Seize a market share increase

Media talks of doom and gloom but did you know advertising and promotion in tough times can lead to a market share increase? In layman’s terms, that means a bigger piece of pie for you and your merry men or women. That’s the best reason to continue your promotional efforts through thick and thin, but there are more.

Advertising spend goes down

According to a report from the US Library of Congress, advertising spend decreased from $77.5 billion in 1929 to $45.9 billion in 1933, with The Great Depression lasting from 1929 to 1939. In advertising, this gave us one of the biggest case studies to investigate whether advertising is effective. Turns out it is… thank goodness… or my whole life in marketing would have turned out to be a lie!

Consumption of “free to air” media increases

According the same Library of Congress report mentioned above, newspaper circulation increased during The Great Depression.

I recall during my time in commercial TV and radio sales, from April 2015 to April 2021, I experienced something similar. Both mediums increased their audience size during COVID lockdowns. I’m not sure if this was due to economic challenges or if it was because of people being forced to stay home. Either way, while advertising spend was going down, our audience was getting bigger.

Market share increase

Somehow this knee jerk reaction of cutting spend caught on with businesses of all sizes, as if cutting advertising budgets in a recesssion is conventional wisdom. In fact, for many brands, it’s not wise to stop promoting their business all together. All this time later, most business leaders think it’s common sense to stop sepnding on advertising and promotion. As you may have heard, there’s nothing common about sense.

Cameron Jenyns, from Deakin University, Australia, refers to two reports which show where companies increased their spend during The Great Depression, they also showed a market share increase.

Comparison of P&G and Coca-Cola spends and emperical data of 57 additional brands during the heights of COVID in 2020, showed a clear relationship between brands who increased their spend and a market share increase. Those who cut their spends lost sales and market share.

Honeymoons end

New business get a lot of hype, so they rarely need to advertise, until they do. I recall the opening of two different food retailers in Dubbo, which had lines of customers along the street for the first 2-3 weeks. Then, nothing. When the opening days, family and friend discounts and chatter about town stopped, so did the customers. Both of these venues returned to paid advertising and have continued ever since.

Every business has a honeymoon. Family and friends join your page on Facebook. They might visit or take you up on an opening special. They may even tell people about your new business or how proud they are that you’ve taken the leap and gone out on your own. As with many good things in life, honeymoons must end. So too, word of mouth dies down.

Word of mouth

Word of mouth is indeed very powerful in business, but if you rely on it, your business is going to struggle. Sure, when someone has an amazing experience at your business, they might talk to others about it. People also talk about their negative experiences. In Consumer Behaviour, (Schiffman, Bendall, O’Cass, Paladino and Kanuk 2005, p510) the writers argue people are 10 times more likely to share a negative experience than a positive one.

In my own experience, many business owners believe all of their customers are talking about them, in a good way. I have been around long enough to see more than one of those businesses fail. In my opinion, they made a false assumption that everyone would naturally talk about their business and this would be enough to keep them alive.

Do you honestly believe people don’t have anough going on in their own life than to promote your business to their family, friends and neighbours? Maybe, when it’s new or novel. Maybe not when it gets old.

People get busy

Life gets busy and I have written previously about the massive volume of advertising messages people see every day. The hard truth is that if people stop hearing and seeing your brand, they will forget you.

In contrast, I know of a handful of local brands who never stopped spending on TV and radio, even in tough times. They’re the jingles that everyone knows in this town and they remain top of mind when people think of their respective product categories. Surprisingly, they don’t spend a lot but they do spend consistently.

Oragnic reach is less

At one time you could post for free on social media networks and reach a lot of people. You can still reach a lot of people but you may have noticed a decline in who sees your content. This is no accident. Social media networks want you to pay for advertising.

You may also notice, anything promotional, any picture with words or any link you attach, forces the algorithms to rank your content lower.

While there are a few tricks to help you get more out of your organic social media posts, mixing this in with a small spend can help you reach more of your target audience.

More for your money

During tough times, most businesses spend less on ads or pull their spend all together. As a startup, you should see this as a way to cut through the usual competitive noise. In contrast, I have seen dozens of businesses focused on what their competitor is doing. Focus on what your business needs. When your competitor stops spending, this is your chance to seize a market share increase.

I am aware of one client who was investing their money on TV, spending roughly $1,500 per month. One month, they received $40,000 worth of advertising including bonus and filler spots. Imagine the impact that has just because others have pulled back their spend.

Sales keep going

The best reason to keep your advertising and promotion going has to be because you need sales. Your sales team (or you when you put on the sales hat) need leads. I once heard marketing described as warming propects up ready to sell to them. That’s a good way to look at it. Warm, inbound leads are much easier to close that cold outreach via social media, email or phone calls.

Clients leave you

I know it hurts to think about it. You put a lot of time and energy into your client relationships and now they’re going to walk out the door. You probably thought you had a real romance or bro-mance going on, didn’t you? People move, competition creeps in, technology improves and people find cheaper substitutes. This is known as customer or client churn and it happens everywhere. Advertising and promotion helps you attract a steady supply of new leads to replace the clients you lose.

As I already indicated, word or mouth and organic reach are barely going to replace your clients as they leave, let alone win you a market share increase.

Keep it up

When you are a startup founder, your promotional budget can be tight. You can still use advertising and promotion to grab a market share increase. You have so many options to promote your business now, both free and paid. Please don’t limit your thinking to one medium or idea, but remember, you should plan and deliver consistent promotional campaigns. Especially when times are tough.

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