Why Companies Are Reducing Digital Ad Spending & Why You Should Do The Opposite
We could spend all day discussing the numerous changes and decisions that businesses have been faced with over the past several months. In addition to adjusting to the work-from-home lifestyle, many companies have had to deal with major profit loss, closures, and layoffs. More than anything, everyone is focused on saving money, and unfortunately, marketing is often one of the first things to get cut.
Many companies—and maybe even yours—have been forced to reduce their marketing and advertising efforts. According to the World Economic Forum, ad spending in the United States has decreased by 10% since the pandemic began. Considering the economic difficulties that everyone has faced, this drop isn’t surprising at all.
However, while reducing your ad spending may seem like a sound strategy, it’s actually more beneficial for you to go against the grain and increase your spending. Here’s why.
When you advertise anywhere, you’re essentially entering your brand’s name into a fight—not just with direct competitors, but with every other brand. If you haven’t noticed, there’s A LOT of ads out there. When you implement a marketing strategy on any platform–Facebook, Instagram, YouTube, Google, or LinkedIn–your brand must compete with other brands to “win” the attention of consumers and your desired audience.
Your brand’s “Share of Voice” (SOV) refers to the percentage of the ad market that your brand owns in comparison with other advertisers. In other words, it’s the percentage of how much your brand is dominating advertising in your industry. The bigger your brand name and the more attention consumers are giving your brand, the larger your SOV is. And as most small businesses know all too well, it can be incredibly difficult to make your voice heard above the noise.
But right now, that noise is much quieter than usual. The advertising landscape, especially on digital platforms, is far less crowded than usual. According to Harvard Business Review,“...It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.” In short, do NOT stop advertising. With many companies reducing their spending and even stopping their ads in general, this is the perfect opportunity for your business to speak up. With fewer brands competing for consumers’ attention, the average cost per click (CPC) has decreased. Plus, with fewer brands actively advertising, consumers are more likely to click on your advertisements which, in turn, means more traffic for you at a lower cost.
So, what happens if my business stops marketing like everyone else? Well, you’re essentially handing your SOV over to your competitors. Your attempt to save money will actually result in you losing far more. Plus, if your brand has established dominance in the digital ad market, stopping ads could bring your business back to square one. Once you lose dominance in the ad market, it is extremely difficult to regain it.
Eventually, businesses will regain their balance and restart their marketing. But when this happens, it’s going to be much harder to achieve the same SOV they had before. So why not use this opportunity to stay ahead of the curve? More than likely, when your competitors jump back in, your business will retain the same traffic.
Ready to dive headfirst into digital advertising? Our team at MCG would be more than happy to help you dominate the market and establish a large SOV. Drop us a line, and we’ll help you map your next move.
Sources: World Federation of Advertisers and Harvard Business Review