A guide to Recession marketing communications and how to survive in tough times.

1. IMPACTFUL
COMMUNICATIONS IN
THE DOWNTURN
Leo Rayman, 19-Feb-09

2. The Recession Survival Guide

16. Agenda
• Latest Economic Forecast
• Charles Darwin on Recessions
• Three themes:
– Cutting & Spending
– Value & Values
– Innovation & Fame
• Summary & Conclusions

18. Latest economic forecast

19. 1980-81 1991-92 2001-02 2008-09
Source: IMF, Jan 2009

20. 1.9 0.7 0.5
-2.4
-2.2 -3.1
Source: IMF, Jan 2009

21. “It is going to be
quite nasty”
Les Binet, Econometrician, DDB Matrix

22. People are not going to stop
feeding their cats

23. Some sectors do well
M a rk e t G ro w th ra te
C in e m a a d m is s io n s 16%
R e c o rd s , C D s , ta p e s 10%
T e le c o m s 10%
A lc o h o l 10%
S o ft D rin k s 9%
P e ts 9%
T o ile trie s 8%
C o n fe c tio n e ry 8%
S p o rts & T o ys 6%
Food 6%
Annualised increases in consumer spending 1989-1991

24. Charles Darwin on Recessions

27. Charles Brebner, Plant Superintendent; Richard Deupree

30. “Recessions accelerate the changes
that are already happening”

31. Ten things to remember
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

32. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3.
4.
5.
6.
7.
8.
9.
10.

33. 1. Cutting & Spending

35. Marketing budget forecasts
Source: IPA Bellwether Survey

36. A good short-term effect.
20%
ROCE during downturn
14%
15%
12%
10%
8%
5%
0%
Reduced Maintained Increased
Marketing spend (as % of market size)
Post-2000 data
Source: PIMS & Malik Management Zentrum St. Galen, with thanks to Les Binet, DDB Matrix

37. But not everyone is cutting.
100%
18%
90%
80%
Increase
70%
31%
60%
Maintain
50%
40%
Reduce
30%
51%
20%
10%
0%
Q1 2009
PR spend intentions
Source: University of Southern California, Feb 2009

38. Because cuts hinder recovery…
3
Share change during recovery
2.0
2
0.8
1
(% points)
0
-0.8
-1
Reduced Maintained Increased
-2
Marketing spend (as % of market size)
Post-2000 data
Source: PIMS & Malik Management Zentrum St. Galen, , with thanks to Les Binet, DDB Matrix

39. …and damage long term sales.
Sales
Time
Budget maintained every year
Zero marketing year 1 then back to usual weights
Half budget in year 1 then back to usual weights
Source: Data2Decisions

40. The Great Depression

41. 1991 Recession

42. It comes down to Share Of Voice
T yp ic a l S O V -M a rk e t S h a re R e la tio n s h ip
B a s e d o n 1 0 9 6 B ra n d s in 2 3 C o u n trie s
25
Brandsd s h e re te ngainin s h a re
here d to g a
20
B ra n
share
S ha r e o f V o ic e (% )
15
Brands here lose share
B ra n d s h e re te n d to lo s e s h a re
10
5
0
0 5 10 15 20 25 30 35
M a rk e t S h a re (% )
D e riv e d fro m J o n e s (1 9 8 7 )
Source: Les Binet, DDB Matrix

43. what to cut…
The question is

44. Cut the marketing services supply chain…

45. Cutting and Spending
(Product) Quality Maintain
R&D and NPD Maintain
Advertising Maintain / increase SOV
Operational /admin costs Cut
Spare capacity Cut (but beware cutting too far)
Source: PIMS analysis of financial performance of 1000+ firms during market slow-downs.

46. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3.
4.
5.
6.
7.
8.
9.
10.

47. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6.
7.
8.
9.
10.

48. 2. Value & Values

49. Recessions change buyer behaviour

50. Classical Marketing: not right now…

51. The Great Unknown: How will Value
brands fare?

52. Value marketing: Grow new markets, Low pricing, Low cost systems
Stelios Haji-Ioannou

53. Growing Markets

54. The Perils of Followership

55. Microsoft XBOX 360 Nintendo Wii

56. Red Ocean Strategy Blue Ocean Strategy
Source: Blue Ocean Strategy (Chan Kim/Mauborgne)

57. “Tough times make people think
more. Something called value
becomes even more important;
and sometimes that’s the same as
price but very often it isn’t.”
Source: Jeremy Bullmore

58. Value not just about Price
Source: Millward Brown Brandz 2007, 500+ brands, 23 categories

59. Emotional brand campaigns more profitable
Source: Les Binet, IPA Datamine

60. Increased sales by an annual average of 8% over three years

61. Ruler Brands do better in tough times

62. Don’t abandon the brand…

64. It all comes down to knowing your
customer.

65. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6.
7.
8.
9.
10.

66. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9.
10.

67. 3. Innovation & Fame

68. Recessions accelerate change
Source: Epsilon US CMO survey, Summer 2008

69. “Something has changed and
the reason for the change is
online activity, where personal
recommendations have become
more important and its clearly
editorial and its clearly not
Advertising-based.”

70. What influences purchasing decisions?
0.00 2.00 4.00 6.00 8.00 10.00
Word of Mouth (someone you know) 8.40
Word of Mouth (from Internet supported by others) 6.80
News Story 6.40
Word of Mouth (from Internet, in isolation) 5.80
Advertising 4.60
Source: Jon Leach, Pattern Recognition

71. People buy famous brands
Source: Les Binet, IPA Datamine

72. Source: Weber Shandwick

73. Keep the conversation going on Twitter
Do our six recommendations agree with the successes and failures you’ve seen?
Use the #Web2.0work hash tag to respond to this article on Twitter. We’ll be
following them and responding via our McKinsey Quarterly account, @McKQuarterly

77. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9.
10.

78. Ten things to remember
1. Some categories grow in Recessions
2. The ability to evolve ensures survival
3. Cutting makes recovery harder
4. Cutting damages brands in the longer term
5. Cut, but cut less than others
6. Grow markets not just market share
7. Invest in brand as a strategic asset
8. Institutionalise customer insight
9. Design campaigns for fame and talkability
10. Social marketing is the way of the future

79. Summary & Conclusions

80. Signs of
Recovery?
Source: McKinsey – Perspectives on Finance and Strategy Winter 2009

81. It isn’t all bad.

82. It isn’t all bad.
Tino Schaedler: Stratocruiser – future airship EF Schumacher – a different kind of
economics

83. 3 things to take away
1. If you cut, cut less than your competitors
2. Insulate yourself through the power emotional
branding
3. Maintain innovation and fame-building campaigns

84. “The future, as always
belongs to the brave”
Source: Bill Bernbach