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Three Brands that Persevered in Challenging Economies

by Adi Vinnakota & Sammy Ford
August 17, 2020

When economic times are uncertain, it's natural for marketers to want to cut costs. In marketers’ never-ending quest to make data-driven decisions, analyze trends, and forecast events, they are less willing to try new things and push the envelope. 

What if the data that incentivizes brands to take risks is the key to navigating through the most challenging times?

Advertisers who followed the data and leaned into turbulent markets, remaining empathetic to the needs of their customers, were able to innovate and deliver thoughtful and consistent ad experiences. They understand that to establish themselves as a leading voice in the industry, they must continue to deliver these messages through advertising, particularly during tough times.

Let’s rewind the clock and examine some historical case studies…

Establishing Hyundai
During the 2008 recession, Hyundai transformed from a second-tier player to a top competitor - challenging the best brands in the auto industry. They combined a strategy of sponsor-driven marketing during the Super Bowl and the Oscars with financial incentives for consumers. 

The results were unequivocally successful. Following the recession, Hyundai won Ad Age’s 2009 “Marketer of the Year” award, increased its market share and, most importantly, established itself as reputable player in the space. They climbed from spot 13 (2008) to spot 4 in the J.D. Power and Associates annual Initial Quality Survey.

Making Room for Pizza Hut and Taco Bell
In the early 90s, a dominant fast-food chain pulled back on their advertising spend when economic downturn hit. Taco Bell and Pizza Hut took advantage of the industry-leader’s silence and continued to advertise. When recovery began, Pizza Hut had increased sales by 61% and Taco Bell by 40%, gaining leverage in an industry once identified with the yellow arches. 

Kellogg’s Takeover
In the late 1920’s, Kellogg’s was battling for position in the relatively new, ready-to-eat, packaged cereal market. Post Consumer Brands responded instinctually during the depression: they cut ad spend to minimize expenses. 

Kellogg’s took the opposite approach. They doubled their ad spending, moved aggressively into radio advertising, and released a new product, Rice Krispies. The “Snap, Crackle, Pop” radio campaign filled living rooms across the country. 

Kellogg’s saw a 30% increase in profits despite the Great Depression, and when the economy recovered they had won the battle for market share against Post. Even today, Kellogg’s holds the dominant position.

It’s not just the underdogs that have something to gain by keeping (or increasing) ad spend in a downturn. In the early 70s, Toyota broke through as the leading auto manufacturer-importer in the U.S. by increasing ad spend. In the same period, Del Monte hired their first Chief Marketing Officer, Groupon launched a successful email marketing campaign, and Amazon released the Kindle. All risky moves that paid off despite tricky economic conditions.

As much as we wish we had a crystal ball to tell us what the future holds, the best we can do is look at insights of the past. We know not to pump the brakes on advertising spend immediately. We also know that spending in all directions is irresponsible. 

Brands need to ask: What do consumers need right now? In times of economic uncertainty, they don’t need tone-deaf advertisements pushing them into unnecessary purchases. They look for strong, leading voices that help them make smart choices and guide them through the difficult times. 

Advertisers who continue to maintain a strong presence in the market with empathetic messaging, and a tone of stability, can seize the opportunity to become leaders in their industries and with their consumers.