‘Come back in a year, and tell us if cutting your budget was a good idea’

Campaign from the IPA and FT comes back into relevance – promoting the importance of brand building in periods of recession – with evidence to back it up.

The IPA and Financial Times’ campaign, running since 2019, aims to underline the importance of brand building, especially in periods of recession, and has come back to prominence in recent announcements of budget cuts. 

The IPA was alarmed by newspapers reporting with suggested that the government-appointed Cost of Living Business Tsar David Buttress, had been recomending that businesses divert their marketing activities and reallocate the savings to price cuts

While this guidance may appear socially relevant in the current moment, the IPA were concerned that it is not founded on sound marketing principles. This ad campaign was designed to bring this to the market’s attention.

Janet Hull OBE, Director of Marketing, IPA said: "The ads are very timely and fit the campaign we have been working on with the FT to improve understanding among their C-suite readership about how to build successful brands. 

“We knew from our survey of the FT readership in 2019 that one third of marketers knew that brand building was vital for business growth but that they lacked the confidence in their own ability to know how to do it well. We also know that marketing effectiveness is now on their agenda. 

“By partnering with the FT we hope to raise awareness of the commercial impact of brands and to provide marketers and agencies with the support they need to make the case for long term investment which is even more important today."

Budget cuts in periods of recession

The research conducted with the FT readership showed that while 52% of C-suite executives claimed to believe in the importance of brand-building, less than one-third felt confident in how to go about it. 

The IPA’s aim was to address this gap in understanding, which prompted the campaign. It believes that there is a long-term need for continuous reinforcement of its key messages. The QR code allows readers to access two pages of evidence backing up statements in the advert.

The evidence base spans more than 40 years but the periods of recession and economic volatility bear particular relevance. The IPA can show how budget decisions made in previous downturns (2001 and 2007/2008) subsequently impacted on companies’ financial performance.

The analysis contrasts average Return on Capital Employed (ROCE), as a ratio of profitability and efficiency, during recovery by businesses that in the previous downturn had cut, maintained or increased marketing spend (as a percentage of market size). 

It found ROCE growth in recovery was highest among businesses that increased marketing spend in recession. These businesses also grew market share fastest in the recovery.

In an economic recession, total advertising spend tends to fall and media rates get cheaper. If brands cut their advertising spend, competitors have greater opportunities to grow their relative Extra Share of Voice (ESOV), often just by maintaining or only trimming budgets.

Another temptation for marketers during a downturn is to shift advertising spend into price promotions. This is particularly tempting during a cost of living crisis.

The IPA’s evidence shows that price promotions damage the profitability of brands and businesses, and are financially unsustainable over the long term.

Regarding pricing, the IPA recommends that if you want to make people less price sensitive, you need to engage them emotionally. People pay more for the brands they love.