By Antonia Welch,
It will come as no surprise that marketing budgets are often cut during a downturn. As a legal PR, it would be somewhat self indulgent to argue why this might be a mistake but history does teach us that businesses that maintain marketing and PR spend during difficult trading conditions fare better than those that lose sight of the of the long term investment they could be making.
Take, for example, the dotcom crash at the turn of this century. Businesses that cut their marketing budgets completely took five years to recover. Equally, in 2008/9 brands that were strong going into the recession remained strong while others disappeared entirely. Going dark by slashing advertising proved to be a costly mistake for some.
There are lots of studies that provide concrete evidence that it pays to maintain or even increase marketing budgets during a recession.
To cite just one example. Harvard’s Roaring out of a Recession report found that “companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession”. Strikingly, the research revealed that of the 4,700 public companies analysed during three major recessions, nine per cent of those companies flourished, outperforming their competitors by at least 10% in sales and profits growth. More specifically, the study found that these companies were the ones that maintained or upped marketing spend.
During difficult times, consumers seek reassurance and continuity so big brands such as Kelloggs and Ketchup tend to perform well. For lesser brands plummeting advertising rates can provide brilliant opportunities for those that are brave enough to maintain or even up marketing spend. What has been interesting about the pandemic is that media consumption has rocketed meaning that brands can secure a prime time advertising slot at a fraction of the cost providing a brilliant way to be grab attention.
So where does this leave professional services organisations such as law firms and accountancy practices? Naturally, the pandemic has changed the way firms are marketing. Webinars and podcasts fill an obvious gap left by no live events but firms need to do more than just push out digital events and content. A comprehensive review of their marketing mix and ROI would be an obvious starting point.
This downturn is different from anything witnessed by baby boomers and younger generations in that the catalyst is not financial. It is easy to argue that an economic decline was still imminent but the circumstances brought about by covid-19 are unique in that the pandemic didn’t just slow down an already ailing economy, it literally put the brakes on it with many sectors coming to an abrupt halt. It is impossible to predict how things will pan out but the competitive landscape will be different beyond lockdown. Some firms won’t survive, there may be more mergers driven by a distressed costs budget but there will also be opportunities.
Just as consumers find reassurance by using big brands during a recession, the same can be said of professional services’ buyers. There are lots of very good law and accountancy firms offering near identical services but the best known ones are able to charge a premium simply because they have built up a strong brand and a reputation as market leaders in the sectors in which they operate.
Reputation is key and firms and fee-earners that devote marketing effort to building a strong profile are likely to fare best and even thrive after lockdown.
Put simply, you are more likely to win work if you are known for it.
Antonia Welch is a freelance PR specialising in the legal sector and other professional services. See more here.