Brand loyalty in recessionary times…comScore's Gian Fulgoni offers valuable insights

SNEWS was an invited guest to a presentation on brand loyalty in recessionary times by Gian Fulgoni, co-founder and executive chairman of comScore. Our summary provides key takeaways that may just change the way you think about your company’s branding and marketing strategies.
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Gian Fulgoni, co-founder and executive chairman of comScore, presented a webinar recently with an intriguing subject line: “Brand loyalty in recessionary times: Can we apply today’s lessons tomorrow?” SNEWS® was an invited guest to the presentation, and what follows are summary points that may just change the way you think about your company’s branding and marketing strategies.

Marketing shifts when dollars are tight

Marketing is always transformed during a recession…sometimes for the long term. Consider the following observations as Fulgoni took a look at history:

>> Clients demanded the same level of service from ad agencies even as they spent less.

>> Capturing ad dollars was a much harder sell.

>> Value messages to consumers were much more explicit and direct.

>> Price became the most prominent message in advertising.

>> Contests, promotions and premiums became a key means of adding value to brand purchases.

>> New media created marketing opportunities and captured the interest of consumers

Recent history? Hardly. This was a description of how the Great Depression transformed marketing. Interestingly enough, Fulgoni pointed out, it is not much different from the marketing and branding response to the most recent economic collapse. Oh, and that new media of yesteryear? Radio was the new media of the 1930s where almost overnight, consumers were listening to four hours of radio a day and Procter & Gamble launched a new media platform to promote its products -- soap operas.

Long-term impacts of the recent recession -- private label benefits

Fulgoni noted that as the economic downturn continued from March 2008 through March 2010, fewer shoppers surveyed by comScore were buying the brands they wanted most. Just over 40 percent reported they purchased the brand they wanted most in 2010 compared to just over 50 percent in 2008.

Much of the decline is attributed to consumers saving dollars and “buying down.” This is especially true among higher-ticket items where a decision is being made by the consumer to convert to less expensive brands to save money.

The danger for premium brands now, Fulgoni said, is that since consumers have had several years of buying price-point brands out of cost-saving necessity, the dislocation may become permanent as consumers discover the quality of the price-point brand rivals that of the premium brand.

Investing in marketing counteracts buying-down tendencies

According to Fulgoni, history shows that effective marketing during recessionary times positions a brand for a bounce-back from any brand preference dislocation when the economy rebounds. He referenced a number of studies to bolster this assertion:

>> According to a McGraw-Hill research analysis of 600 B2B companies during the 1981/1982 recession, those that maintained or increased media spend during the recession experienced a 265 percent relative sales growth.

>> A 2001 CARR Report found businesses that aggressively increased media expenditure during the previous recession increased market share by 2.5 times the average for all businesses post-recession.

>> Cahners and SPI in a 2002 study found that businesses that increased ad spending during a recession experienced a 1.5 point increase in market share.

Lessons learned from the recent recession

If the past is our teacher, Fulgoni said it is clear that brands must deliver additional value if they are to maintain market share during recessionary times. By this, he does not mean simply lowering prices. Product innovation and thoughtful marketing campaigns that convey the value of a brand are excellent ways to position a premium brand, increase consumer loyalty and ensure success.

This most recent recession (perhaps we are still in it or perhaps not, depending on who is talking) has accelerated, Fulgoni said, the entry into a very new marketing age. It is one where e-commerce is a very significant sales channel, online display advertising is an effective and efficient brand-building strategy, social networking has become an effective and efficient advertising medium, and search advertising is a powerful direct-response tactic.

All of this simply means that it has never been more important than right now to focus on a creative strategy in developing advertising plans, especially given, he said, “the confusion of today’s digital marketing landscape.”

Get your creative house in order now!

The buzz right now is all about targeting data and tracking consumers to best meet their needs. While increasing the efficiency of a media buy by delivering more impressions against a desired target audience is certainly important, Fulgoni said it is all meaningless if the message being delivered is crap. Too many ads these days, especially online, are completely missing the mark due to poor creative, he noted.

“Isn’t the creative message every bit as important as who we say it to?” asked Fulgoni. “Doesn’t the efficacy of any ad campaign depend to a large degree on the copy being used?” Unless brands fundamentally realize they are communicating with and trying to influence the behavior of humans, he said the full potential of marketing in the online channel will never be realized.

It is no longer good enough to slap up some alternating banners—no matter how slick—and run them in a real-world campaign, and then measure click rates to gauge branding impact. “The click has been shown to be irrelevant in that regard. No, we need to do our homework before the online campaign runs and make sure we have a persuasive branding message,” he said.

In a related blog post on the topic, Fulgoni wrote, “Without a persuasive branding message, all the targeted precision in the world won’t increase sales. Mathematical laws aren’t about to change on our behalf: four times zero will always be zero.”

--Michael Hodgson

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