Parasitic Wasps, Zombie Cockroaches & the Importance of Marketing in a Downturn
There’s a particular type of parasitic wasp, Latin name Ampulex Compressa, that’s as brutal and precise as a trained assassin.
After laying its egg on a common cockroach, it administers two precise stings to the cockroach’s brain. This leaves the cockroach with the ability to walk, but entirely robbed of the ability to initiate its own movement.
The sting exhausts the offending wasp of its own energy, so how does it replenish it? By cutting off the ends of the cockroach’s antennae and drinking its blood. It then latches on to these antennae to ‘drive’ the zombified cockroach to the perfect place for the wasp’s egg to hatch.
A few days later the wasp’s infant larva chews its way into the cockroach’s abdomen and proceeds to eat its internal organs in the exact precise order to ensure the cockroach stays alive for the next four days. That’s the amount of time it takes for the larva to form a cocoon inside its hapless host.
I offer this by way of an analogy of what it feels like to be living under the shadow of, well, 2020. It is normally at times like these that confidence plummets and marketing budgets, just like those antennae, are the first things to get cut.
But history (and cold hard facts) show this is the absolute worst thing that can happen.
Over the years, a range of evidence has been collated (including from Millward Brown, PIMS and the IPA Databank) which makes the case for protecting marketing spend when others are cutting theirs.
Impact on Market Share
This chart is from the IPA Business Effects Paper based on data collected from 1000 businesses during periods of market downturn and subsequent market recovery.
Impact on Annual Profitability
This one, using econometric modelling, shows the likely impact of changes to marketing spend on the annual profitability of a brand during and after a recession, based on different budget scenarios.
Any short term profitability realised by the panic scenario (which cuts all marketing spend during a recession), is rapidly overtaken by a severe decline post-recession.
Even with only mild budget cuts, the brand still emerges from the downturn in a considerably weaker position in terms of profitability.
Impact on Brand Health
Millward Brown have explored the effects of budget cutting on ‘bonding’ – an aggregate measure of multiple brand-consumer relationship metrics that correlates to market share.
Any budget cuts reduce bonding – and, the implication being – market share.
Further data also demonstrates that ‘brand usage’ and ‘brand image’ suffer when brands stop communicating for 6 months or more (13% and 6% declines respectively).
Brands in more price-driven categories are even more at risk of market share losses.
The Time-Lag Effect
Econometric modelling from Data2Decisions has shown an even more worrying impact –that of the time-lag effect.
Most estimates of payback from marketing suggest a figure of 50% in the short-term (i.e. up to 12 month’s worth of purchases), but a much bigger impact in the long-term (between one to four years’ worth) which can be up to 400% payback.
A budget cut can appear to not be having a negative impact in the short-term as the brand continues to enjoy that long-term payback from previous investment.
Halving budgets for just one year takes three years to recover from to pre-cut levels.
The obvious conclusion is to avoid getting stung in the first place, and keep calm and carry on marketing.
Keep a close eye on what your competitors are up to. If you can maintain spend in the same proportion to theirs, the chances are you’ll emerge with your market share intact.
If you can increase your spend levels proportional to theirs you could very well gain market share.
And if you decide to cut your spend? Well you may very well find yourself like that hapless cockroach – powerless against a more sophisticated opponent who shows no mercy in the face of its own self-interest.
Want to find out more? We’re currently developing recession / pandemic / Brexit-proof plans for our clients and would be happy to take a look at yours if you want a no-obligation chat? Call Ian Morgan on 0161 833 4300 or email at email@example.com.
(“Emerald cockroach wasp or jewel wasp, Ampulex sp., Ampulicidae” picture by Ecuador Megadiverso is licensed under CC BY-NC-SA 2.0 )