What can 1 billion future middle class consumers teach Marketers? Muhtar Kent, the Coca-Cola CEO, thinks he knows the answer. It’s about investing in your brand — in good times and bad.
At the recent AdCouncil annual dinner, I had the privilege of hearing Mr. Kent accept the annual Public Service Award. You may know the AdCouncil as the organization behind such famous Public Service Announcement (PSA) campaigns as, Smokey the Bear and “Only You Can Prevent Forest Fires;” and The United Negro College Fund’s “A Mind is a Terrible Thing to Waste;” etc.
Beyond imploring the audience to continue its support of the AdCouncil, which was the obvious topic, Mr. Kent devoted his speech to making an impassioned plea to those present — Marketers, Ad Agencies, and the Media — about what Marketers should do during a recession.
Learning from the Great Recession
The key learning? Well, it’s not about value marketing, it’s not about more predictive models, and it’s not about being more price competitive. It’s something more basic, but also more challenging for Marketers to do — invest. In Marketing. In brand building. Even when the market is bad. Really bad.
Mr. Kent’s point was more than a brand plea–it was an economic one: globally, 1 billion consumers will move into the middle class in the next 10 years. Let me say it differently: these are your future consumers and your future revenue stream–and they can’t afford your brand today. But that’s going to change.
Brand Choice: Yours or Someone Else’s?
And when it does, they’ll be making a choice: your brand or someone else’s. The critical point is this: today, these 1B consumers probably don’t know your brand, its benefits, and why they should consider buying it in the future. Advertising and Marketing have a critical role to play in engaging these future consumers with your brand now, so that when they have the wherewithal to buy your brand in the future, they will.
Investing in Marketing during a recession is tough. Challenging economic times scare everyone — CMO’s included. So, what’s the standard CMO response? Cut spending. Invest less. Economize wherever possible. I know, I’ve been an unfortunate actor in these kinds of plays before.
Why Invest When Times Are Tough?
There’s now a sizable body of research which empirically proves that companies which invest in Marketing during downturns tend to outperform their competitors coming out of the downturn. What’s the evidence?
- Advertising in Downturns Yields Better Financial Performance — John Quelch, a professor at the Harvard Business School, conducted a study which compared companies which followed one of two strategies–investing in Marketing or cutting back. Results showed a consistent pattern of superior performance for the companies which invested during tough times. Guest blogger Susan Kanefield Lauinger highlighted Quelch’s research and the temptation to make quick cuts in marketing dollars.
- Advertising in Downturns Builds Confidence — Nielsen IAG reviewed financial companies which invested in advertising during the recent economic crisis versus those which didn’t (Disclosure: I work for The Nielsen Company). The key learning? Firms which invested had higher confidence in them than those which didn’t.
But How To Do It ?
Fine you may say, but how do you continue investing in Marketing when sales are falling, revenue is down, and Wall Street continues to have high expectations for your quarterly profit? What’s a CMO to do?
- Educate Senior Management — The CMO has to educate the CEO and CFO so they understand and really believe that Marketing is an investment and not just another cost item. Show them the research cited above, walk them through case studies, and even find examples within your own company of where downturn Marketing has made a difference. Educating your C-Suite about the proper role and impact of Marketing is an on-going responsibility (read more in my post “What Do CEO’s Really Want From Marketing?”)
- Drive Financial Accountability in Marketing — CMO’s must be committed to being accountable for the money they spend. The more the Marketing function can demonstrate that it spends money wisely and generates positive return of Marketing investment, the more likely CEO’s and CFO’s will support investments during a downturn. The CMO’s job is to demand financial and brand building accountability of the Marketing organization.
Courage is never in more short supply than when a CMO proposes to invest more when times are tough. But investing in a recession is a proven way to gain advantage versus competition. Whether you can get the money you need in the next downturn depends entirely on educating the C-Suite and being accountable for good financial results behind your Marketing initiatives.
It’s really that simple. So simple, in fact, that 1 billion emerging middle class consumers already know this: invest in your brand in good times and bad–or risk having them buy your competitor instead.