Marketing lessons from the Great Recession (2007)
What we can learn from the great recession for the Corona crisis
I wrote a new thing on Google’s market share: https://www.kevin-indig.com/how-big-is-googles-market-share-really/.
I’m also happy to announce that I’m speaking at an Oncrawl webinar series with lots of other great SEOs such as Aleyda Solis, Mike King, Paul Shapiro, and many more!
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This is the second part (part 1) of an article series about Marketing lessons from previous recessions. Even though every economic crisis is different, we can learn some things from the past to prepare for the future.
Marketing lessons from the Great Recession
As the Corona recession hits 10% of unemployment within weeks, we start to see similarities with the previous economic crisis: the Great Recession. Over the span of 18 months between 2007 and 2009, the Subprime Mortgage Crisis in the US pulled the global economy into a downturn that took 2-3 years to recover from.
I looked at four research papers (and a couple of articles) that highlight what companies that thrived did differently compared to those that didn’t:
Here is what I found:
How consumer behavior changed in the 2007 recession
As Marketers, we must never, never, never ignore consumer behavior changes. Search volumes, CPAs/CPCs/CPMs, values - all can change our traffic acquisition and retention and engagement channels.
In 2007-2009, consumers looked more for value and deals instead of brands. To be fair, that’s the case in every recession. However, it plays out differently every time because technology advances.
One interesting example is the alcohol industry. Total alcohol consumption in the US increased. Light drinkers consumed less but heavy drinkers drank more. As a result of the recession, pre-drinking became more common so consumers had to spend less at bars. People preferred smaller, more economic packs when buying alcohol.
A second interesting example of consumer behavior change was the shift from ownership to renting. Homeownership for 25-35-year-olds dramatically decreased and people rented more instead.
Some of that behavior has stuck until today (though houses also became more expensive than ever).
A third and last example is toys. Toy companies thrived during the recession. Lego saw +20% sales in the UK (2009) because its product is more durable. You can assemble the bricks in different ways over and over again (source).
How successful marketers reacted
What separated successful businesses and marketers from the rest?
First, as budgets were slashed by 60% across the board, Marketers had to learn to do more with less (source). That means identifying and doubling down on what works. Specifically, a paper that looked at companies in Hungary found the following strategies to be effective:
Sharing marketing resources with other teams
Re-evaluation of the strategy
Integrating sales & marketing functions
Finding new expertise and techniques
Strengthening key account teams
Second, discounts and offers. Online wine clubs grew and worked with heavy discounts to lure people in. A Cornell study that looked at almost 500 hotels found out that winning chains spend more on Marketing than those that lost. Winning hotel chains used loyalty programs, promotions and advertising to a greater extend.
Third, new avenues. Facebook reached significant size during the Great Recession and became an attractive advertising platform. Alcohol brands leveraged Facebook more for online advertising and saw good success.
Newspapers saw a -19% decline in revenue as a result of less ad spend during the Great Recession. The Seattle Times even saw -40% fewer ad placements (source). What happened? Businesses spent less money on ads because they had lower revenue and shifted more advertising to platforms like Facebook and Google because performance is easier and more accurate to measure.
What to learn from the Great Recession for Marketing
In the Great Recession, marketing strategies that strengthened the brand, emphasized value, and offered discounts and loyalty programs. The rise of Facebook gave Marketers another performance marketing channel besides Google ads.
Obviously, we can copy a lot of those tactics. Now that Facebook is established, we should ask ourselves what other platforms we can use to advertise on to a) lower advertising spend and b) reach out target audience.
5 things to check out
Financial Times Yuval Noah Harari: the world after coronavirus
Harari breaks down how we’re at a crucial point of decision making. Do we want to use surveillance technology and make us vulnerable to privacy restrictions but fight pandemics?
We also need to ask ourselves if we want to leverage our biggest weapon, global cooperation, or stick to national isolation and selfishness?
Kikolani How to Build a $216,000 Blog
What’s the secret to selling a blog for over $200K? Good, old hard work, freebies, and good content.
Appreciate this case study around cutting the right data when having to save cost, instead of cutting across the board.
Good reminder on management during peace vs wartime. I guess we’ll have to think more about the latter right now.
Also read this fantastic follow-up by Ed Batista: https://www.edbatista.com/2020/03/from-peacetime-to-wartime.html
Search Engine Journal How to Get Your Brand in Google’s Knowledge Graph Without a Wikipedia Page
Fascinating insights into the knowledge graph and sources Google uses to put it together.
See the list here: https://tools.kalicube.pro/trusted-sources?region=uk