV) and excess share of voice (ESOV) and feeling the same pressures, will continue investing and reach not only those 300K who will snap back to “in-market” as conditions improve, but also reach the other 9.5MM with greater frequency than you. When those 9.5MM move in-market, you may lose your previous share of their business as a result.
Why not continue to invest in your advertising and take advantage of that relatively quick bounce-back when it happens and grow your share of the rest of that audience when they too decide to buy in your category?
I’ll leave the math and how you convince your CFO to you.
Takeaway: Continue to invest. Garner ESOV. Gain share at the end of the recession. And win.