NAB’s economics team recently reported that we’re going to see economic growth slowing sharply as consumer spending comes under pressure from both higher rates and inflation. 

Whether Australia goes into a recession this year or not remains to be seen but there is no doubt that this downturn isn’t going to get better anytime soon. 

That means continued pressure and cuts to marketing budgets, with investment in brand building usually the first to go. 

Yet all the data from previous downturns tells us that cutting brand investment has severe consequences. And for businesses that hold the line, and continue to prioritise investment in their brand’s equity, there is a huge upside.

In the midst of every crisis, lies great opportunity.' 

- Albert Einstein 

We’ve collated this data for you here to equip yourselves with to protect your brand and seize the upside of this downturn. Key findings:

Advertising spend directly links to revenue. If you stop advertising in a downturn, sales and brand equity will decline.

Research by Analytic Partners shows that brands that stopped advertising during a recession saw sales drop by 15 per cent compared to brands that increased investment who saw sales increase by 16 per cent. Ehrenberg-Bass Institute lead Professor Byron Sharp’s research shows that the drop in sales as a result of stopping advertising is 3.5 x more pronounced for smaller brands. Brand equity also suffers when firms stop advertising – and Nielsen data shows that marketing accounts for 10-35 per cent of a brand’s equity.

If you maintain or increase ad spend during a downturn you will reap the rewards – especially in the upturn.

Research on 600 companies during the 1981/82 recession, by McGraw Hill, showed that brands who maintained or increased their ad spend during the recession grew sales 375 per cent over the three years after the recession versus 19 per cent sales growth amongst those who decreased their ad spend. 

Why? Advertising in a downturn is more effective.

The proven way to increase your share of market is to increase your share of voice – the ESOV principle. In a downturn, many of your competitors will be cutting ad spend so it’s more cost effective to increase your share of voice and therefore share of market. Also people tend to stay at home more in a downturn and consume more media and therefore more ads. They may spend less in the short-term, but those memory structures are laid.

Not all advertising is created equal.

Understanding how to boost the effectiveness of your advertising is critical to success.

Emotional advertising has more powerful long-term brand and business effects and can drive short-term effects as well.

The research of Binet and Field is well publicised and incredibly robust, emotional advertising outperforms rational advertising in driving long-term brand and business effects. And, published more recently, it can also drive short-term effects. 

Why? Economist and Nobel Prize winner Daniel Kahneman, in his book, Thinking Fast And Slow, explains that upwards of 95 per cent of our decisions are made emotionally. We sell through the heart. There may be more scrutiny on our work by finance teams during these times but don’t let rational thinking overshadow how we know advertising works. 

Fame driving campaigns outperform all other campaigns - on all business metrics.

Also reported by Binet and Field, fame driving campaigns (those that earn media) outperform when it comes to sales, market share, price sensitivity, loyalty, penetration and profit. Fear and uncertainty makes us more risk averse at a time when the opposite makes commercial sense. Now is the time to take some risks and get talked about. 

Creativity is the number one multiplier of profit - that you can control.

The biggest driver of profitability, according to research by Kantar, is brand size. The second is creative quality, which has a 12 x multiplier of profitability. The Binet and Field research also proved that creatively-awarded campaigns are 11 times more efficient than non-awarded ones at driving market share growth. 

So here’s that data pack.