News and advice
How to grow your market share during a downturn
In today’s uncertain market, it’s easy for your first reaction to be tightening your spending. While this holds true for your non-essential expenses (usually lifestyle choices), the opposite should be your strategy when it comes to your marketing budget – reducing your marketing budget is a sure way to lose momentum and market share.
In fact, history (almost 100 years of history) shows that brands who invest more in marketing during a recession reap the rewards as the economy bounces back.
Studies of advertising during a recession have shown that companies who continued to advertise saw 256% higher sales than their counterparts post-recession. Those who chose not to advertise during the economic slump, saw virtually 0% market share increase and a rise in sales of only 18% once the economy regained traction. While the study doesn’t relate specifically to real estate, the fundamentals of marketing still apply.
As noted in this Forbes article, the reasons for this are clear:
- The “noise level” in a brand’s product category can drop when competitors cut back on their ad spend.
- Brands can project to consumers the image of corporate stability during challenging times
- The cost of advertising drops during recessions. The lower rates create a “buyer’s market” for brands. Studies have shown that direct mail advertising, which can provide greater short-term sales growth, increases during a recession.
- When marketers cut back on their ad spending, the brand loses its “share of mind” with consumers, with the potential of losing current – and possibly future – sales. An increase in “share of voice” typically leads to in an increase in “share of market.” An increase in market share results, with an increase in profits.
What does this mean for you? We know the importance of listings skyrockets during a downturn. A property listing leads to physical for sale signs, REA and Domain listings, social posts, and a reason to drop direct marketing (DLs etc) into letterboxes. These all boost your share of voice.
Mark Ritson sums up the share of voice benefits in his Marketing Week column, Ritson’s recession playbook: 9 steps marketers should take to survive the dark times ahead:
“Summarising a century of data, the reason brands should maintain their brand building budgets in a recession is not because of the recession itself, nor the behaviours of consumers. It’s because your competitors lose their nerve and are vulnerable because of it. If you can keep your head and your brand budget while those around you are reducing theirs, you will earn the post-recessionary benefits.”
And closer to home, in his recent XCON 2022 talk, Jason Adcock highlighted the importance of ongoing brand building:
It’s not who you know but who knows you.
He went on to say that he spends 10% ($550k!) of his GCI on brand building and personal marketing. Given his success, it’s sound advice.
So remember, “WHEN TIMES ARE GOOD YOU SHOULD ADVERTISE, WHEN TIMES ARE BAD YOU MUST ADVERTISE.”